Click this link for helpful information about the current US Government Shutdown and how it may affect your tax return.
Some of the changes and new items for the 2018 Tax Year addressed in the Tax Cuts and Jobs Act are as follows:
- Increased standard deduction
- Elimination of personal exemptions
- Cap on state and local taxes (if you itemize)
- Additional child tax credit and increased child tax credit
- New Section 199A deduction – this will affect anyone who has a flow through entity incorporated into their tax return (sole proprietors, farmers, rental property owners, S corp. stockholders, and partners in a partnerships). The deduction is 20% of qualified business income but does have limitations based on overall filing status income and type of service generating the income.
- New to farmers and other business owners who generally “trade-in” equipment. In years past when a trade was made on a piece of equipment the “boot” is what was used for depreciation. Now under the new law the trade is counted as a sale at the trade in allowed.This will cause a gain to occur on the trade. But the full cost of the equipment (not just the boot) will be used as a basis for depreciation purposes.This can affect Earned Income Credit for some taxpayers. If you did any type of trade this year-not of real property, you will need to bring in trade paperwork for us to properly prepare your tax return.The IRS increased Section 179 expensing but again the State of Iowa did not couple with this.