Tax Deductions

6 Tax Deductions That Went Extinct in 2018

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The Tax Cuts and Jobs Act of 2017 was called one of the largest tax overhauls in 30 years. It went into effect at the beginning of 2018, which means taxpayers are starting to feel the impact now. Some households will benefit from it, others will not. Here are some deductions that have been eliminated or reduced.

Moving Expenses
Unless you or a spouse is in the military and is currently on active duty, you won’t be able to take any deductions for moving. In the past, those who moved for a job and paid the moving cost could deduct most of their expenses.

Personal Deductions
Deductions for personal exemptions, which can be worth $4,050 for each exemption, were eliminated and replaced with a larger standard deduction and an expanded child tax credit.

Paying Alimony
If you’re paying alimony on a divorce finalized before December 31, 2019, then you can deduct those payments one last time.

Unreimbursed Job Expenses
This fell into the category of miscellaneous itemized deductions, an area that has been greatly reduced by the latest tax laws. It means that anything an employee pays for while on the job and doesn’t get reimbursed for, is not deductible.

State and Local Taxes
You used to be able to fully deduct any amount of state or local taxes. Now that cap is set at $10,000 meaning those with high state income and property taxes will get much less back.

Tax Preparation Fees
Tax preparation fee deductions were eliminated as part of the miscellaneous fees. This is will occur from 2018-2025. That means you cannot deduct payments to accountant, tax prep firms, or tax preparation software.

The Business & Tax Benefits of Westchester County

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Thinking of starting a business?

Westchester County is the perfect place to start a business. There are lots of countywide programs to get your business off the ground and geographical benefits from being in Westchester County.

Proximity to NYC

Depending on where you are in Westchester County, you’ll be close to the bustling economic center of New York City without having to deal with commuting to the city.

You’ll also be located close to Connecticut and parts of upstate New York.

That means you’ll be within drivable range for all of these areas.

Get Ahead With Westchester’s IDA Program Benefits

Westchester County Industrial Development Agency (IDA) can help you grow or start your business.

Use the benefits from this program to:

  • Build or renovate office parks or buildings
  • Develop mixed-use projects including hotels, marketers, medical office space, etc.
  • Support extensive multi-family and multi-use residential

This past January, the agency funded $391 million worth of residential projects in 2019. They’ve helped get hundreds of businesses off the ground and have given them a variety of benefits. For more details, check out IDA’s website.

Tax Exemptions

The IDA agency can also provide exemptions for use and sales tax in the following areas:

  • Construction
  • Furnishings
  • Business equipment
  • Related capital improvements

Check out the policy here.

Westchester County wants businesses to move in, so find out what both the county and the town/city you’re in offers in the way of incentives.

Image: Fred Murphy/C.C 2.0

Preparing for Tax Season 2019

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We know it’s not even Christmas yet, but some of you are probably wondering what the new tax law will mean for your finances heading into 2018. The news can’t decide if the changes are good or bad, but the answer for you will depend on your individual circumstances. Here is some basic information to help give you an idea of what to expect, but don’t worry. This is what we do best.

Standard Deduction Doubled

You may be familiar with the standard deduction. Many people use it rather than itemizing. For 2018, the amount of the standard deduction will roughly double:

  • $12,000 for single filers, up from $6,350
  • $24,000 for married filing jointly, up from $12,700
  • $12,000 for married filing separately, up from $6,350
  • $18,000 for heads of household, up from $9,350

This means that many of you may receive more money back when you file your taxes. This increase is balanced by changes to many deductions.

Deductions and Exemptions Removed

The increase in the standard deduction is balanced by the removal of several individual deductions and exemptions, including all of the miscellaneous itemized deductions. Many of these apply to specific life circumstances, so they may or may not affect you. Examples include:

  • The personal exemption (an amount claimed against income for the filer and each dependent;
  • The unreimbursed employee business expense (when an employee pays business expenses out of their personal funds—such as nurses, salespeople, and educators); and
  • The home office deduction (for those who work out of their homes and pay for services related to their work).

Deductions Changed

While many deductions were removed, some of the most commonly used were preserved, though altered.

  • The mortgage interest deduction was limited going forward. It will only apply to a mortgage to purchase, renovate, or build your home up to $750,000 (up to $375,000 if married filing jointly).
  • The medical expenses deduction was made more accessible by lowering the floor to deduct such expenses from 10% of income down to 7.5% of income.
  • The child tax credit was expanded to $2,000 per qualifying child and is potentially refundable up to $1,400.

Conclusion

There are many changes starting with your 2018 taxes that will affect whether you get more or less back when you file. It can seem very confusing and overwhelming, but we are here to help you when the time comes. You don’t have to do it alone.

Any U.S. tax advice contained in the body of this website is not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.