El Mensajero (English)

Posted: December 12, 2018

Experts see benefits to tax law changes

Despite some taxpayers’ concerns about changes under the Tax Cuts and Jobs Act of 2017, local tax experts contend that the revisions should benefit a majority of individuals.
 
“While some in the media say it will be very bad for many, all indications are that it will put more money in our pockets to spend and invest,” Al Burgos, president of Burgos Income Tax in Rochester, said of the federal legislation, which was signed into law by President Donald Trump in December 2017.
 
Burgos pointed to the TCJA’s changes in the standard deduction, which reduces one’s taxable income. Under the TCJA, the standard deduction for individuals jumps from $6,500 to $12,000, and for married taxpayers filing jointly, it increases from $13,000 to $24,000.
 
Peter Buttrill, a certified public accountant with Nacca & Capizzi in Greece, noted that his firm is fielding questions about changes in deductions for charitable contributions and medical expenses.
 
According to the Internal Revenue Service (www.irs.gov/pub/irs-pdf/p5307.pdf), under the TCJA, the limit on charitable contributions of cash has increased from 50 percent to 60 percent of an individual’s adjusted gross income. And certain unreimbursed medical expenses that exceed 7.5 percent of adjusted gross income can be deducted, compared to the previous threshold of 10 percent of AGI.
 
“On the personal side, people want to know which deductions are no longer available and how that will impact their taxes,” he said.
 
Tashanda Thomas is one such individual.
 
“I won’t know the full impact until my tax preparer does my taxes,” said Thomas, who lives in Rochester with her husband and son, who is currently in college. “My only question or concern is just that — what will the impact be? My worry is owing the IRS due to the itemized (deduction) restrictions.”
 
Individuals who itemize deductions on their federal tax returns, for example, are now limited in the amount of deductions allowed for state and local taxes (SALT). Under the TCJA (www.congress.gov/bill/115th-congress/house-bill/1), individual deductions for such taxes is now limited to $10,000 per year.
 
Taxpayers also can expect new restrictions on mortgage interest deductions. According to information from the IRS, if a mortgage was originated after Dec. 15, 2017, an individual can only deduct interest on a total of $750,000 in qualifying debt for a first and second home. In addition, interest deductions for home equity loans have been eliminated.
 
Another change for individuals will be the loss of the personal exemption that allows taxpayers to subtract more than $4,000 from their taxable income for each dependent they claim. Some experts say the TCJA’s increase in the child tax credit — which has doubled from $1,000 to $2,000 per child under age 17 — will offset this change.
 
Orlando Rivera, a real estate agent who works throughout Monroe County, said he highlights the TCJA’s enhanced child tax credit and the expanded standard deduction when he meets with couples in their searches for homes.
 
“With the high cost associated with child care, any dependent care credit is a welcome benefit,” he said.

 

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