Tax law changes: Homeowners are likely paying more
You’re not alone if you think 2018 taxes for homeowners seem odd, scary, and costly. For a lot of people the Tax Cuts and Jobs Act of 2017 aka “tax reform” is proving to be anything but simple. Homeowners may be surprised when they see their final bill from Uncle Sam.
February 8th figures from the IRS show that a lot of taxpayers are getting grim news.
- The total number of refunds were down 15.8 percent when compared with this time in 2018
- The amount sent back to taxpayers fell 23.2 percent from a year ago
- Average refunds dropped 8.7 percent, from $2,135 in 2018 to $1,949 so far in 2019
Homeowners seem to be bearing the brunt of tax reform. Projections on the new tax law estimate that property owners will pay an additional $668.4 billion in the next few years. This is due to eliminating deductions such as:
- Taxes not paid or accrued in a trade or business (except for up to $10,000 in State and local taxes),
- Interest on mortgage debt in excess of $750K,
- Interest on home equity debt,
- Non-disaster casualty losses
So what can you expect when you file 2018 taxes?
The standard deduction
The bright shiny object under tax reform has been the standard deduction. Between 2017 and 2018 the size of the standard deduction has markedly grown.
- Single taxpayers: Increased from $6,350 in 2017 to $12,000 in 2018.
- Married, filing jointly: Increased from $12,700 in 2017 to $24,000 in 2018.
Taxpayers are allowed to write off either their standard deduction or itemized deductions — but not both. It follows that logical taxpayers…