Certified public accountant Salvatore J. Armao, the managing partner of Strategic Tax and Consulting Services, has more than three decades of professional experience of serving various clients in New York in the fields of accounting, auditing, government reporting, and consultancy. Salvatore J. Armao also offers professional guidance through the complexities of the Tax Cuts and Jobs Act of 2018.
The Tax Cuts and Jobs Act of 2018, the newest tax legislation, took effect on January 1, 2018. The new tax law brought several changes in the tax computations for both businesses and individuals. Here are some of the changes embedded in the new law that will affect individual taxpayers.
1. There was a slight increase in personal deductions, and experts expect that more taxpayers will opt for standard deduction over itemized deduction because it is simpler to use.
2. The medical expense deduction threshold was decreased to 7.5% based on the adjusted gross income. This may be used for both the alternative minimum tax and the regular tax. In 2019, the medical expense deduction threshold will revert to 10%.
3. The state and local tax (SALT) cap is fixed at $10,000. The cap includes property tax and all state sales or income tax.
4. No casualty loss deduction except for federally declared disasters.
5. An increase in the deduction for charitable contributions from 50% to 60% of the adjusted gross income. However, the deduction is not allowed if the contribution has secured seating rights during athletic events.
6. Increased child tax credits for double the amount are allowed, but only when Social Security numbers are provided for every qualified child.
