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Reminder on how the new Tax Law affects your 2018 deductions

Written on October 24th, 2018 by Jamesno shouts

As we near the end of 2018, here is a reminder of the major change for tax filers next year:

- The biggest item of the tax law change is the caps on itemized deductions that will move more people to use the “standard” deduction:

  • SALT taxes:  state taxes, property taxes, sales taxes are going to be capped at a combined $10,000 deduction on your schedule A.  This means if you are a high income earner that pays a lot of state tax or you pay a lot of property taxes, you will see a cap on total deductions which means higher income shown on your tax return.
  • Mortgage Interest:  interest on primary mortgages up to $1M is still grandfathered in for loans prior to 2018, loans taken out this year the interest will be capped on loans up to $750k
  • Charitable Deductions:  You can still deduct all charitable contributions, however if your charitable + mortgage interest + SALT taxes are less than $24k you will just use the Standard Deductions.
  • Misc Itemized Deductions:  These pretty much are eliminated, including moving expenses and unreimbursed job expenses (moving expenses still deductible for members of military).

Standard Deduction:

  • Single $12,000 / married $24,000
  • if over 65 add $1300 to that deduction
New Tax Credit:
  • kids under 17 you get a child tax credit of $2000 each.  A credit is a dollar for dollar reduction in taxes owed.

Personal Exemptions:

  • These have gone away with new tax law, sort of replaced with that Child Tax Credit above

Summary:

Unless you have a lot of mortgage interest and charitable contributions, odds are you will now just do a standard deduction.

NOTE:

If you are over 70 1/2 and required to do RMD’s, and you make charitable contributions but will fall into the standard deduction category – consider making your charitable contributions direct from your retirement account (IRA).  These will go towards your RMD requirement and not be taxable as income when sent direct from your IRA.

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Is my Home Equity loan interest still deductible?

Written on July 16th, 2018 by Jamesno shouts

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

IRS videos

Written on May 29th, 2018 by Jamesno shouts

Did you know that the IRS has short video tutorials on a variety of topics?  These videos discuss individual tax items as well as questions small business owners might have regarding payroll withholdings and retirement plans:

https://www.irsvideos.gov/Individual

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Time to adjust your tax withholdings?

Written on April 17th, 2018 by Jamesno shouts

As we wrap up the 2017 tax year and look forward to the tax cuts of 2018, many are wondering if they should adjust their withholdings?  In my small sampling statistic, about 85% of the clients I do taxes for will see a benefit from the 2018 Tax Cuts.  Those that are still earning a regular paycheck have the option of adjusting their current withholdings to keep more money throughout the year or simply wait and get a refund when they file next year.

Whether you did your own taxes or worked with a tax pro, you should have gotten an estimate on what your 2018 taxes would look like based on the new rules.  From there you can figure out if you need to adjust your withholding’s through your employer by submitting a new W4.

So how do you make the decision on what to put in your W4?  The IRS has a withholding calculator to help you get closer to your actual tax liability under the new rules here: https://www.irs.gov/individuals/irs-withholding-calculator 

Once you determine any changes you need to make, fill out a new W4 and hand in to your payroll department:  https://www.irs.gov/pub/irs-pdf/fw4.pdf

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Pre-Retirement Survival Guide

Written on February 10th, 2018 by Jamesno shouts

Everything you always wanted to know, in one handy reference guide:

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2018 Tax reference / Key Financial Facts

Written on January 5th, 2018 by Jamesno shouts

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

Decent savings rate + $200 bonus

Written on September 21st, 2017 by Jamesno shouts

I get asked quite frequently about where you can get “any” return on Cash Reserves.  Most banks are paying a fraction of a percent if anything, but here is something I just came across:  Capital One 360 Money Market is offering 1.2% annual yield on balances of $10,000 or more.  If you deposit before Oct 31, 2017 you will also get a $200 bonus.  The website is www.capitalone.com/200atlanta and use the code MY200.

Personal Finance FYI: are you due a tax refund on your stock options or grants?

Written on September 7th, 2017 by Jamesno shouts

medicare plan F vs. plan G

Written on August 21st, 2017 by Jamesno shouts

Came across these two videos that compare Medicare supplement plans F and G.  Most folks naturally gravitate toward Plan F since it covers the deductible, but that may not be the best choice.  Especially once you consider the higher premiums and higher annual increases associated with Plan F.

https://www.youtube.com/watch?v=sHj3-Y_gwUs

https://www.youtube.com/watch?v=bmU0KdQuxbU

 

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Find unclaimed money in your name

Written on August 18th, 2017 by Jamesno shouts

Good article about a new website on Clark Howards site:  http://clark.com/personal-finance-credit/this-website-will-notify-you-if-theres-unclaimed-money-in-your-name/

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