Question

In: Accounting

There have been significant changes to personal and non business deductions starting january 1,2018. these are:...

There have been significant changes to personal and non business deductions starting january 1,2018.

these are:

-mortgage interest deduction

-home equity interest

-state and local tax deductions

-casualty losses

-charitable contributions

-medical expenses

-alimony

-miscellaneous itemized deductions

What are the changes in tax law from tax year 2017 to 2018, and what these changes mean to the economy in general ?

please provide provide explanation for the items listed above.

Solutions

Expert Solution

Mortgage interest deduction 2018 2017
Interest payments are deductible on mortgage debt of up to 750000 1000000
Married couples filing separately can deduct interest on up to (each) 375000 500000
Home equity interest
Deduction for other home equity debt (HELOCs and second mortgages) Eliminated 100000
State and local tax deductions
Taxpayers who itemize can deduct their state individual income, sales and property taxes up to a limit of 10000 Unlimited
Either individual income taxes or sales taxes can be deducted
Casualty losses
Deduct losses not reimbursed or reimbursable by insurance or other means. You'll need to subtract $100 from each casualty loss of personal property. The total of your casualty and theft losses on personal property must be more than 10% of your adjusted gross income (AGI)
The itemized deduction for personal casualty and theft losses is suspended
Charitable contributions
The standard deduction for singles 12000 6350
The standard deduction for married couples 24000 12700
Medical Expenses
Medical costs are deductible only after they exceed 7.5 percent of your Adjusted Gross Income (AGI) in 2017 and 2018
Alimony
Deductions are eliminated
Considered as Income to the recepient
Miscellaneous itemized deductions
Deductions Subject to the 2% Limit of Adjusted Gross Income (AGI)

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