INCOME TAX PLANNING

Not to be confused with tax form preparation, income tax planning is the analysis of your financial situation to determine how your after-tax wealth can be maximized.

IMPORTANT CHANGES FOR 2019

Here are some of the changes from the 2017 Tax Cut and Jobs Act as they relate to 2019 taxes:

  • While the personal and dependent exemptions have been repealed, the standard deduction is now $12,200 for individuals and $24,400 for married couples.

  • The child tax credit is now $2,000.

  • State and local taxes can still be itemized, but they are capped at $10,000.

  • The charitable deduction for a cash donation is now up to 60% of adjusted gross income.

  • The mortgage interest deduction is now capped at $750,000 of loan value instead of $1 million. Home equity loan interest (on a loan up to $100,000) is only deductible if it is used to buy, build, or improve the home.

  • The “miscellaneous itemized deductions” have been eliminated. This includes investment advisory fees, tax preparation fees, safe deposit box rentals, et al.

  • For small business owners, there is now potentially a deduction of 20% of the income earned by a business.

  • Alimony payments for newly divorced couples are now treated similarly to child support payments. They are not deductible to the payer, nor are they taxable to the recipient.