Kelly Bullis
How many times have you heard somebody tell you, “You need some tax deductions”?
You know? Mortgage. Charity. Extra sales tax on large purchases. Auto registrations. Property taxes. Medical expenses. Stockbroker fees. Investment interest expense. Gambling losses, etc.
Thanks to the tax law we currently enjoy and now that Trump is president again, a good chance this will now become permanent. (Until some politician comes along in the future to change it.)
Back in the Obama days, we had this thing called Miscellaneous Itemized Deductions (Employee Business Expenses, Tax Preparation Fees, Stockbroker Fees, Safe Deposit Box, etc.) All gone! More on one of your options later.
Second, a lot of Mortgage Interest expense is limited to the interest you pay on your original purchase and substantial improvement related loans completed after Dec. 15, 2017. Also, the mortgage loan is peaked at a total maximum loan of $750,000. No more Home Equity Interest if you used it to buy a car, or go on a vacation, etc. Warning! If, in the past, you refinanced your mortgage and pulled in more than $100,000 of non-acquisition/improvement related debt, that portion of your mortgage interest is NOT deductible any longer, even if it’s in a first mortgage.
Medical expense limitation is 7.5% of your Adjusted Gross Income, but that’s a tough nut to crack. You either must have low income, or a lot of medical expenses in order to get to deduct any medical-related itemized deductions.
The standard deduction is huge! $14,600 for singles and $29,200 for joint filers. There are still additional standard deductions of $1,950/$1,550 for those over 65, or blind.
Regarding still deducting Charity (when no longer itemizing), you can deduct your charity if you have an IRA and are at least 73 years old but don’t itemize any longer.
If you are paying stockbroker “managed account” fees, you may need to talk to your stockbroker and change to a “per transaction” fee arrangement. (While you’re at it, tell them to stop churning your account and start buying and holding stocks, which will also keep your fees down. And also, while you’re at it, ask them to stop buying foreign stocks.)
For those of you who might still need to itemize, you will continue to need to keep track of certain expenses, such as large purchases sales tax (Cars? Furniture? etc.), large medical expenses, auto registrations, charity, and gambling losses. Most of the rest should usually come to you in the form of statements from payers (mortgage interest, property taxes, etc.)
For most folks, the standard deductions you will be taking mean you no longer need to keep track of all those “deductions” and have proper documentation, etc. Just take the standard deduction and you get to have your “tax deductions” cake and eat it too!
Did you hear? Prov 24:27 says, “Prepare your work outside; get everything ready for yourself in the field, and after that build your house.”
Kelly Bullis is a Certified Public Accountant in Carson City. Contact him at 775-882-4459. On the web at BullisAndCo.com. Also on Facebook.