It’s the holiday season, and we’ll be bombarded with ads for TVs and toys and other trinkets. But the minute the new year rolls around, Californians will face a new season with all new – and less fun — advertisements: tax season.
And the 2019 tax season – in which we’ll file taxes for our 2018 earnings – will have a whole new wrinkle since the passage nearly a year ago of the Tax Cuts and Jobs Act. This will be the first year for the new tax law, and a lot of things will look different.
So what’s changed?
Personal exemptions have been eliminated and the standard deduction has doubled to $12,000 for singles and for married people filing jointly, $24,000. This likely will mean that fewer people will itemize their 2018 deductions.
And for those who still can qualify for deductions, these itemized deductions largely have disappeared.
- Losses from theft and other casualties. Under the former tax code, property losses not reimbursed by insurance could be deducted. That included damage from natural disasters, accidents, fire, vandalism and theft. The losses had to be higher than 10 percent of your adjusted gross income. Now, losses can be claimed only for a disaster the president declares.
- Deductions for state and local taxes can’t exceed $10,000.
- Unreimbursed medical and dental expenses can be itemized if they exceed 7.5 percent of your adjusted gross income.
- Miscellaneous itemized deductions, such as tax preparation fees and investment expenses, could be itemized once they exceeded 2 percent of adjusted gross income. Those have been eliminated.
- Before the new law was passed, homeowners could write off the interest on as much as $1 million in mortgage debt. Now, the limit is $750,000. And home equity loan costs can be deducted only if they improve your home – not for personal expenses.
Americans will have a lot of questions about the new tax law when they prepare their taxes after the holiday season. A California attorney experienced in tax laws will be there to answer those questions for you.