As Taxpayers Begin to Feel Impact of Tax Overhaul, TaxAudit Reveals List of Americans Most Likely to Lose Out on Tax Breaks
New report identifies taxpayers with the potential to be hit hardest by the new tax rules; offers helpful tips to those worried they will owe significantly more to the IRS this year
FOLSOM, Calif., Nov. 14, 2018 /PRNewswire/ -- TaxAudit, the largest audit defense service in the country, today revealed a list of taxpayers likely to be hit hardest by the Tax Cuts & Jobs Act. With the new tax law effective on January 1, 2018, there are a number of changes which will benefit some taxpayers while significantly hurting others.
Among the taxpayers who could pay more this year are certain homeowners with high loan balances, homeowners with nonqualified home equity debt, itemizers whose combined state and local taxes are over $10,000, and parents whose dependents are 17 and older.
TaxAudit's list of some of the taxpayers most harmed by the new tax law include:
Homeowners
- Taxpayers whose home mortgage loans are above $750,000 and loans were originated after 12/15/17. These taxpayers are subject to the new $750,000 mortgage loan limit.
- Taxpayers with acquisition debt of more than $1 million from loans originated on or before 12/15/17. (Previously, interest from an additional $100,000 in acquisition debt was deductible.)
- All taxpayers that have a HELOC (home equity line of credit) that was NOT used for acquisition, building, or improvements on their principal home – interest is no longer deductible.
Itemizers
- Taxpayers who have combined state and local taxes over $10,000 due to the new $10,000 cap.
- Taxpayers who pay foreign property taxes, as this is no longer a deduction under the new rules.
- Employees who are no longer allowed to deduct their unreimbursed expenses (e.g. office-in-home, mileage, travel, meals, and entertainment).
Self-Employed Taxpayers
- Self-employed taxpayers whose income is above the threshold will be ineligible for the new Section 199A deduction if they are in a "Specified Service Trade or Business (SSTB)."
Parents and Taxpayers with Dependents
- Taxpayers with dependents 17 and over will lose the dependent exemption and the Child Tax Credit.
Soon to be Divorced Taxpayers
- Taxpayers who must pay alimony and were divorced after 12/31/18. The deduction of alimony is no longer a valid deduction.
- Taxpayers who receive alimony and will have a final divorce decree before 1/1/19 will have to claim the alimony as ordinary income.
"There still remains an incredible amount of confusion and worry around the new tax law, and many Americans are concerned they will owe the IRS a lot more this year," said Dave Du Val, Chief Customer Advocacy Officer at TaxAudit. "We're hoping to put taxpayers at ease with a few easy tips and advice to minimize their tax bill, so no one has to pay the IRS more than they have to."
Tips for taxpayers hit hardest by the new tax law include:
- Certain factors, such as a home office (not as an employee, however), can help to maximize your home mortgage interest deduction.
- Taxpayers with foreign taxes paid generally would benefit by using Form 1116 if they are over the $10,000 limit.
- There is a new $500 credit for eligible taxpayers who support a dependent who does not receive the Child Tax Credit.
Please note: This is only a short list of some of the tax changes. Please spend time learning about the rules at IRS.gov so you are knowledgeable about qualifying deductions, exemptions, and more that may help to reduce your tax burden.
About TaxAudit
As the exclusive provider of TurboTax® audit defense, TaxAudit is the largest and fastest-growing audit defense service in the country for taxpaying individuals and small businesses. With over 10 million members, TaxAudit handles more audits than any other firm.
TaxAudit offers audit representation in regard to both IRS and state taxing authority audits and examinations and defends taxpayers from the moment they receive an audit notice through to the best possible resolution. TaxAudit members receive expert tax representation and relief from the nightmare of being audited – at a price point any taxpayer can afford.
TaxAudit is headquartered in Folsom, CA, but provides representation services wherever the taxpayer is located.
SOURCE TaxAudit
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