07/11/2018
Many of my friends and clients have asked me about the alleged simplicity of the new tax law. There are many changes, to numerous to mention at one time but I would be happy to discuss any questions that you may have and will try to address the questions that are most often asked of me here.
How long should you keep individual tax returns? Federal returns should be retained at least three years. Generally, that’s how long the Internal Revenue Service has to question items on your return and assess you for any additional tax. It’s also the time in which you can file an amended return and request a refund. Just be aware that the Internal Revenue Service can go back up to six years if over 25% of income is omitted. If there is fraud, there is no limit. State returns may have to retained longer.
It appears that filing out Form 1040 will be a bit more challenging for many individuals next year. Although the President has said that your return could be filed on a postcard sized form it appears that many items have been removed from the form and now requires separate schedules to be attached to the “postcard.” They have been removed from the face of the return and are now found on schedules. I guess that shorter isn’t always simpler.
For those of you who live in high tax states such as New York, New Jersey etc. it is important that you realize that the new tax law limits the total itemized deduction for taxes on your income tax return to a maximum of $ 10,000. This includes, income taxes, property taxes, sales tax, etc.. The old law allowed deduction for the total of these taxes in full.
With the hurricane season once again upon us I would like you to know that the new tax law does not allow for any write off for personal casualty losses except for those incurred in presidentially declared disaster areas. Even these losses are subject to two reductions – the loss must be reduced by $ 100 and the balance is only deductible to the extent it exceeds 10% of adjusted gross income. So if you suffer a theft or your house were to catch fire or your car is damaged the uninsured portion of the loss is no longer deductible.
In a time when many may have to change jobs it is important to know that the new tax law no longer allows for write off of moving expenses resulting from a job change unless the move is the result of military reassignment.
This written advice is not intended or written to be used, and cannot be used by any taxpayer, for the purpose of avoiding penalties that may be imposed on the taxpayer. (this legend has been affixed pursuant to United States Treasury Regulations governing tax practice.)
