Did you know the major tax law changes (HR1) went into effect 12/22/2017?
What? How does that affect me?????
You should see an increase in your net pay because your federal withholdings will automatically do down.
Hooray! Right? But…I heard I can no longer deduct my mortgage interest. Won’t that make my taxes go up?
The impact of not deducting your mortgage interest is offset by your standard deductions going up to $24,000 for married individuals, $18,000 for head of household filers and to $12,000 for single tax payers! What that means is, in the past, you got a larger tax benefit by itemizing your deductions over $12,000 ($6,000 for singles). Now, you don’t have to itemize to get the tax benefit up to $24,000 (married). If you are one of those folks whose itemized deductions exceeded $24,000, you are still eligible to itemize and will probably be in a lower tax bracket than previously, when you do. But the down side is the personal exemption deduction is eliminated.
But…I thought I couldn’t deduct mortgage interest and property taxes?
The new law limits your combined state income and property tax deduction to $10,000. Other changes are:
No more job-related expenses that were subject to the 2% floor
Mortgage interest is limited to indebtedness of $750,000
No more interest on home equity indebtedness; only purchases & improvements
Charitable contributions limits increased to 60%
No more moving expenses unless you are active duty military.
What’s the impact on the Child Tax Credit?
It went up to $2,000 ($1,000 prior years) for each qualifying child under 17 and $500 credit for other qualifying dependents to a maximum of $1,400