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Steps to consider in light of new tax changes

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Mary Currie

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BY MARIE CURRIE
Business Columnist

Monday, December 24, 2018

In the last few articles, I have covered some of the changes taking effect in 2018 and forward, such as like-kind exchanges, casualty losses, alimony, elimination of personal exemption and miscellaneous itemized deductions and various other changes.

Bottom line: With significant tax changes, form changes and additions to schedules, you can expect there will also be significant increase in the time and fees to complete all the necessary requirements.

Before year-end, you may want to compare your itemized deductions to the standard deduction for your filing status to help with the decision as to whether to pay in 2018 or in 2019 deductions such as charitable contributions, medical expense and taxes.

You still can give a gift of up to $15,000 per year, per person in 2018 and 2019. A gift up to $15,000 per person is not taxable to the giver or to the recipient. This may be a way of helping someone to pay for education expense, buy a needed vehicle, pay bills or put some aside for investment purposes. If you do not have $15,000 the gift can be less; for example $100, $200, $500, $1,000, etc., remember do not go over $15,000 in a year.

Required minimum distributions from retirement accounts must be made by Dec. 31 starting in the year you turn 70½ years old. If you fail to take the RMD distribution, the IRS can levy a 50 percent penalty on the amount you should have taken.

Business meals are now 50 percent deductible — however, no deduction is allowed for entertainment, amusement, recreation, club dues, or sports events.

Look at your withholding (from W-2 or 1099R) now and after your tax returns have been prepared to make sure you are having enough federal and state income tax withheld to keep from falling short when you file returns and owe taxes. Remember, personal exemption deduction for each person claimed on your tax return is no longer available.

Please check with your accountant to help apply these new changes to your particular situation.

As we come to the end of another year, look back and be thankful for all the good things and lessons learned. Look forward, think of at least one thing you want to achieve and start working toward that goal. Let us make it a year of optimism and positive collaboration between all of us. 

May each of you have a Merry Christmas and a Happy New Year!

The information in this article is general in nature and should not be acted upon without first checking to determine its applicability to your situation.

Mary Currie is a certified public accountant practicing in Rocky Mount.

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