Wednesday, April 25, 2018
THE GOP TAX ACT AND RECORDKEEPING
Now that the tax filing season is over it is time to think about your 2018 return.
The GOP Tax Act – aka the Tax Cuts and Jobs Act – drastically changes the US Tax Code, and will affect every single 1040, and 1040A, filed from 2018 through 2025 (or until new tax legislation is passed).
Traditional recordkeeping for tax returns no longer applies. Here is what you do and do not need to keep track of during the year.
What you no longer need to keep records of (at least for 1040 purposes) –
* Job-related moving expenses. Except for active duty members of the Armed Forces who move pursuant to a military order and incident to a permanent change of station.
* Casualty and theft losses. Unless they are the result of a Presidentially-declared natural disaster.
* Unreimbursed employee business expenses. This includes job-related mileage, travel and entertainment, continuing education, dues and memberships, subscriptions and publications, tools and supplies, uniforms and work clothes, and job seeking expenses. Except if you are a grade K – 12 teacher, instructor, counselor, principal, or classroom aide who works at least 900 hours during the year, a “qualified performing artist”, or a National Guard member or Armed Forces reservist who must travel more than 100 miles away from home and stay overnight to fulfill his or her training and service commitment. These individuals can still claim an “adjustment to income” for some of their expenses.
* Investment expenses, such as investment advisory fees, investment charts, newsletters and publications, and safe deposit box rental fees.
* Fees and expenses related to preparing your tax returns and responding to a federal or state audit of a tax return.
What you do need to continue to keep records of –
* Unreimbursed medical expenses, including mileage and travel to and from medical care.
* Property taxes and state and local income or sales taxes paid.
* Interest paid on home mortgages for up to two personal properties. While it has always been important to keep separate track of interest paid on acquisition debt and interest paid on home equity debt, this is more important than ever under the new law. And this must be done going back to the original purchase mortgage of a property and include all subsequent refinancing and borrowing. Interest on home equity borrowing is no longer deductible, and there is no “grandfathering” of any home equity interest. I wrote a special report that will help you with this task – click here for more information.
* Investment interest.
* Gambling losses.
I am currently working on an e-book that discusses in detail how the new GOP Tax Act will affect 1010 filers and include tax planning strategies to help you take full advantage of the new laws. I will let you know when it becomes available.