Will the new tax law affect my taxes for 2017 that will be filed soon?
No, your tax rates and itemized deductions remain unchanged for this year. However, you should see changes in your tax withholdings by february when the new tables are released.
Will the new tax law save me money???
At least 90% of our clients will save under the new tax law. We will be happy to estimate your savings when we prepare your 2017 tax return. Or, you can check out this calculator to see an estimate of your tax savings: http://tpc-tax-calculator.urban.org/
Will I be in a different tax bracket for 2018?
That depends on your income and filing status. Generally, if you were in the lowest bracket of 10%, you will remain there. If you were in the 15% bracket, your new bracket is 12%. If you were in the 25% bracket, your new bracket is 22% but you may reach the 24% bracket sooner. If you were in the 28% bracket, rejoice- most of that 28% bracket is now at 24%. If you were in the 33% bracket, don’t get too excited- most of your 33% bracket is actually now in the 35% bracket. This bracket starts at taxable income of $195,451 (married at $237,951) in 2017 and changes to 35% bracket in 2018 at $200,001 (married at $400,001).
Will I still be able to itemize deductions?
For 2017 tax year, that doesn’t change. For 2018, the standard deduction is practically doubled so it may not benefit you to itemize. This additional deduction may be offset by the elimination of personal exemptions. We will happily advise you when we prepare your tax return as to how this change will affect you.
Will I be able to deduct my mortgage interest?
If your itemized deductions are higher than your standard deduction and the mortgage is not over $750,000, you will still be able to deduct the interest.
Will the increased child tax credit be enough to offset the loss of the dependency deductions?
For anyone who was in the 25% bracket or lower, the credit is actually more beneficial. For those in higher brackets, the calculations are much more complicated.
Will I still be able to deduct expenses for my business?
Yes! There is much confusion over this issue because some of the itemized deductions for business related expenses were repealed and there is a cap on state and local taxes including property taxes. However, this does not mean that business owners will lose deductions. In fact, small business owners will get a new deduction for profits that “pass through” to them. This applies to schedule c self employed owners, partners in small business partnerships, and owners of s corporations that do not provide professional services (doctors, lawyers, etc.).
Will I still get a reduced tax rate on capital gains?
Yes, long term capital gains and qualified dividends will still be taxed at the same rates.
What about moving expenses, student loan interest, and teacher’s deductions?
Only moving expenses were repealed. The education related deductions remain available.