Naturally, Tax Time Planning

Here’s how the new Tax and Jobs Act changes our end-of-the-year calculations



Snow is falling, shops are bustling, and everyone is decorating for the holidays. This can only mean one thing: It’s time to prepare our year-end tax strategies.

The Tax and Jobs Act is completely changing the way we plan for the upcoming tax season. Learn how to maximize deductions and minimize tax liabilities by reviewing the top items that we can control before the end of year.

Itemized vs. Standard Deductions

The Tax and Jobs Act doubled the standard deduction for joint filers to $24,000. This may limit your itemized deductions, so it’s important to know where you stand. Here are the key points to note:

  • State and local taxes are capped at $10,000.
  • You can deduct the interest on the first $750,000 of a new home mortgage.
  • The line of credit interest has been eliminated.
  • The 2% “miscellaneous itemized deductions” provision has been eliminated.
  • For charitable contributions, see below.
Capital Gains and Losses

Short-term gains and losses are taxed as ordinary income with respect to the net of losses or offsets of carry-forwards. However, the treatment of longterm gains and losses is now based on income thresholds rather than income tax brackets. The rates are still 0%, 15% and 20%.

Qualified Tuition Plans

With the Tax Cuts and Jobs Act, you can use your 529s to pay for up to $10,000 in private and religious elementary and secondary school costs.

Charitable Contributions

Deductions for charitable contributions have increased from 50% to 60% of adjusted gross income. However, know your personal situation. Consider bunching and alternating years if you are unable to itemize.

Maximizing Retirement Deferrals

Maximize the retirement options that you have available. The maximum contribution for 2018 for 401K/403b is $18,500, with a catch-up contribution of $6,000 for those over age 50. The maximum contribution for 2018 for a traditional or Roth IRA is $5,500, with a catch-up of $1,000 for those over age 50. Maximizing Qualified Business Income Deductions Under section 199A, owners of sole proprietorships, partnerships, LLCs and S corporations may be able to deduct up to 20% of their business income. There are many rules and regulations, and owners are subject to these limitations.

Of course, this brings us to the reason we are reviewing our records. The fourth and final estimated tax payments are due January 15, 2019, covering the period September 1 to December 31, 2018. Happy holidays!

The above information is for informational purposes only. Consult your personal tax or business advisor to learn what the Tax and Jobs Act means to you.

Rick Kouns owns and operates 1099 Account LLC, which provides accounting and tax services for independent contractors and the self-employed. His office is located at 240 Van Cortlandt Park Ave., Yonkers, NY. For more information, contact him at 855.529.1099 or rick@1099accountant.com, or visit 1099Accountant.com.

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