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Old 12-30-2018, 05:19 PM
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The lower rates coupled to the virtual elimination of the AMT taxes seem to make a difference in the projections. It remains to be seen how this shakes out when the final tax returns are filed.

For those of you who have significant positions in funds keep an eye out for the capital gain distributions. Last year the capital gain distributions surprised many taxpayers as they were bigger than expected. Keep an eye on your year end statements. Even though the stock market has had a bad December, the market did pretty well the rest of the year. The capital gain distributions are liable to be substantial.
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Old 12-30-2018, 05:37 PM
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Lets talk about the mortgage interest deduction. It is still available as part of the itemized deduction. Whereas in prior years the limitation was on mortgages with a ceiling of $1,000,000 for 2018 the ceiling has been lowered to $750,000. If, however, your mortgage was originated before 2018 your $1,000,000 is grandfathered in. If the mortgage was originated in 2018 the limitation is $750,000.

Interest on a Home Equity Loan is still deductible but the conditions have changed. Prior to 2018 the first $100,000 of the loan could be used for any purpose and the interest would still be deductible. Now that is no longer the case. The loan (including the first $100,000) must be used for the purchase or renovation of your residential property. The exact wording (and this is important) is "the loan is used to buy, build or substantially improve the home that secures the loan". You can no longer use your home equity loan for purposes other than the home and expect to deduct the interest.

As always, consult with your CPA or tax preparer.

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Old 12-30-2018, 08:05 PM
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Thanks for the "heads up".
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Old 12-30-2018, 10:32 PM
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Rob, you might mention whether that rule is grandfathered in for existing loans.
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Old 12-31-2018, 05:48 AM
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I'm still filing three (3) state returns again this year. Virginia resident, and Ohio and New York non-resident (minor business partnership). Prep fees will probably be more than either the OH or NY taxes.

-- Chuck
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Old 12-31-2018, 12:59 PM
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Originally Posted by ralper View Post
Yes it is true. If you file single and are over 65 you get an additional $1,600, if you are married but only one of the spouses is over 65 you get an additional $1,300, if both are over 65 you get an additional $2,600.

Your business expenses probably has nothing to do with the Standard or Itemized Deduction. I would expect that your detailing business appears on a Schedule C (Profit or Loss From Business) of your individual tax return. If that's the case, nothing has changed from 2017 except that you can no longer claim entertainment as an expense, only meals. In the past people claimed "Meals and Entertainment" as a business expense for when they took out clients. Meals were deducted at 50%. Meals are still allowed at 50% but entertainment is no longer allowed as a deduction. If you are claiming your expenses on a form 2106, (unreimbursed business expenses) you can no longer write them off. If your detailing business is your business as a sole proprietor the proper form for it is the Schedule C, not the 2106. Your business expenses probably should not appear on the Schedule A Itemized Deductions form. Please consult with your CPA or tax preparer about this. He/She knows your situation and can properly advise you.
Thank you Rob. I think we are better off using the standard deduction as it will be more than our itemized deductions by a few thousand. I have a CPA who does our taxes and he takes care of my detailing business. I do claim a few meals but no entertainment expenses. Happy New Year and have a great 2019.
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Old 12-31-2018, 02:06 PM
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Originally Posted by Chuck S View Post
I'm still filing three (3) state returns again this year. Virginia resident, and Ohio and New York non-resident (minor business partnership). Prep fees will probably be more than either the OH or NY taxes.

-- Chuck
You should be getting a tax credit in Virginia for the taxes paid to the two non-resident states (if any). The credit probably won't be dollar for dollar, but for the most part, you won't be paying twice.

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Old 12-31-2018, 02:16 PM
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Originally Posted by Morris View Post
Rob, you might mention whether that rule is grandfathered in for existing loans.
Prior mortgage loans in the excess of $1,000,000 are grandfathered in if the mortgage was originated before 2018. You can still deduct the interest on the loans even though the ceiling for deductibility of interest on mortgage loans taken in 2018 is $750,000. So of your mortgage is $1,000,000 but was originated before 2018 you can still deduct the interest on amounts up to $1,000,000.

I haven't heard anything about Home Equity Loans being grandfathered in. I don't think they are but I'll check. For now the Home Equity Loan originated in 2018 must be used to buy, build or substantially improve the home it is secured against. As mentioned, I don't believe that Home Equity Loans originated before 2018 are being grandfathered in but I will check and post what I find.

As always please consult with your CPA or Tax Advisor.
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Old 12-31-2018, 02:24 PM
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The answer to whether or not you can deduct interest on a home equity loan originated before 2018 is maybe. If the debt was used to buy, build or substantially improve the residence that it is secured against, you can continue to deduct the interest. If it was used for other purposes (ie: paying off credit card debt, the purchase of a car and etc.) you cannot.
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Old 12-31-2018, 07:05 PM
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I was going to discuss the Home Sale Exclusion Rule tonight. While it's not a new rule, it has been around for a few years, it is something that probably impacts vintage people more than people in any other age group.

But, tonight is New Year's Eve and there are so much better things to think about than taxes. So, we'll discuss this tomorrow night.
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