1. Federal Tax Highlights
2018 New Tax Law Update
Federal Tax Highlights
Presented By: Leonard Steinberg, EA, CMC
Steinberg Enterprises, LLC

2. New Tax Law Largest tax law changes since 1986.
Over 450 forms and publications will have to be changed.
Estimated that Schedule A (Itemized Deductions) filers will be reduced by 92 percent.
New Form for Seniors – SR Form 1040.
New law ends in 2025 unless Congress votes to make permanent or revises statutes.
Forthcoming – Technical Corrections Act.

3. New Tax Law Seven Ordinary Rates: 10%; 12%; 22%; 24%; 32%; 35%; 37%
Single; Married Filing Joint; Head of Household
Standard Deduction:
$12,000 – Single; Married Filing Separately
$24,000 – Married Filing Joint
$18,000 – Head of Household

4. New Tax Law Long Term Capital Gain Rate – NO Change 0%; 15%; 20%
Kiddie Tax – Net unearned income (Dividends, Interest and Capital Gains) will be taxed at trust and estate tax rates. Adjusted for inflation.
Personal Exemptions - Removed

5. New Tax Law
Section 121:
2 out of 5 rule changes to 5 out of 8 recommended – final bill not mentioned
Medical Expenses:
7.5% for 2017 and 2018 – 10% afterward
Mortgage Interest:
Acquisition Debt only up to $750,000
Equity Debt on HELOCs – NOT Deductible
Deduction can be used for second homes

6. New Tax Law Taxes – New $10,000 threshold
State and Local Income Tax
Sales Tax
Property Taxes
Foreign Real Property Taxes
Does NOT affect Schedule C Filers who use home office deduction – Form 8829
Does NOT affect rental property
New Jersey changed to $15,000 for real estate taxes

7. New Tax Law Alimony – Change to law after December 31, 2018
No deduction allowed
Not considered income
1031 – Like Kind Exchanges
No personal property
Homes, Art Works, etc.
Commercial Property Only

8. New Tax Law Child Tax Credit:
Increased to $2,000 for qualifying child under 17
Refundable credit-$1,400 for inflation after 2018
Phaseout threshold increased to $400,000 (MFJ)
New $500 credit for dependents who don’t qualify for the credit
Credit is nonrefundable- same phaseout as CTC
Available for older children, parents, and other dependent, the new credit is also available for children under 17 who do not qualify for the CTC because they have no Social Security Number.

9. New Tax Law
Moving Expenses – Non Deductible except for active military
Charitable contributions – cash limitation raised to 60% of AGI
Casualty and Theft Losses – federally declared disaster areas only
All Miscellaneous 2% deductions are eliminated including non-reimbursed employee expenses, tax prep fees, investment fees

10. New Tax Law Gambling – only up to gambling winnings
Section 529 plans now include elementary and secondary education to $10,000 per person.
Permanent increase in Section 179 expensing to $1 million (from $500,000) and phase out threshold is now $2.5 million

11. New Tax Law
AMT – for 2018 through 2025 is $109,400 (MFJ) for incomes up to $1 million and 25% of excess for incomes over $1 million.
Obamacare mandate is repealed –
Reconversion from Roth to Traditional IRA is prohibited.
Discharge of student loans (including private loans) are excluded from income where the discharge is on account of death or total and disability.

12. New Tax Law
Estates and Trusts – Exemption doubled to $11.2 million. Reverts in 2026for 2018 through 2025 is $70,300 for incomes up to $1 million and 25% of excess for incomes over $1 million.
Deduction for local lobbying costs – eliminated
Business entertainment expenses –at 50% repealed. New Jersey remains the same.
Section 199A – Qualified Business Income – more guidance from IRS is required. Income threshold is $415,000 (MFJ).

13. New Tax Law
Passports:
Under the FAST (Fixing America’s Surface Transportation) Act, signed into law in December 2015, the IRS is required to notify the State Department that the taxpayer owes $51,000 or more in taxes, interest and penalties.
The State Department can deny renewal or revoke your passport.

14. Correspondence Receiving IRS and/or State Correspondence Don’t Panic
Read the notice carefully!!
Contact your tax advisor immediately
Respond to all correspondence quickly
Do NOT represent yourself
Penalties may be abated; Interest is statutory