Tax

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.

Tax Scams: Don’t be fooled

Westchester NY accountant Paul Herman of Herman & Company CPA’s is here for all your financial needs. Please contact us if you have questions, and to receive your free personal finance consultation!

By Tax Advocate

Scam Awareness

Don’t be fooled by scammers pretending to be the IRS. Scammers target taxpayers and tax professionals each year in growing numbers. Oftentimes a scammer will contact you by telephone and alter the caller identification to make it look like the IRS or another official agency is calling. The IRS will not call you if you owe taxes without first sending you a notice in the mail.

Scammers may also use a scheme called “Phishing” to falsely lure you into telling them your personal information such as your social security number, bank information, credit card accounts, and more. Scammers will “Phish” for your information by asking you to verify specific details.

Don’t fall for these scams. The IRS provides tips and resources to help taxpayers and tax professionals learn how to spot a scam and what to do if you are a victim of a scam. Learn more about tax scams and how to recognize the signs of phishing and tax scams. It could save you from becoming a victim.

You should report all unsolicited email claiming to be from the IRS or an IRS-related function to phishing@irs.gov.

Paul S. Herman CPA, a tax expert for individuals and businesses, is the founder of Herman & Company, CPA’s PC in White Plains, New York.  He provides guidance and strategies to improve clients’ financial well-being.

Do you have everything you need before you file a federal tax return this year?

Westchester NY accountant Paul Herman of Herman & Company CPA’s is here for all your financial needs. Please contact us if you have questions, and to receive your free personal finance consultation!

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By Taxpayer Advocate Service 

There are several changes that might require some up-front actions by you, so that you are ready to file your federal tax return this coming year. The IRS has provided a listing titled Get Ready on IRS.gov.

Reviewing this list now can help you avoid return processing delays or last minute scrambles for information you will need to prepare your return.

Number one on that list is Individual Taxpayer Identification Number (ITIN) renewal – for anyone who has not used it on a federal tax return at least once in the last three years. Additionally, all ITINs issued before 2013 will begin expiring January 1, 2017, starting with those with middle digits of 78 and 79 (Example: (9XX-78-XXXX). All expired ITINs must be renewed before being used on a U.S. tax return. This year, there are also new documentation requirements when applying for or renewing an ITIN for certain dependents – so be sure to read those before applying. This process can take seven weeks if you qualify for an ITIN and your application is complete. If your information is not complete, it can take longer, so start the process now of applying for or renewing an ITIN.

Others changes are that some taxpayers:

Life events can also make a big difference in taxes and healthcare, so remember to account for all life events that could affect your tax liability.

Any of these events during 2016 may affect the taxes you owe:

  • Birth of a child or a child turning age 17,
  • Marriage, divorce or separation,
  • Career or job changes, unemployment or furlough,
  • Planning for retirement,
  • Withdrawal from the Thrift Savings Plan or a 401(k),
  • Natural disasters,
  • Moving or home ownership, and
  • Foreclosure, debt forgiveness or bankruptcy.

The Individual Shared Responsibility Provision of the Affordable Care Act requires you, your spouse and your dependents to report qualifying health insurance for the entire year. If not, you need to be able to claim a health coverage exemption or report an individual shared responsibility payment when you file. In addition, you may be eligible for the premium tax credit if you purchased health coverage through the Health Insurance Marketplace.

Paul S. Herman CPA, a tax expert for individuals and businesses, is the founder of Herman & Company, CPA’s PC in White Plains, New York.  He provides guidance and strategies to improve clients’ financial well-being.

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.