Dominguez Bookkeeping & Tax Svc, LLC

(520) 742-3856

Located in Northwest Tucson

Established May 1989

Tax Cut & Jobs Act (the name will change as it is supposed to include the word "Budget" in the title)

 

Most changes apply for the 2018 Tax Year with a few exceptions.

 

Standard Deduction increased - Single/$12,000, Head of Household/$18,000, MFJ/$24,000 - this will mean that more people will not be itemizing.

 

Personal Exemptions eliminated - this will mean that you will no longer be claiming your children however you may still qualify for the Child Tax Credit or Earned Income Credit.

 

Child Tax Credit increased - $2,000 per child with phaseouts starting at $200,000/Single and $400,000/MFJ - $1,400 of the overall credit may be refundable.

 

New Family Tax Credit - $500 for each non-child dependent (i.e. parents).

 

State & Local Income Taxes - limited to $10,000.

 

Mortgage Interest - Drops the overall mortgage limitation to $750k for new mortgage debt after 12/15/17.  Pre-exisiting mortgages are able to follow the old limit of $1 million.  No deduction for Home Equity interest after 12/31/17.

 

Casualty Losses - eliminated except for those in a federally declared disaster zone.

 

Tax Brackets & Tax Rates lowered for everyone

 

[Warning - new tax tables will be coming out in the next few months that will affect your withholding. We will be evaluating the effectiveness of the tables once they are released to be certain they are sufficient.]

 

Passthrough entities (S Corps, Partnership, Sole Proprietors, etc.) - will receive a 20% deduction but there are a number of limitions, exclusions and inclusions here so more information will be provided as it becomes available.

 

Misc Itemized Deductions - no deductions for employee business expenses, investment expenses, tax return preparation, etc..  Gambling expenses remain deductiible as before.

 

Overall limit on Itemized Deductions removed

 

Affordable Care Act Mandate - removed beginning in 2019.

 

Education -Tuition & Fees Deduction expired and was not renewed.  No new contributions to Education IRAs.  Up to $10k 529 College Savings funds can be used for elementary and secondary education.

 

Retirement - No changes for contributions.  Plan loans can be repaid (upon separation from employment) by due date of your tax return instead of 60 days.

 

100% First Year Expensing available for Capital Assets acquired after 9/27/17 - this may be another area needing interpretation as 100% expensing of business vehicle purchases may still be limited.

 

Business Interest Expense deduction limited to 30% of taxable income.

 

Net Operating Losses limited

 

Like Kind Exchanges limited to real property that is not held for sale (i.e. inventory).

 

Domestic Production Activities Deduction repealed

 

Business Entertainment Expenses no longer allowed including membership dues.

 

Business Meals provided for the Employer Convenience - limited to a 50% deduction.

 

Stock Options - new election to defer recognition of gain for up to 5  years.

 

Kiddie Tax Revised - Children's Investment Income will now be taxed at Estate Tax Rates rather than their parents' rate - which will be much higher.

 

Estate Tax Exclusion - doubled to just over $11 million.

 

Business Employer Credit for Paid Family & Medical Leave for a maximum of 12 weeks.

 

C Corporation - tax rate modified to a flat 21% (this was done to limit the impact of double taxation).

 

AMT - repealed for corporations.  Increased thresholds and exemptions for individuals.

 

Moving Expenses - eliminated except for armed forces.

 

Alimony - beginning in 2019, no deduction or inclusion of alimony payments by payor & payee for new divorces and modifications.

 

Combat Zone - expanded to include the Sinai Peninsula.

 

ABLE accounts - (for individuals with disabilities & their families) - increased contributions & 529 rollovers allowed.

 

Excise Tax Provisions - a dozen or so added/revised but one specifically to help the craft beer industry.

 

Authorizes Drilling in the Alaska National Wildlife Reserve - in the tax bill?

 

International Changes - there are many but the major ones are allowing "Repatriation" or the sending of money back to one's own country for a one time tax of 15.5% and . . .switching to a Territorial Tax System which taxes US businesses on only income earned in the US rather than worldwide as it is now.

 

 

 

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