Many are questioning this. The government says it will be good for Americans. And, the way I see it, it will probably be good for many of us. As for me, the jury is still out on this subject. But, some of us will not benefit from this. Here’s why.
Before I start, let me say I am not a financial expert, and I am not an accountant. And if you follow my advice about your taxes, do so at your own risk. I strongly recommend that you speak with a financial professional.
But here is how I see things.
The standard deduction is doubling to $12,000 for a single person, and to $24,000 for a married couple. This means that the first $12,000 or $24,000 of income is not taxed.
Now let’s talk about deductions from the balance of your income that exceeds those amounts.
First, your 401K (if you have one) is not affected.
Currently you are able to deduct you state and local taxes. This translates to mean your real estate taxes. You can also deduct certain medical expenses, charitable deductions and more. But the real estate tax is the biggie. If your deductions total more than the $12,000 or $24,000 threshold, then I have just given you some bad news. Please don’t shoot the messenger.
But – we did not lose the deduction for mortgage interest. It just got modified. The way it is now, you can deduct all mortgage interest that you paid. Under the new plan, that amount will be capped at $500,000. Frankly (and remember, I am not a financial expert) my calculations show me that, in order to pay more than $500,000 in interest, the mortgage would need a principle amount of over $20 million dollars!
I don’t know about you, but, if someone can afford a $20 million mortgage, I don’t really care if they lose a tax deduction.
If you are indeed, a financial expert, and if I am calculating these amounts improperly, pl ease call me, Art Reiman, at 732-598-7700. Of contact me via one of my web sites, www.BunnyandArt.com www.55PlusInOcean.com or www.55PlusinMonmouth.com . If I am wrong, please give me the proper info and I will gladly post the proper info in another blog and remove this post.