With rising health care costs, claiming whatever tax breaks related to health care that you can is more important than ever. But there’s a threshold for deducting medical expenses that may be hard to meet. Fortunately, the Tax Cuts and Jobs Act (TCJA) has temporarily reduced the threshold. What expenses are eligible? Medical expenses may be deductible if they’re “qualified.” Qualified medical expenses involve the costs of diagnosis, cure, mitigation, treatment or prevention of disease, and the costs for treatments affecting any part or function of the body. Examples include payments to physicians, dentists and other medical practitioners, as well as equipment, supplies, diagnostic devices and prescription drugs. Mileage driven for health-care-related purposes is also deductible at a rate of 17 cents per mile for 2017 and 18...

Individual taxpayers who itemize their deductions can deduct either state and local income taxes or state and local sales taxes. The ability to deduct state and local taxes — including income or sales taxes, as well as property taxes — had been on the tax reform chopping block, but it ultimately survived. However, for 2018 through 2025, the Tax Cuts and Jobs Act (TCJA) imposes a new limit on the state and local tax deduction. Will you benefit from the sales tax deduction on your 2017 or 2018 tax return? Your 2017 return The sales tax deduction can be valuable if you reside in a state with no or low income tax or purchased a major item in 2017, such as a car or boat. How...

With bonus depreciation, a business can recover the costs of depreciable property more quickly by claiming additional first-year depreciation for qualified assets. The Tax Cuts and Jobs Act (TCJA), signed into law in December, enhances bonus depreciation. Typically, taking this break is beneficial. But in certain situations, your business might save more tax long-term by skipping it. That said, claiming bonus depreciation on your 2017 tax return may be particularly beneficial. Pre- and post-TCJA Before TCJA, bonus depreciation was 50% and qualified property included new tangible property with a recovery period of 20 years or less (such as office furniture and equipment), off-the-shelf computer software, water utility property and qualified improvement property. The TCJA significantly expands bonus depreciation: For qualified property placed in service between 9/28/17, and 12/31/22 (or...

As posted by Thomson Reuters on 2/12/18 On 2/9/18, Congress passed, and the President signed into law, H.R. 1892, the "Bipartisan Budget Act of 2018" (the Budget Act). In addition to providing a continuing resolution to fund the federal government through 3/23/18, this 2-year budget contains a host of tax law changes. The Budget Act retroactively extends through 2017 over 30 so-called "extender" provisions, provides a number of miscellaneous tax-related provisions, and includes tax relief to victims of the California wildfires and Hurricanes Harvey, Irma, and Maria. The following general topics are outside the scope of this Tax Planning Letter: Non-extender tax-related provisions Disaster relief provisions INDIVIDUAL EXTENDER PROVISIONS The Budget Act extended the following individual provisions for one year: Exclusion for discharge of indebtedness on a principal residence...

As posted by Thomson Reuters on 1/23/18 Enacted on 12/22/17, the Tax Cuts and Jobs Act (TCJA) added §199A, which applies to tax years 2018-2025. Under this new provision, individuals, estates, and trusts may deduct up to 20% of their Qualified Business Income (QBI) from sole proprietorships (including farms) and pass-through entities. This means that the QBI of taxpayers in the new 37% tax bracket may be taxed at an effective top marginal rate of 29.6%. Although §199A can greatly benefit many noncorporate taxpayers, it's one of the more convoluted provisions of the TCJA. It contains various rules and limits that can substantially reduce or eliminate the deduction. Given this, a step-by-step guide to claiming the deduction would be helpful. This Tax Planning Letter examines in detail...