Archive for the ‘Personal Finance’ Category:
The media has been all over the fact that many are not getting a refund this year and actually owe taxes this year. Actually from what I’m seeing, they are correct. However, it has nothing to do with the 2018 Tax Cuts.
Employers lowered the amount they were withholding from employee paychecks in 2018 and now it is coming back to haunt those taxpayers. Overall, what I’m seeing is that most are in a lower tax bracket (a few percent), but unfortunately did not withhold enough throughout 2018, so they owe. Especially those with higher incomes (limit on state/local tax deduction is also hurting).
Go ahead and adjust your W4 so that this doesn’t become a reoccurring problem next year: https://www.irs.gov/individuals/irs-withholding-calculator
Just posted a newsletter that gives examples and explains the new 199A deduction. Download the newsletter here: Tax Newsletter Feb 2019
Today BB&T and Suntrust announced a merger. I guess to survive and compete with the mega financial institutions they had to, but dang look at this graphic from 1996 to 2009 of how the last few standing have gobbled up everyone: (click on image and it will enlarge for viewing)
Prior to 2018, mortgage interest on $1M primary mortgage and Home Equity loan interest on a loan up to $100k were deductible on your Schedule A itemized deduction form of your tax return. With the new tax law that has changed and caused a bit of confusion:
For mortgages taken out in 2018, the total combined mortgage loan amounts (primary and home equity/second) where interest can be deducted has dropped to $750,000. The question is what about Home Equity Loan interest? The new tax law made it sound as if Home Equity loan interest would no longer be deductible, however per the IRS that is not the case. If a Home Equity loan was taken out to specifically make improvements to the property then the interest on the loan can still be deducted on your Schedule A. The caveat is that the loan has to be to improve the residence it is loaned against, no using it to pay off credit cards, vacations, etc…
For more info see the IRS’ statement on this: https://www.irs.gov/newsroom/interest-on-home-equity-loans-often-still-deductible-under-new-law
This question came up recently with a client that had both Non-deductible contributions in an IRA mixed with Pre-tax (deductible) contributions. When you take a withdrawal how much is taxable? It is called the Pro-Rata rule with the IRS and you have divide your after tax contributions by the entire retirement balance to figure out non taxable basis.
Kudos to Wells Fargo for putting out this great info sheet that explains the whole thing: https://www08.wellsfargomedia.com/assets/pdf/personal/investing/retirement/taxes-and-retirement/pro-rata-rule.pdf
Everything you always wanted to know, in one handy reference guide:
Interested in the tax reform info for 2018? Or maybe SS/Medicare info? Or simply retirement plan limits? Here is the latest quick reference guide:
The Advisory Firm Tax Facts 2018
From a quick scan it appears to me that congress is trying to get folks to take the standard deduction vs. itemizing on their taxes. On the schedule A they are trying to eliminate deductions for Medical expenses, state taxes and capping property tax deductions at $10k. Higher income folks and those that live in states with high property and state income taxes are not going to be happy. Any new home purchases will also have a cap of $500k for mortgage interest deductions.
This website has a good summary:
https://www.thefiscaltimes.com/2017/11/02/Read-House-GOPs-Tax-Bill-or-Summary-Key-Points
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