“It’s tax time”. These are the the three words I always start to saying every year as February approaches. After January 31st, The urgency to spend time mired in income, expenses and deduction numbers becomes greater and greater. Like most, I always start the year having good intentions to keep up with my books and finances. However, that quickly fades as family and work gets in the way of bookkeeping. This year will be different.
As someone who likes to understand opportunity, especially when it comes to taxes, knowing a little about what has changed for 2018 will help me understand how things will look once the taxes get filed.
New tax laws have come into focus
2017 was definitely a year of changes to our tax code. The tax overhaul put all of us on notice. Especially those that embark on completing their taxes on their own. I, for one, am one of the 83 million in the United States that turns to a trusted accountant to complete my taxes. I want to take advantage of every single opportunity available under the new tax code. And certainly don’t want to be one of the almost 20% that make mistakes, which can lead to over or underpaying your taxes.
Here are Standard Deductions You Should Be Aware Of
- Single – Increases by $5,650 to $12,000 for 2018
- Married – Increase by $11,300 to $24,000 for 2018
- Head of Household – Increases by $8,650 to $18,000 for 2018
- Child Tax Credit – Increases by $1,000 to $2,000 for 2018
Understanding these deductions will definitely help .
Those Who Itemize May Be Disheartened by These Change
Generating and offsetting tax dollars lost to the increase in standard deductions are looking to make it up in the new deduction rules with the state and mortgage interest deduction. Here’s how it breaks down:
- Taxpayers who itemize their deductions can only deduct up to $10,000 on a combination of the following:
- State Income Tax
- Sales Tax
- Local Tax
- Property Tax – This can be at a significant cost to those in high taxed states of New York and California
- Own a property in which you pay a mortgage? The deduction for mortgage Interest has been adjusted downward from $1,000,000 to $750,000. This will have a significant effect on those who have higher loans on their property(ies).
There are a number of deductions that were standard in the past that will disappear
Dependent and personal exemptions
- Interest on Home Equity Loans (under certain circumstances
- MIP – Mortgage Insurance Premiums for FHA and loans less than 20% down
- Exclusion for forgiven debt
- Miscellaneous itemized deductions
- Moving Expense
- Tax preparation and investment fees
No matter where you stand, taking advantage of every deduction will present an opportunity for you to put or keep more money in your pocket. I have a great one-sheet that outlines key factors that will help you understand the new tax laws. Please feel free to e-mail me or call (562) 618-9770 and I will gladly put it in the mail to you.
Dave Harbison has been a Real Estate Practitioner in Long Beach and surrounding communities. He regularly contributes to blogs, news outlets and other media. He continuously provides insight to home owners, buyers and sellers in the Long Beach and surrounding communities. Dave Harbison Long Beach REALTOR® email@example.com
DRE:#01475840 — Long Beach Realtor® / Real Estate Agent Long Beach Homes for Sale, Condos and Investment Properties