Big Changes That Will Affect You This Year

As we shift from summer into fall, it’s important to review your tax withholdings & ensure you’re on pace to cover your 2018 liabilities. Remember that with the overhaul of our tax system via the Tax Cuts & Jobs Act (TCJA), your tax situation may have drastically changed. Now is the time to review your current tax withholdings. 

Most of you know that after my family, my business is the most important thing in my life! Not only do I love asset management & financial planning – but I LOVE TAXES!

With that, I recently received the Enrolled Agent, EA, designation. The EA designation is the highest award given by the IRS and provides me unlimited rights to represent any taxpayer for any tax issue before the Internal Revenue Service. Only attorneys, enrolled agents & CPAs are awarded this right.  As an Enrolled Agent, I am a specialist in federal taxation & can assist you with:

  • Individual tax & business planning
  • Individual & business tax preparation
  • Representation before the IRS

As we shift from summer into fall, it’s important to review your tax withholdings & ensure you’re on pace to cover your 2018 liabilities. Remember that with the overhaul of our tax system via the Tax Cuts & Jobs Act (TCJA), your tax situation may have drastically changed. Now is the time to review your current tax withholdings.

The TCJA offers big changes. There are some definite winners & losers.  Let’s review:

  1. There is a brand new tax deduction for owners of pass-through businesses. Pass-through owners who qualify can deduct up to 20% of their net business income from their income taxes, reducing their effective income tax rate by 20%. This deduction begins for 2018 and is scheduled to last through 2025—that is, it will end on January 1, 2026, unless extended by Congress
  2. Taxpayers now have lower tax rates to all household – however, this does not mean your tax liability will go down. Contact our tax office for an estimate.
  3. The Child Tax Credit has doubled to $2,000 per child. This credit ends the year your child turns 17. Additionally, the income phaseouts on this credit were significantly increased; meaning more American households will qualify compared to last year.

There are 7 deductions that you can no longer claim in 2019:

  • Personal Exemptions – These are eliminated. Previously available to everyone, which was $4,050 for yourself and each family member.
  • Home Equity Loans – The new rules disallow deducting the interest on home equity loans. However, there are some situations where you may still be able to do this.
  • Moving Expenses – The new law eliminates this deduction which previously could be claimed even if you didn’t itemize your deductions.
  • Job Expenses – Deductions for costs related to your job such as license fees, clothing, tools & equipment and unreimbursed continuing education are no longer allowed.
  • Tax Preparation Fees – The costs paid to your tax preparer, combined with other miscellaneous deductions are no longer deductible.
  • Other Miscellaneous Deductions – Deductions like unreimbursed work expenses & investment advisory fees are eliminated.
  • Casualty and theft losses – Under the new law, this deduction is only allowed for property damaged in areas designated as a Federal disaster area.

If you haven’t had a review or can’t make heads or tails of any of this, contact our office for an appointment for a tax review.

About the Author

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Joseph A. Davis, EA, CDFA®

Director

With over 13 years in the financial services industry, Joe knows his stuff. Cursed with the desire to be a serial entrepreneur - Joe is a real estate investor & managing partner for Davis Financial LLC, Utah Divorce Services and Tax Smart Pros. He most recently became the director for Find a CPA Today. Joe is an Enrolled Agent, EA, & CDFA®. He also holds FINRA licenses 7, 66 & 24. When Joe isn't trading, looking for new real estate investments or obsessing over his work - you can find him at home, playing with his children & probably mowing his lawn.

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