As the year comes to a close, taxes are heavy on people’s minds. But as we see the effects of the new tax law for 2018, there are some deductions you can no longer claim.
Tax filing seasons starts at the end of January. Tax day falls on April 15th. CPA J. Michael Banks tells Fox46 Charlotte less deductions could still leave you more money: “I think they are going to be shocked in a positive way.”
Under the Tax Cuts and Jobs Act, parents and big families can no longer file exemptions for dependents. “Everyone was getting $4050 on their tax returns. That’s gone,” said Banks. “But with the changes in the brackets and for some people standard deduction, the designed to really off set that. So I think that’s not going to hurt people too bad.”
There’s also no more tax breaks for movers: “If that’s something you were going to use in 2018 and your moving next year and your company doesn't pay for it, you are just going to miss out.”
Plus, taxpayers can no longer file a claim for business expenses that aren’t reimbursed by their employer. Banks believes that could hurt people who travel far for work. He suggests talking to the employer and working out some kind of deal. “If you don’t get reimbursed by your employer you may want to go and say, ‘we need to renegotiate this or I’m going to get killed in taxes.’”
Another big change in the new tax reform eliminates deductions for alimony. Banks says this has caused a rush to finalize divorces before the start of the new year. “If you are in the middle of a divorce and you are paying alimony you want to get it done by the end of the year. If you are receiving alimony then you want to wait until January 1, because it only applies to divorces that happen January 1, 2019 and beyond.” Experts also say this could be a reason for lawyers to lower alimony payments in the future.
“Everyone hates paying taxes, but it’s a guarantee of life, isn’t it?” said Fidel Montoya. “I’m concerned the new tax code benefits the wealthy and not necessarily the working people.”
Banks has many small business clients and says they may come out on top: “We have been doing tax projections since November, and have seen our smaller business owners have a higher income and pay lesser taxes.”
J. Michael Banks, CPA, CFP website: www.jmbtax.com