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Debra Rodway's blog

Tax reform and the child tax credit

What changed?

- The new law increases the child tax credit from $1,000 to $2,000.

- Eligibility factors for the credit have not changed. As in past years, a taxpayer can claim the credit if all of these apply:
     • the child was younger than 17 at the end of the tax year
     • the taxpayer claims the child as a dependent
     • the child lives with the taxpayer for at least six months of the year

100% Depreciation Deduction For Businesses

One of the changes brought about by Tax Reform legislation passed in December 2017 allows businesses to write off most depreciable business assets in the year they place them in service.

The 100% depreciation deduction generally applies to depreciable business assets with a recovery period of 20 years or less and certain other property. Machinery, equipment, computers, appliances and furniture generally qualify.

NEW TAX LAW: Do You Usually Itemize Deductions? Check Your Withholding To Avoid Surprises

If you have been itemizing deductions on your 1040, you may be affected by changes from the Tax Cuts and Jobs Act. You should take a few minutes to use the IRS Withholding Calculator to make sure your employer is withholding the appropriate amount of tax from your paychecks for your financial situation.

New Tax Credit For Paid Employee Leave

A new provision of the Tax Cuts and Jobs Act (TCJA) creates a new tax credit for employers who pay wages for family and medical leave. The new credit, which takes effect in 2018, only lasts through 2019. However, there is a chance it could be extended by future legislation. Eligible employers can claim a credit equal to a percentage of wages paid to qualifying employees on leave under the Family and Medical Leave Act (FMLA).

The IRS has not yet fully described some of the provisions, but here are the highlights:

New 2018 Form W-4 And Employee Calculator

On Wednesday the IRS posted a NEW W-4 Form for 2018; the Employee's Withholding Allowance Certificate and Personal Allowances Worksheet . It is recommended that employees consider re-doing this form and worksheet each year as life situations may have changed and you may want to consider instructing your employer to change your withholding.  

The IRS also has a new Online Calculator.  If you are an employee, the Withholding Calculator helps you determine whether you need to give your employer a new Form W-4. You can use your results from the Calculator to help fill out the form and adjust your income tax withholding.  

The IRS encourages everyone to use the Withholding Calculator to perform a quick “paycheck checkup.”  This is even more important this year because of recent changes to the tax law for 2018.

Interest on Home Equity Loans May Still Be Deductible Under New Tax Law

 

The Tax Cuts and Jobs Act of 2017, enacted Dec. 22, suspends from 2018 until 2026 the deduction for interest paid on home equity loans and lines of credit, unless they are used to buy, build or substantially improve the taxpayer’s home that secures the loan.

Under the new law interest on a home equity loan used to build an addition to an existing home is typically deductible, while interest on the same loan used to pay personal living expenses, such as credit card debts, is not. As under prior law, the loan must be secured by the taxpayer’s main home or second home (known as a qualified residence), not exceed the cost of the home, and meet other requirements.

For anyone considering taking out a mortgage, the new law imposes a lower dollar limit on mortgages qualifying for the home mortgage interest deduction. Beginning in 2018, taxpayers may only deduct interest on $750,000 of qualified residence loans. The limit is $375,000 for a married taxpayer filing a separate return. These are down from the prior limits of $1 million, or $500,000 for a married taxpayer filing a separate return.  The limits apply to the combined amount of loans used to buy, build or substantially improve the taxpayer’s main home and second home.

The following examples illustrate these points.

Selecting And Working With A Tax Preparer

It's tax time again. Taxpayers should choose their tax return preparer wisely.  This is because taxpayers are responsible for all the information on their income tax return. That’s true no matter who prepares the return.

Here are several tips for taxpayers to remember when selecting a tax preparer:

Check the Preparer’s History. Ask the Better Business Bureau about the preparer. Check for disciplinary actions and the license status for credentialed preparers.

Ask about Service Fees. Avoid preparers who base fees on a percentage of the refund or who boast bigger refunds than their competition. When asking about a preparer’s services and fees, don’t give them tax documents, Social Security numbers or other information.

Charitable Contributions: What Can You Deduct On Your Tax Return?

During the holiday season many people make donations to benefit charitable organizations. It's great to help others, and your contributions make a difference in people's lives. There is another benefit . . . you may be able to claim a deduction for the donation on your federal tax return.

Here are five facts about charitable donations:

1. In order to qualify for a deduction, you must donate to a 'qualified' charity. Gifts to individuals, political organizations, or candidates are not deductible. Use Exempt Organizations Select Check to check the status of a charity to see if it qualifies.

Proposed Bill Would Eliminate Ohio's 'Marriage Penalty'

State Representatives John Becker and David Leland are sponsoring a bi-partisan bill to eliminate the 'marriage penalty' in Ohio.

Married Ohioans have to figure out every year what filing status they are going to use — married filing separately or married filing jointly. Often the best option for the couple on their federal return is not the same as it would be on their state return. Because Ohio forces couples to file with the same status on both state and federal returns, they could be hit with what some call a marriage penalty for filing jointly. Filing jointly on their federal return could net them a break on taxes, but here in Ohio it pushes them into a tax bracket that forces them to pay more than if they filed separate returns.

You May Be Able To Get Tax Benefits To Help Pay For Education

It's that time of year again . . . back to school!  This is a good time to learn about tax benefits that can help offset qualifying education costs. Here is information about two tax credits available to those who pay higher education costs for themselves, a spouse or a dependent.

The American Opportunity Tax Credit (AOTC)

The AOTC is worth a maximum benefit up to $2,500 per eligible student. It is only available for the first four years at an eligible educational or vocational school for students pursuing a degree or other recognized education credential. Eligible taxpayers can get up to $1,000 of the credit as a refund, even if they do not owe any tax.

Tax Tips, Resources & News

Our blog, news feeds, forms, and links to helpful resources are provided to help you find the answers you seek any time of the day or night.

Please call us at 330-779-0781 for assistance.  We're here to guide you through your business and personal accounting, tax questions and obligations.

Contact

DJL Accounting & Consulting Group, Inc.
1570 South Canfield-Niles Road #C102
Youngstown, Ohio 44515 

Phone:  330 779 0781

               

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