The new Federal income tax law passed at the end of 2017 takes full effect in 2018. This month is the time to determine the actions that can still be taken for 2018 and to plan for 2019. Some of the major changes that will affect your income taxes are:
- Increased standard deduction amounts
- Elimination of personal exemptions
- Credit for qualifying children and for other dependents
- $10,000 cap on taxes in your itemized deductions
- Decreased limitation on mortgage interest deduction and elimination of home equity interest
- Elimination of miscellaneous itemized deductions including unreimbursed employee business expenses and investment expenses
- Up to 20% reduction of business income (also known as 199(A) depending on a number of complex factors; specified service businesses are potentially excluded
- Revision of form 1040 and elimination of 1040EZ and 1040A forms
Due to these changes, the effect on your 2018 income taxes will only be determined when your 2018 income tax returns have been completed. The increased complexity of your returns due to these changes may result in an increase in your income tax return preparation fees.
California has not made any of these changes to its income tax laws, so there are more differences between the Federal income tax return and the California income tax return than in prior years.
We are here to help you plan and understand how these changes will affect your tax situation. We urge you to contact us as soon as possible.
We want to remind you of deadlines that are coming shortly:
2018 Forms W-2, 1099-MISC – the deadline to file these forms is January 31, 2019.
California Sales Tax Returns for the 4th quarter of 2018 – the deadline to file this form is January 31, 2019.
If applicable, the deadline to file the City of Los Angeles business license is February 28, 2019. Please provide us with your 2018 gross receipts as this amount is needed to calculate the business license fee.