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Recent tax-saving changes

There is good news for many taxpayers in the coming year.  Tax breaks that expired or were going to expire are being extended through 2020.  Some of these expired at the end of 2017 and 2018, and some would have expired on Dec 31 of this year.

The breaks that expired after 2017 are being retroactively revived.  Consequently, in order to take advantage of the retroactive changes, amended returns will need to be filed.  Many people are concerned that filing an amended return will result in an audit.  This simply isn’t true.  I have filed amended returns every year for the past 30 years and have never had one audited.

Filing an amended return can be challenging for many taxpayers.  You may want to consider contacting a tax pro and having them check to see whether filing an amended return will be beneficial.

Some of the tax break changes that will have an impact on the most people include the mortgage insurance premium write-off and the deduction for college tuition.

The threshold for deducting medical expenditures on Schedule A has been lowered to 7.5% AGI.  The threshold had been increased to 10% for several years.

The penalty for not having health insurance is not enforceable.  If a taxpayer’s income taxes have been paid, the IRS has no right to file a tax lien on unpaid penalties for not having health insurance.  If the IRS has filed a tax lien due to unpaid penalties for not having health insurance, you may want to contact a tax pro who is licensed to represent you before the IRS.  A licensed representative can have the lien removed.

Four states are continuing to argue that the $10,000 limit on state and local taxes on the Schedule A is unconstitutional.  The states sued the U.S.  government, claiming that the cap interferes with the states’ rights to make their own tax and spending choices.  The four states have appealed the ruling to the U.S.  Court of Appeals for the 2nd Circuit.

Excise tax on wine, beer, and spirits have been reduced.

There have also been changes that will lower taxes for businesses which include:

 

  • The work opportunity tax credit for employers who hire economically challenged workers.
  • The credit for employers who provide paid family and medical leave to their employees.
  • The new-markets tax credit for investing in local development groups that lend money to businesses in low-income areas.

David Zubler is a tax accountant in East Tennessee, the author of four books, and a philanthropist.  All of his proceeds from the books go to a charitable foundation he created for underprivileged children.  He is also the founder of Your Tax Care which provides tax education. David can be reached for questions and consultation at yourtaxcare.com.