The majority of the 2017 tax reform is effective after 2017. I’d like to explain important notes that will impact your 2017 tax returns.
Add up those medical expenses! Currently if you itemize your deductions, you can deduct qualifying medical expenses which exceed 10 percent of your adjusted gross income.
Under the new bill the medical deduction stays in place with a lower floor of 7.5 percent. A simple example — if you make $45,000 you may now deduct any medical expenses over $3,375 if you itemize your deductions.
Obamacare isn’t going away, yet
Under Obamacare, consumers must buy insurance or pay a penalty unless they qualify for a limited number of exemptions. Although the clause in ACA that financially penalized taxpayers if they did not sign up for health insurance is eliminated, the individual mandate doesn’t end until 2019.
Bottom line: Don’t cancel your health insurance — there are still penalties.
Miscellaneous Itemized Deduction, Charity and State and Local Income or Sales Tax Deduction
The Act reduces the deductibility of certain of these expenses in 2018. Please make sure that you provide us with a good accounting of these expenses and payments made in 2017. This should include any estimated tax payments, investment and attorney fees/accounting fees, real estate taxes and unreimbursed employee expenses as well as cash and non-cash charity deductions.
We will highlight 2018 changes in the next article.