Five-Minute Tax Briefing®

Five-Minute Tax Briefing®

March 06, 2018
PREVIEW ISSUE – No. 2018-05

Item for Thursday, March 1, 2018

IRS Releases Updated Form W-4 and Withholding Calculator: The IRS has released an updated version of Form W-4 (Employee’s Withholding Allowance Certificate) and its online withholding calculator. These tools allow taxpayers to check their 2018 tax withholding following passage of the Tax Cuts and Jobs Act (TCJA). The IRS is encouraging taxpayers to perform a quick “paycheck checkup” to make sure sufficient tax is being withheld from their paychecks. This is particularly important for (1) two-income families; (2) people with two or more jobs at the same time or who only work for part of the year; (3) people with children who claim credits (such as the child tax credit); (4) people who itemized deductions in 2017; and (5) people with high incomes and more complex tax returns. The IRS anticipates making further withholding changes for 2019 and will work with businesses and the tax and payroll communities to implement these changes. The revised withholding calculator can be accessed at www.irs.gov/individuals/irs-withholding-calculator . News Release IR 2018-36 .

Copyright © 2018 Thomson Reuters/PPC. All rights reserved.

Five-Minute Tax Briefing®

March 06, 2018
PREVIEW ISSUE – No. 2018-05

Item for Friday, February 23, 2018

IRS Clarifies Deductibility of Home Equity Loan Interest: For tax years 2018–2025, the Tax Cuts and Jobs Act (TCJA) eliminated the deduction for interest on home equity debt and limited the mortgage interest deduction to qualified residence debt of up to $750,000 ($375,000 for married taxpayers filing separately). In a recent News Release, the IRS advised taxpayers that interest paid on home equity loans and lines of credit is still deductible if the funds are used to buy, build, or substantially improve the taxpayer’s home that secures the loan. For example, interest on a home equity loan used to build an addition to an existing home is generally deductible (subject to the new dollar limit on qualified residence debt). However, interest on a home equity loan used to pay personal living expenses, such as credit card debt, is not deductible. Also, interest on a home equity loan on a taxpayer’s main home to purchase a vacation home is not deductible. News Release IR 2018-32.

Copyright © 2018 Thomson Reuters/PPC. All rights reserved.

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