Manuel DaRosa, CPA
Accounting and Tax firm with offices in Taunton and Mansfield, MA
NEWSLETTERS

The Tax Cuts and Jobs Act that Congress passed last December is likely to produce some winners and losers when taxpayers file their returns next tax season.

Here is a list of what is predicted to be the taxpayers who will be hit hardest on their taxes.

Among those who expected to be paying more this year in taxes are those homeowners who have high loan balances, homeowners with non-qualified home equity debt, itemizers whose combined state and local taxes amount to more than $10,000, and parents whose dependents are 17 years of age and older.

Here is a list of taxpayers who could suffer the most harm under the new tax law :

Homeowners

Taxpayers whose home mortgage loans are above $750,000 and loans were originated after Dec. 15, 2017. These taxpayers are subject to the new $750,000 mortgage loan limit.

Taxpayers with acquisition debt of more than $1 million from loans originated on or before Dec. 15, 2017. (Previously, interest from an additional $100,000 in acquisition debt was deductible.)

All taxpayers that have a HELOC (home equity line of credit) that wasn’t used for acquisition, building or improvements on their principal home – interest is no longer deductible.

Itemizers

Taxpayers who have combined state and local taxes over $10,000.

Taxpayers who pay foreign property taxes, which is no longer a deduction under the new tax law.

Employees who are no longer permitted to deduct unreimbursed expenses such as office-in-home, mileage, travel, meals and entertainment.

Self-Employed Taxpayers

Self-employed taxpayers whose income is above the threshold will be ineligible for the new Section 199A deduction if they belong in a “specified service trade or business” such as accounting.

Parents and Taxpayers with Dependents

Taxpayers with dependents who are 17 years of age and over will lose the dependent exemption and the Child Tax Credit.

Divorcing Taxpayers

Taxpayers who pay alimony and were divorced after Dec. 31, 2018. The deduction of alimony is no longer a valid deduction.

Taxpayers who receive alimony and will have a final divorce decree before Jan. 1, 2019 will need to claim the alimony as ordinary income.

For those taxpayers who are likely to be hit hardest by the Tax Cuts and Jobs Act, here are a few recommendations:

Certain factors, such as a home office (not as an employee, though), can help to maximize a home mortgage interest deduction.

Taxpayers with foreign taxes paid generally would benefit by using Form 1116 if they’re over the $10,000 limit.

There’s a new $500 credit for eligible taxpayers who support a dependent that doesn’t receive the Child Tax Credit.

Tax Alerts
Tax Briefing(s)

Tax-Related Portion of the Substance Use–Disorder Prevention that Promotes Opioid Recovery and Treatment (SUPPORT) for Patients and Communities Act, Enrolled, as Signed by the President on October 24, 2018, P.L. 115-271


Congressional Republicans are looking to move forward with certain legislative tax efforts during Congress’s lame-duck session. The House’s top tax writer, who will hand the reins to Democrats next year, has reportedly outlined several tax measures that will be a priority when lawmakers return to Washington, D.C., during the week of November 12. However, President Donald Trump’s recently touted 10-percent middle-income tax cut does not appear to be one of them.


The Senate Finance Committee’s (SFC) top ranking Democrat has introduced a bill to restore a retirement savings program known as myRA that was terminated by Treasury last year. The myRA program was created by former President Obama through an Executive Order.


A new, 10 percent middle-income tax cut is conditionally expected to be advanced in 2019, according to the House’s top tax writer. This timeline, although largely already expected on Capitol Hill, departs sharply from President Donald Trump’s original prediction that the measure would surface by November.


IRS Commissioner Charles Rettig gave his first speech since being confirmed as the 49th chief of the Service at the American Institute of CPAs (AICPA) November 13 National Tax Conference in Washington, D.C. "You’re going to see things [I do] and go, ‘I can’t believe he did that,’" Rettig said.


The American Institute of Certified Public Accountants (AICPA) and the American Bar Association (ABA) Section of Taxation are urging the IRS to make extensive changes to proposed "transition tax" rules.


Last year’s tax reform created a new Opportunity Zone program, which offers qualifying investors certain tax incentives aimed to spur investment in economically distressed areas. Treasury Secretary Steven Mnuchin has predicted that the Opportunity Zone program will create $100 billion in private capital that will be invested in designated opportunity zones.


The IRS is expected to soon release proposed regulations for tax reform’s new business interest limitation. "They are so broad that nearly every domestic taxpayer will be impacted," Daniel G. Strickland, an associate at Eversheds Sutherland, told Wolters Kluwer.


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