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Some People did not see decrease in their tax bill this year
For many people living in high-tax states like New Jersey, New York and Connecticut, there’s one overriding reason their tax bills have risen: Their state and local tax deduction, known as SALT, will be capped at $10,000. This includes state and local income taxes, as well as real estate taxes.
New Jersey & New York residents, for example, often have state and city taxes that total nearly 10 percent of their income, so if your state and local taxes already exceed the $10,000 limit, you lose the ability to deduct any of your property taxes.
New Jersey & New York residents with incomes in the $200,000 to $400,000 range are feeling the most significant pinch. Though their tax rates have decreased, that usually does not make up for the loss of their largest itemized deductions.
Popular deductions & credit changes
Dependent exemption: Under the previous law, families were able to claim a $4,050 exemption for each qualifying child, but that deduction has been eliminated. Instead, if you have children under the age of 17, you may qualify for the child tax credit, which was raised to $2,000 from $1,000 for each child. More people will qualify now that the credit begins to phase out at $400,000 in income for joint filers ($200,000 for individuals). The law also introduced a $500 credit for other dependents, which could include elderly parents or children over the age of 17.
Mortgage interest: If itemize, can deduct the interest paid on the first $750,000 in mortgage indebtedness on loans taken out after Dec. 15, 2017 (on first and second homes). Older loans are grandfathered: can still generally deduct interest on up to $1 million in mortgage debt on loans taken out before Dec. 16, 2017.
Interest on home equity loans or lines of credit are now only deductible if the debt is used to “buy, build or substantially improve” the home that secures the loan. Can no longer deduct the interest if you pay off credit card debt, for example.
Employees’ business expenses that weren’t reimbursed by their employers — like classes and seminars — are no longer deductible.
Moving expenses: Workers moving for a new job were once able to deduct related expenses. That has been wiped away, except for members of the military.
Alimony is no longer deductible
Divorces completed in 2019 and later, alimony payments will no longer be deductible, and recipients will not have to include them on their returns, added Mr. Mickey, who is also a member of the American Institute of Certified Public Accountants’ personal finance specialist committee.
Under the previous law, spouses paying alimony could deduct those payments on their returns, while the recipients had to include the income on theirs. That remains the case for divorce agreements finalized on or before Dec. 31, 2018 (unless the agreement changes after then).
Business owners can’t deduct entertainment anymore.
You can no longer deduct entertainment or amusement, generally defined as taking a client to, say, a basketball game. But you can still deduct 50 percent of what you spend on meals, as long as you are dining with clients, traveling for business or attending a business convention (or something along those lines).
Contact PNF Certified Public Accountants
For cost-effective, high-quality, corporate-level financial advice and CPA services, look to the experienced team at PNF Certified Public Accountants. We offer personalized financial services to businesses and healthcare providers in New York, New Jersey and the surrounding metro areas. We will take a systematic approach to evaluating your financial situation, offering deep insight and detailed reports to help you make smart business decisions. Through our services, you can rest assured that you will save money while making more money, as we are no normal CPA firm. Learn why for yourself by contacting us via the online form provided below or by calling us at
732-605-1529 or toll free at 888-785-5653.
Disclaimer: The news site hosting this press release is not associated with PNF CPA. It is merely publishing a press release announcement submitted by a company, without any stated or implied endorsement of the product or service. Please consult with a CPA or Tax attorney for all tax matters.
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