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Washington CPA Chris Falco Educates Taxpayers About Tax Cuts and Jobs Act

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Washington CPA Chris Falco Educates Taxpayers About Tax Cuts and Jobs Act

CPA Chris Falco, of the Washington accounting firm Falco Sult, lists the top three tips about changes to itemized deductions following the new Tax Cuts and Jobs Act.

PR Newswire

REDMOND, Wash., July 24, 2018 /PRNewswire-PRWeb/ -- Due to the recent passing of the Tax Cuts and Jobs Act (TCJA), there are several items that will affect an individual's deductions on their return. "Besides the substantial increases to the standard deductions, from $6,350 and $12,700 to $12,000 and $24,000 for single and married filing jointly taxpayers, respectively, many itemized deductions have been altered or repealed for the years 2018-2025," said CPA Chris Falco, a founding partner of the accounting firm Falco Sult.

To further educate taxpayers about TCJA, Falco lists the following three changes concerning itemized deductions:

No. 1: Home mortgage interest deduction. One change to the itemized deductions is the limitation of the mortgage interest deduction. In 2017, the deduction for interest paid was limited to acquisition debt of $1,000,000 for all mortgage balances combined ($500,000 if married filing separately). "Per the act, the limit has been reduced to $750,000 ($375,000 if MFS) for all mortgages beginning after December 15, 2017," noted Falco. "However, the $1,000,000 limitation will still apply to the mortgages that were placed in service before this date (grandfathered debt)."

When determining the amount of deductible interest, any mortgage balances considered before December 15, 2017, will decrease the $750,000 limitation. For example, if a taxpayer has a $500,000 mortgage beginning before 2017, any mortgages succeeding December 15, 2017, will be limited to $250,000 ($750,000 - $500,000).

No. 2: Deduction for taxes paid. The deduction for taxes paid has been limited to $10,000 starting for tax years after December 31, 2017. This includes the total of all property, personal, and sales or income taxes paid. Foreign real property taxes will no longer be deductible for these tax years. Prepayments of property taxes will be deductible in the year paid if the prepaid taxes have been assessed for that specific year.

"For example, if the taxpayer received their 2018 property tax assessment from the county showing the first installment due in 2018 and the second installment due in 2019, the entire amount paid, subject to limitations, would be deductible on the 2018 tax return if paid by December 31, 2018," stated Falco.

No. 3: Miscellaneous itemized deductions. Another notable change to itemized deductions is the repeal of all the 2% miscellaneous itemized deductions. These include investment fees, professional fees paid, union dues, safe deposit box rentals and hobby expenses.

"This category also includes unreimbursed business expenses," concluded Falco. "Taxpayers will no longer be able to claim expenses such as continuing education, meals during business travel, or dues and subscriptions relating to their job. This subsection also contained the home office deduction for those who are not self-employed. Therefore, if the taxpayer has been working in a home office on behalf of their employer, expenses related to this will be non-deductible on their personal return going forward."

About Falco Sult
Falco Sult looks at a business' needs from a broad perspective by knowing where the company is in the business life cycle at all times and designing a plan accordingly. Falco Sult is a West Coast accounting firm serving clients nationwide. For more information, please call (425) 883-3111, or visit http://www.falcosult.com. The office is located at 16150 NE 85th Street, Suite 203, Redmond, WA 98052.

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