How the New Tax Regulations Affect Your Family

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How the New Tax Regulations Affect Your Family

This month is our Guest Blogger for March is Wendy Uken.  Wendy is a designated agent for the IRS and a QuickBooks Pro Advisor. She is also the co-founder of the Gonzales Tax Group in California.  You can visit her website at http://www.GonzalezTaxGroup.com.

 

Tax Cuts and Jobs Act, signed into law Dec 22 2017, affects everyone whether you’re just entering the workforce or whether you’re a seasoned pro.  If you’re just entering the work force, it will be easy for you to assimilate to the new way of doing things since you won’t have much prior experience to compare it to, but if you’ve been doing your family’s taxes for a few years, here are a few things you should pay special attention to:

Personal exemptions v Standard Deduction. In the past, a personal exemption would allow you to deduct a specific amount from your taxable income for each taxpayer and dependent claimed on your returns. With the new tax law; however, Personal exemptions have been eliminated; instead the standard deduction has increased. See the chart below:

Filing Status Standard Deduction Amount
Single $12,000
Married Filing Joint & Surviving Spouse $24,000
Married Filing Separate $24,000
Head of Household $18,000

Child Tax Credit. The child tax credit has doubled from $1,000 to $2,000 per qualifying child and this amount is now refundable up to $1,400.

For example: If you claim one qualifying child you get $2,000 in child tax credit. If you claim two qualifying children you get $4,000 in child tax credit. So on and so forth.

The phase out threshold for the child tax credit now starts at $400,000 for married taxpayers filing jointly or $200,000 for all other taxpayers.

Home Mortgage Interest deduction. If you’ve purchased a home or are thinking of purchasing a home (between Dec 15th 2017 and 2026), its important to note that you’ll be able to deduct interest on a mortgage of up to $750,000. If you purchased your home before Dec 15th, you’ll be grandfathered into the prior law which means that you’ll be able to deduct mortgage interest up to 1 million dollars.

Now, if you’re thinking of taking out a home equity loan or home equity line of credit please consider it carefully as the interest on either of these loans will no longer be deductible.

Of course, this information is simply a foundation for you to build on and it shouldn’t be construed as advice specific to your situation, and you should always consult a professional. As Enrolled Agents (IRS Designation) and QuickBooks ProAdvisors, my team and I can represent individuals and businesses in all 50 states and we would be happy to work with you directly. Simply visit Gonzalez Tax Group and complete the “Contact Page” or give us a call at 818-539-7014.

Author: Wendy Uken

Enrolled Agent (IRS Designation) & QuickBooks ProAdvisor

Co-Founder of Gonzalez Tax Group

GonzalezTaxGroup.com

 

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