The TCJA and You

With less than a month to go in the tax filing season, many Americans have already seen the effect that the Tax Cuts and Jobs Act (TCJA) is having on their bottom line.  In practice for the first time since being approved in December 2017, this new tax act is impacting everyone. Many people are finding minor decreases in their refunds or increases in their payment due.  Tax preparers are spending a little more time working through questions and concerns with clients. So who is being impacted and what, if anything, can you do to improve your situation for next year?

TCJA and you Photo by Sharon McCutcheon on Unsplash

The biggest impacts are to those with children and those who typically itemize deductions.  Homeowners are seeing a definite change in tax refunds as well. The variation to your tax return depends upon so many different details it is almost impossible to give examples of every one.  Filing status, income level, number of dependents, and whether or not you own a home all come into play in a variety of ways. Here are some common areas that are impacting most people.

The elimination of the personal exemption touches everyone but hits families the most.  At $4,050 per person, for a single taxpayer, this might not be a big deal. But for a family of 4 – this means $16,200 MORE of your income is taxable since the personal exemption is gone.

However, the increase in the standard deduction does a good job making up for the personal exemption loss.  At $24,000 for couples filing married and $12,000 if you are a single filer, this increase is all but equaling out the personal exemption for many.  The child tax credit has increased, further helping families. An additional equalizer in many cases is the lowered income tax rates across tax brackets.  

The net result of these changes is bringing many taxpayers within  close range of how their 2017 tax refunds looked. However, the end of itemized deductions is an area that is also having an impact.  Homeowners are especially noticing a change in their bottom line. How much you can deduct for home mortgage interest and home equity loan interest has been limited. Under the new tax laws, the amount you can deduct for state and local tax deductions is $10,000. This hurts taxpayers who would itemize their state and local income, property, and general sales tax payments on their federal tax returns. The TCJA eliminates the deduction for home equity loans.

So how do you prepare for next tax season?  The IRS continues to recommend doing a paycheck check-up.  The IRS has all the tools to complete a check-up on their website.  It’s also a good idea to talk to a financial advisor or tax preparer to plan ahead for next year.  If possible, wait until after the filing deadline when your tax preparer has time to sit down and think.  We would be happy to help!


Protecting Yourself this Tax Season

Every tax season brings a new post on how to avoid scams.  Redundant but relevant, as this is the time when scammers prey on taxpayers.  We provided some basics last year in Tax Scams.  If you don’t have time to read much further, know these basic tips:

  1. Never give out your Social Security Number to someone who calls you.  Ever.
  2. The IRS will never contact you by phone to demand money.  Ever.
  3. The IRS will not threaten  police action or ask for credit/debit card numbers over the phone
  4. The IRS will not call about an unexpected refund.  You are being scammed.

The IRS will communicate by letter through the mail.  If you need to contact them, they can be reached at 800-829-1040.  The IRS Is protecting consumers in several ways, so when you place that call be prepared to supply:

  • Social Security numbers or ITIN and birth dates for anyone on the tax return
  • Filing status
  • A copy of the tax return in question
  • Any IRS letters or notices received by the taxpayer

If you are contacting the IRS on behalf of another person you will need to complete Form 8821 and Form 288.  These will give Power of Attorney and Tax Information Authorization. If the other party is deceased then a copy of the death certificate and Form 56 are required.

What do criminals do with the information they steal?  Withdrawing money from bank accounts and using credit or debit cards for purchases are among the typical crimes.  Also common are selling the stolen information or filing a fake return io claim the money. Knowing how the stolen information is used, there are several important steps to take immediately after you suspect you’ve been victimized to minimize damages

  1. Figure out what information was breached.
  2. Utilize credit bureaus to determine the extent of the damage.
  3. Contact credit card companies and your bank to re-establish new accounts and freeze old ones.
  4. Reset all passwords.

For more information about protecting yourself and your investments, visit Tax Scams and Consumer Alerts.


Gambling and Tax Laws

If games of chance such as poker, horse racing, or playing the lottery are among your recreational hobbies, the new tax law brought some minor changes.  The IRS website includes a description of changes as they relate to each type of gambling.  It is the best place to verify current and future tax law plans, but the two biggest impacts are described below as well.

How Gambling Affects Taxes

The change that affects the most gamblers and therefore is the one most talked about, is how losses can be deducted.  While many types of itemized deductions were eliminated under the new law, gambling losses are still allowed! The change to these deductions is that they can only be deducted to the extent of gambling winnings for that tax year.  

