Broker Check

Time to Review Your Tax Situation

September 18, 2018

It may be early September but at Chatham Wealth we are always looking at ways we can be tax efficient for our clients. How do we do this?

  • Because you are dealing directly with the portfolio manager we are able customize the tax situation. When able, we look to offset realized gains by harvesting losses. Let us know if you have significant gains or losses in other investments outside of Chatham that need to be offset.
  • For clients that like to give to charity: Gifting appreciated stock to a donor advised fund or directly to the charity of their choice (allows you to avoid capital gains tax and gives you a tax deduction). Call us we can help with this.
  • If required to take a Required Minimum Distribution from the IRA (over age 70 ½) you can gift all or part of your RMD (relieves you from paying income tax on the RMD).

Please speak with us or your accountant about how the new tax laws may affect your 2018 return. There have been many changes and we do not want you to be surprised come tax time. For many of our client’ the most important changes are the limit of $10,000 deduction for state and local taxes (If you live in Florida you are very lucky) and the big increase in the standard deduction which will make it much more difficult to itemize on your 2018 return.

2018 Major Tax Changes

  • State and local taxes
    • The itemized deduction is limited to $10,000 for both income and property taxes paid during the year.
  • Standard deductions
    • Those who are married and filing jointly will have an increased standard deduction of $24,000, up from the $13,000 it would have been under previous law.
    • Single taxpayers and those who are married, and file separately now have a $12,000 standard deduction, up from the $6,500 it would have been for this year prior to the reform.
    • For heads of households, the deduction will be $18,000, up from $9,550.
  • Personal exemption
    • The personal exemption has been eliminated with the tax reform bill.
  • Top income tax rate
    • 10%0 to $9,525
    • 12%$9,525 to $38,700
    • 22%$38,700 to $82,500
    • 24%$82,500 to $157,500
    • 32%$157,500 to $200,000
    • 35%$200,000 to $500,000
    • 37%$500,000 and up
  • Child tax credit
    • The child tax credit has been raised to $2,000 per qualifying child, those who are under 17, up from $1,000. A $500 credit is available for dependents who do not get the $2,000 credit.
  • Mortgage interest
    • The deduction for interest is capped at $750,000 for mortgage loan balances taken out after Dec. 15 of last year. The limit is still $1 million for mortgages that were established prior to Dec. 15, 2017.