Home >> Money & The Economy >> As Taxpayers Start Feeling Impact of New Tax Law, Here’s Who Could Win Big

As Taxpayers Start Feeling Impact of New Tax Law, Here’s Who Could Win Big

A list of taxpayers who stand to benefit the most from the Tax Cuts & Jobs Act as they begin to prepare for tax season was released Tuesday. Among the taxpayers who are set to win big this tax season are itemizers with low state and local taxes, self-employed taxpayers who will benefit from the new 20% deduction, and parents with children under 17, according to TaxAudit, the largest audit defense service in the country.

“Tax professionals have spent a lot of time this year understanding how the new tax law will finally impact taxpayers this coming season, and it’s becoming clearer who the likely winners and losers of the tax overhaul are,” said veteran tax expert Dave Du Val, Chief Customer Advocacy Officer at TaxAudit. “Whether or not you benefit under the new tax law, it’s important to take the time to understand the new rules for proper tax planning for 2019 – and now is the time to do it. No one should have to pay the IRS more than they legally owe.”

TaxAudit’s list of some of the taxpayers who will generally benefit from the new tax law include:

Homeowners

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  • Those with home mortgage loan amounts above $750,000 and equal to or less than $1,000,000for home acquisition, building, or improvements, and the loans were originated prior to or on 12/15/17.

Itemizers

  • Taxpayers in states with low or no state income tax rates and property tax rates, and whose combined state and local taxes are below $10,000, and whose total itemized deductions exceed the new standard deduction.

Self-Employed Taxpayers

  • Self-employed taxpayers whose income is within the limits for the new Section 199A deduction for business will benefit from the new 20% deduction.

Retirees

  • Some retired individuals may benefit from the increased standard deduction if they have not been able to itemize in the past. They may also benefit from a lower marginal tax rate.

Parents and Taxpayers with Dependents

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  • Taxpayers whose children are under the age of 17 will benefit from the increased Child Tax Credit which has a much higher income limitation.
  • Eligible taxpayers with non-child dependents will benefit from a new $500 credit.

Wealthy Taxpayers

  • Wealthy taxpayers will enjoy lower tax rates.
  • People who will inherit extremely large amounts of money. The Estate and Gift Tax Exemption for 2018 went up to $11,180,000 after considering the necessary inflation adjustment on $10,000,000.

Soon to be Divorced Taxpayers

  • Taxpayers who must pay alimony and whose divorces were finalized before 1/1/19 will still be able to deduct alimony. The deduction of alimony will no longer be a valid deduction for those that are divorced after 12/31/18.
  • Taxpayers who receive alimony and will have a final divorce decree after 12/31/18. The requirement to include alimony as income is no longer required.

Tax tips for taxpayers to maximize their tax refund include:

  • Certain factors, such as a home office (not as an employee, however), can help to maximize your home mortgage interest deduction.
  • Taxpayers with foreign taxes paid generally would benefit by using Form 1116 if they are over the $10,000 limit.
  • There is a new $500 credit for eligible taxpayers who support a dependent that is not eligible for the Child Tax Credit.

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About Carl Fox

Carl Fox is the money and finance editor for Conservative Daily News. Follow him in the "Money & The Economy" section at CDN and see his posts on the "Junior Economists" Facebook page.

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