It’s Time To Pay Taxes ?? And, Boy, Are People Steamed About The Trump ??tax Cut’ Bill
By: Michelle Singletary - April 12, 2019
The major overhaul of the tax code wasn’t popular when it passed. And based on the postings of many people on social media, it’s still not well liked.
A Gallup poll conducted in September found just 39 percent of Americans approved of the Tax Cuts and Jobs Act.
With so many changes people have a lot of questions about their tax situation. To help with the confusion, members of the American Institute of Certified Public Accountants answered some common tax questions they’re getting from clients.
Q: Are the property taxes I pay for my rental property subject to the new $10,000 state and local tax (SALT) cap?
A: “Taxpayers can deduct property taxes for rental properties in addition to the $10,000 itemized deduction limit for state and local taxes,” says Robert Westley, a CPA and financial planner based in New York. “Also, if you lease part of your home to a full-time tenant or rent rooms part-time, you can deduct property taxes allocable to these rental uses without being subject to the SALT cap. However, these deductions would be subject to certain tax rules that govern rental real estate activities, including the guidelines about when activity rises to the level of a ‘trade or business.’”
Q: Since I no longer itemize my deductions, can I still get a tax benefit for my charitable contributions?
A: “An IRA owner who has attained age 70½ may direct the distribution of up to $100,000 per year from the IRA to one or more qualified charitable organizations,” Westley says. "This distribution counts toward satisfying your required minimum distribution (RMD) and will not be taxable to you. This is a smart way to gain an effective deduction for charitable gifts without the need to have itemized deductions over the newly increased standard deduction.”
Q: Will I continue to pay the alternative minimum tax?
A: “The majority of taxpayers will likely not have to pay the alternative minimum tax with their 2018 tax returns,” Westley says. “The new law raises the exemption on the alternative minimum tax from $86,200 to $109,400 for married joint filers and increases the phase-out threshold to $1 million. Given the increased exemption and new limitations on deductions that are preference items, or add backs for AMT, few taxpayers will find themselves paying the AMT.”
Q: Is it true that alimony is no longer deductible?
A: “For most people going through a divorce, alimony has been both an incentive to the payer and a useful settlement tool to avoid trial,” says Dave Stolz, a CPA based in Tacoma, Wash. “Soon, that will change. The elimination of the spousal support tax deduction will affect a lot of people. Divorces already finalized will not be impacted, but for those completed in 2019 or later, any alimony paid will no longer be deductible by the person paying, nor will it be taxable as income to the person receiving the money. Meaning, the spouse paying alimony will not only lose the deduction, they will now have to also pay the federal taxes on the money they are paying.”
Q: What receipts/records do I need to keep now that I’m not sure if I’ll be itemizing or taking the standard deduction under the new tax law?
A: “It is always important to keep a record of medical expenditures, charitable contributions, property and other tax payments,” says Brooke Salvini, a CPA based in California. “Even though the standard deduction has increased to $12,000 for individuals and $24,000 for married couples, when adding up expenditures at the end of the year you may discover that you’ll itemize when you thought you would take the standard deduction. If you keep ongoing records during the year for these expenditures even better so that you can make adjustments to optimize itemizing one year and taking the standard deduction the following year.”
Article Source: Thewashingtonpost
** Disclaimer Required by IRS Circular 230** Unless otherwise expressly approved in advance by the undersigned, any discussion of federal tax matters herein is not intended and cannot be used 1) to avoid penalties under the Federal tax laws, or 2) to promote, market or recommend to another party any transaction or tax-related matter addressed.