At year-end, calculate all your losses.  Everything from non-winning lottery and bingo ticket costs to money spent and lost on slots.  You can then claim an itemized deduction for all these betting losses throughout the tax year, against your winnings.  For example, if you spend and lose $10,000 and win $9,000 during the year, you could deduct for the $1,000 difference.  If you lose $10,000 and win $11,000 you would be responsible for taxes on the $1,000 difference.

The increase in the amount of the standard deduction may make it more attractive to many taxpayers over taking itemized deductions.  Gamblers too may find taking the standard deduction a more beneficial decision than itemizing losses. If your losses are greater than the standard deduction amount than itemizing is likely your best choices.  Otherwise, take the standard deduction or talk with your tax preparer.

The tax law also includes changes for professional gamblers.  Expenses for travel, lodging, food, and the like are lumped in with losses now for deduction purposes.  These expenditures can no longer be separately itemized. Small time gambling hobbyists will be the ones most likely to still see returns under the new law, while gambling professionals are not going to be so lucky.

Do you have additional questions about gambling under the new tax law? Contact our office today and we will get you the answers……you can bet on it!


Get in Shape with Bull Ridge Fitness

Daylight savings time is, thankfully, upon us.  The days are getting longer, warmer and people are beginning to think about getting in shape for summer.  If you are looking for a great way to tone after a long cold winter, check out Bull Ridge Fitness, LLC.  Conveniently located in Willow Street, Bull Ridge is celebrating 2 years in business this week!  

Gym owner, Chris Martin, has been cross training for 8 years and during that time did some coaching at a local gym. When that gym went out of business, Chris continued working out at her home.  What began as working out with friends in her garage expanded into a business with many loyal customers. Chris shares that her favorite part of her job is helping people change their lives for the better.  She says of Bull Ridge, “Our mission is MOVEMENT. For each person that is at a different level. We meet you where you are at and make amazing things happen. We build strength in functional movements.”

Bull Ridge is a group training facility which offers the advantages of personal training in a team environment.  Each individual completes the same workout at their own level. Everyday brings a new 1 hour long workout. This time includes a warm-up, skill/strength, workout of the day (WOD), and mobility/stretching.

We know that joining a gym can be daunting for many reasons.  Bull Ridge offers a 1 week free trial so customers can come make sure that the fit is right for them.  We’re pretty sure you will want to stay! To get in touch with Chris directly her email is chris@bullridgefitness.com  The gym can also be reached at 717-587-5629 and their website is well designed to help answer many of your questions!

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“ITP, LLC is supporting local small business owners through this post.  The experiences described are personal to particular users, and may not necessarily be representative of all users of the products and/or services.  We do not claim, and you should not assume, that all users will have the same experiences. Your individual results may vary. We are not affiliated with the organization referenced and are not paid or compensated for this publication.”


Welcome Home With Lancaster Transplant

Being new to an area can be hard.  How do you meet up with people who share the same interests when you are in an unfamiliar home?  Where do you go for the best Mexican food and a fun scene? This is where Jocelyn Park and Lancaster Transplant can help.  Jocelyn began Lancaster Transplant five years ago and the group has grown in many positive directions since then.  

Lancaster Transplant offers the community a way to get connected to their new home and neighbors.  This organization is open to ANYONE who is looking to meet new people, not just Transplants to our area.  Their website has a wealth of information available, including what being a member entails.  Transplants meet up regularly for drinks, bike rides, field trips and other fun adventures.

Jocelyn came to Lancaster with undergrad and graduate degrees in Design.  Her experience as a transplant to Lancaster, combined with her design expertise, help in dreaming up big ideas  As a visionary, she enjoys leading a team of talented people to figure out how to bring these plans to fruition.  The Lancaster Transplant team is constantly thinking of ways to make people feel more at home in Lancaster. Interested in making connections of your own here in Lancaster?  You can call Lancaster Transplant at 717.925.0562 or email at hello@lancastertransplant.com.

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“ITP, LLC is supporting local small business owners through this post.  The experiences described are personal to particular users, and may not necessarily be representative of all users of the products and/or services.  We do not claim, and you should not assume, that all users will have the same experiences. Your individual results may vary. We are not affiliated with the organization referenced and are not paid or compensated for this publication.”