Individual Tax

Go Green, Save Green: Tax Breaks for Saving Energy

Earth Day is April 22. This occasion reminds us to consider implementing changes to help reduce the amount of energy we consume. But “going green” isn’t just good for the Earth — certain energy-saving expenditures also may qualify for generous tax breaks that are good for your pocketbook, too. Here are some tax credits for buying and installing certain types of energy-efficient residential equipment. Current Tax Breaks for Green Equipment On your 2017 through 2019 returns, you may be eligible for a tax credit of 30% of expenditures (including costs for site preparation, assembly, installation, piping, and wiring) for installing the…

Last-Minute Tax Planning Tips for 2017

This year, Tax Day for individuals, sole proprietors and C corporations is Tuesday, April 17. You still have time to consider some moves in 2018 to potentially save federal (and possibly state) income taxes for 2017. Here are three last-minute planning ideas. Last-Minute Section 179 Option for Businesses Did your business make improvements to real property in 2017? If so, you might qualify for a special Section 179 deduction. The Sec. 179 deduction privilege often allows eligible businesses to deduct the entire cost of depreciable asset additions in the year they’re placed in service. For 2017, the limit is $510,000. However,…

Good News! More Families May Be Eligible for the Child Credit in 2018

The Tax Cuts and Jobs Act (TCJA), which was signed into law on December 22, 2017, made significant changes to the child credit. This credit is generally available to taxpayers with children under the age of 17, but the new law adds a new (smaller) credit for other dependents. Here are the details. Old Rules Under prior tax law, the child credit was $1,000 per “qualifying child.” But the credit was reduced for married couples filing jointly by $50 for every $1,000 (or part of $1,000) by which their adjusted gross income (AGI) exceeded $110,000. The phaseout thresholds were $75,000…

IRS Clarification: Home Equity Loan Interest May Still Be Deductible

The IRS recently announced that in many cases, taxpayers can continue to deduct interest paid on home equity loans. The tax agency issued the clarification because there were questions and concerns that such expenses were no longer deductible under the Tax Cuts and Jobs Act (TCJA), which was signed into law on December 22, 2017. Background Basics Taxpayers can deduct interest on mortgage debt that’s “acquisition debt” under the tax law. Acquisition debt means debt that is: 1. Secured by the taxpayer’s principal home and/or a second home, and 2. Incurred in acquiring, constructing, or substantially improving the home. This rule hasn’t been…

How the New Limit on SALT Deductions Affects Homeowners

The ability to deduct state and local taxes (SALT) has historically been a valuable tax break for taxpayers who itemize deductions on their federal income tax returns. Unfortunately, the Tax Cuts and Jobs Act (TCJA) limits SALT deductions for 2018 through 2025. Here’s important information that homeowners should know about the new limitation. Thinking about Selling Your Home? There’s good news if you’re planning to sell a personal residence: The Tax Cuts and Jobs Act retains the home sale gain exclusion. If you meet certain conditions, this valuable tax break allows you to exclude from federal income tax up to $250,000…

New Law Eases the Individual Alternative Minimum Tax

  Why the AMT Hits Upper-Middle-Income Taxpayers Under prior law, many high-income taxpayers weren’t affected by the AMT. That’s because, after numerous legislative changes, many of their tax breaks were already cut back or eliminated under the regular income tax rules. So, there was no need to address the AMT. For instance, the passive activity loss rules restrict the tax benefits that can be reaped from “shelter” investments like rental real estate and limited partnerships. If your income exceeds certain levels, you run into phaseout rules that chip away or eliminate other tax breaks. As a result, higher-income taxpayers had…

AMT Calculations: It’s Showtime

The alternative minimum tax (AMT) was enacted back in 1969 to ensure that high-income individuals don’t take advantage of multiple tax breaks and avoid paying federal tax. However, in recent years, the AMT has been imposed on many middle-income taxpayers. Unfortunately, the Tax Cuts and Jobs Act (TCJA) retains the individual AMT. But AMT exemptions and phaseout thresholds have been increased for 2018 through 2025. How it works: The AMT calculation runs side-by-side with your regular income tax calculation. The starting point for the AMT is your taxable income calculated under the regular tax rules. Next, you add in “tax preference…

Tax Reform: Topics of Special Interest for Individuals

As you’ve heard by now, the Tax Cuts and Jobs Act (TCJA) includes a number of changes that will affect individual taxpayers in 2018 and beyond. Significant attention has been given to the reduced tax rates for most individuals and the new limit on deducting state and local taxes. But there is more to the story. Here’s a summary of some of the lesser-known provisions in the new law. Repeal of the ACA Penalty for Individuals The Affordable Care Act (ACA) requires individuals to pay a penalty if they aren’t covered by a health plan that provides at least minimum essential…

How Might the New Tax Reform Law Affect You?

President Trump and Republican members of Congress say the Tax Cuts and Jobs Act (TCJA) will bring $3.2 trillion in tax cuts. Now that the bill has passed, everyone wants to know how much they’ll save. Unfortunately, the tax bill won’t be good news for everyone. Here’s a comparison of how tax results for a typical family of four might be affected by the tax law changes, which generally are effective for tax years beginning after December 31, 2017. Taxes Due in 2017 Meet the Smiths. They’re a family with two married parents and 18-year-old twins. Their adjusted gross income (AGI) for 2017…