itemized deduction

The $10,000 SALT Limit and the Rental Real Estate

The $10,000 SALT Limit and the Rental Real Estate

                Under the recently enacted Tax Cuts and Jobs Act, State And Local Tax (SALT) deductions are limited to $10,000.  How does this affect the individual taxpayer?

QUESTION:  Are SALT payments made on my rental real estate subject to the $10,000 cap?

ANSWER:  Generally, under the old law, all SALT payments were deductible.  However, the new law caps deductible SALT at an aggregate of $10,000 for individual taxpayers.

OF SALT, TAXES & MORTGAGES…

OF SALT, TAXES AND MORTGAGES…

Do you pay State and Local Taxes (SALT)? If you live in any of New York, California, New Jersey, Connecticut, or any other of the so-called high-tax states, you likely pay more than the national average in SALT.  Prior to 2018, you were allowed to itemize all of your SALT payments on your federal tax returns.  However, the recently passed law, the Tax Cuts and Jobs Act, curbs the deductibility and otherwise affects you disproportionately, compared with the rest of the country.   The changes to the deduction of State and Local Taxes (SALT) on federal tax returns are generally as follows

AN ANALYSIS OF THE TAX CUTS AND JOBS ACT

January 2018

 

AN ANALYSIS OF THE TAX CUTS AND JOBS ACT

On December 22, 2017, after much, well-publicized legislative skirmishes, President Donald Trump signed into law H.R. 1, otherwise known as the “Tax Cuts and Jobs Act.”   Provisions affecting individuals are generally effective beginning December 31, 2017 and expire on December 31, 2025.  Most business-related provisions are permanent and are effective beginning December 31, 2017.

This new law is, by all accounts, the most significant revisions to the U.S. tax code since 1986, affecting almost all individual and business taxpayers.   Our firm’s general assessment of the new law will therefore be a two-part series: this first part covers changes to individual taxpayers, and the second part will cover changes to business taxpayers.

Answers to FAQs for Individuals of the Same Sex Who Are Married Under State Law

Here are some answers to frequently asked questions relating to the tax consequences for individuals participating in a same-sex marriage.

*When are individuals of the same sex lawfully married for federal tax purposes?

For federal tax purposes, state or foreign law determines whether individuals are married.

*Can same-sex spouses file federal tax returns using a married filing jointly or married filing separately status? Yes.

  • For tax year 2013 and going forward, same-sex spouses generally must file using a married filing separately or jointly filing status.

A Discussion Of New York State Income Tax Deductions

Income tax deductions are expenses that may be deducted from pre-tax gross income. Of course, deductions reduce New York income tax and maximize a refund. One of the experienced tax professionals at the Thorgood Law Firm can assist any New Yorker in determining the deductions for which they qualify under New York law.

New York has a standard state income tax deduction. For 2015, they are as follows:

Filing Status Amount  of Standard Deduction
Single (and can be claimed as a dependent on another taxpayer’s federal return) $3,100

Taxes And Medical Expenses

Taxpayers that itemize​ personal deductions instead of claiming the standard deduction may deduct qualifying medical expenses to the extent that such expenses exceed 10 percent of adjusted gross income (“AGI”). Taxpayers that are 65 years or older, or turned 65 during the tax year, may deduct unreimbursed medical care expenses that exceed 7.5% of AGI. This threshold amount remains at 7.5% of adjusted gross income for these taxpayers until Dec. 31, 2016. I.R.C. §213(f).

Unsure if you should go with standard or itemize deductions?

Unsure of whether you should use the standard deduction amount, or take the time to itemize deductions? The answer is fairly straightforward; you should itemize deductions if your total deductions are more than the standard deduction amount. Also, you should itemize if you don’t qualify for the standard deduction. Taxpayers should initially calculate itemized deductions and then compare that amount to their standard deduction to determine which provides the greater benefit. A taxpayer may be subject to a limit on some itemized deductions if he or she exceeds the adjusted gross income limits.

What You Need to Know About Deducting State and Local Taxes

Taxpayers that itemize deductions on Schedule A, (and file Form 1040) can deduct the cost of state income taxes on their federal tax return. The ability to deduct the full cost of these taxes  has its obvious advantages. Taxpayers may either claim such a deduction from state and local income taxes or state and local sales taxes, but not both. Basically, to be deductible, the tax must be imposed on a taxpayer and must have been paid during the particular tax year. Taxpayers that elect to deduct state and local general sales taxes, may use either their actual expenses or the optional sales tax tables.

Who Claims The Kids On Their Taxes, And Other Ways Divorce May Affect Your Taxes

Divorcing couples often wonder who claims the children on their taxes, and in what other ways divorce will affect their taxes. Questions may include which filing status to use after the divorce, and how payments for spousal maintenance and child support to an ex-spouse are treated for tax purposes. Also, inquiries about what happens to assets like the family residence are obviously frequently common.

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