With all of the buzz about the new Tax Reform many taxpayers are questioning how this will affect their 2018 tax return. These provisions kicked in on January 1, 2018, which means that they will impact your 2018 tax return.
The federal tax filing deadline for individuals has been extended to May 17, 2021. Quarterly estimated tax payments are still due on April 15, 2021. For additional questions and the latest information on the tax deadline change, visit our “IRS Announced Federal Tax Filing and Payment Deadline Extension” blog post.
For information on the third coronavirus relief package, please visit our “American Rescue Plan: What Does it Mean for You and a Third Stimulus Check” blog post.
By Chris Simone, Enrolled Agent, Intuit Manager
Rest assured, TurboTax has you covered and will be up to date with the latest tax laws. The bottom line is you’ll be able to file your tax return with complete confidence.
Here’s a recap of what you need to know about a few of the provisions that take affect beginning in tax year 2019.
This one reaches back for tax year 2017. For the 2017 and 2018 tax years, if you itemize your deductions, you could deduct qualifying medical expenses which exceed 7.5% of your adjusted gross income. In 2019 and 2020, separate tax extender bills were passed that keeps the 7.5% rate for 2019 and 2020 as well. Beginning January 1, 2021, all taxpayers may deduct only the amount of qualified medical expenses that exceeds 10% of their adjusted gross income.
Under the new bill the medical deduction stays in place with a lower floor of 7.5%, down from 10% in previous tax years. For example - if you make $50,000 you may now deduct any medical expenses over $3,750 if you itemize your deductions through 2020.
Personal Casualty Losses
This tax break is retroactive back to 2016 and was expanded to include losses in any federally declared disaster area, like the Mississippi River Delta Flood Disaster Areas. Under the tax reform, your principal place of residence must have been located in a federally declared disaster area between December 31, 2017, and December 31, 2025.
A personal casualty loss is typically claimed as an itemized deduction but with this new law a taxpayer may claim the loss if they claim the standard deduction with limitations.
Expensing certain property for your business in the first year has been increased, up to 100%, for any property acquired and placed in service after September 27, 2017, but before January 1, 2023.
The bill also eliminates the requirement that the original use of the qualified property start with the taxpayer- this means it could be a used item!
The bill also expands the definition of qualified property to include qualified film, television, and live theatrical productions released after September 27, 2017.
State and Local Taxes
For tax year 2019 (the taxes you file in 2020), you may be able to deduct sales tax, state and local income tax, and/or property taxes capped at $10,000 ($5,000 for married filing separate) if you itemize deductions.
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We are ready to help you file and our products will be up to date with the latest tax laws and will guide you through these situations.