Lyle & Associates CPAAccountant in Chagrin Falls, Ohio
Tax Tidbits of the Day:
I've been remiss in posting because I was floating around in the Southern Caribbean while clearing my head for tax season, so today I offer three tax law changes that are effective this year (2018):
Beginning in 2018 alimony payments will no longer be deductible (hopefully you aren't affected by this)....
There is effectively no more "Kiddie Tax". Instead, dependents under the age of 24 will be taxed on interest & dividends not at their parents' tax rates but instead at trust rates, which are higher.
Business interest expense is severely limited, to 30% of taxable income.
And as a compensatory bonus here's a fourth: You should compare your new 2018 payroll tax withholdings, and the resulting larger paychecks you may be seeing, to your actual projected income tax liability for this year. I believe you may find you'll come up short and owe on April 15th, as opposed to getting a refund like you may be accustomed to. Nobody likes nasty surprises. Your tax advisor should subscribe to tax projection software that can be used to provide a heads-up before the day of reckoning on April 15th, 2019.
Tax Tidbit of the Day: Don't presume that prepaying your 2018 real estate tax will benefit you. It's entirely possible that it will push you into AMT (Alternative Minimum Tax) and negate the effort. Your tax professional should be able to calculate the tipping point, where you are just on the brink of AMT but not in it.
Tax Tidbit of the Day: The newly-enacted Tax Cuts and Jobs Act restricts itemized deductions for combined real estate, sales, and state & local income taxes to $10,000 beginning in 2018. Think about prepaying those before December 31st.
There's a lot to like here in my opinion, particularly for those concerned about their Social Security benefits. "President Trump's 2018 budget proposal on Tuesday won't reform Social Security or Medicare."
Your tax dollars at work. We sometimes have a 90 minute wait on hold. Tomorrow I have to call, again, to chase down a client's problem. They have received three erroneous refund checks for $25k, they have sent each one back, and today they got a notice of intent to levy for a phantom tax bill of $20k. This kind of stuff gets really old, being passed around from one department to another and getting a different answer every time.