These US taxpayers face higher payments thanks to new law
Republicans passed a sweeping overhaul of the U.S. tax code last year, aimed at cutting taxes for businesses and middle-class Americans: But not everyone is expected to benefit from the new law.
According to a new report from audit defense service TaxAudit, some homeowners, business owners and itemizers are likely to owe the Internal Revenue Service more money come April.
Here’s who can expect to pay higher taxes, as predicted by TaxAudit:
A number of different categories of homeowners could be on the hook for higher tax tabs.
Under the previous law, Americans could deduct interest on as much as $1 million worth of home acquisition debt – which has been lowered to $750,000 for those with mortgages originated after Dec. 15, 2017.
For those same individuals who originated a mortgage on or after Dec. 15, 2017, the new law eliminates a prior policy that allowed interest deductions on up to $100,000 of home equity debt – or $50,000 for married couples filing separately.
Interest will no longer be deductible for any homeowner with a home equity line of credit that was not used for certain purposes, like acquisition or improvement.
The Tax Cuts and Jobs Act implemented a cap on state and local tax deductions, so previously eligible taxpayers will no longer enjoy this deduction.
Americans will also no longer be able to deduct property taxes on foreign residences.
Self-employed Americans with incomes above $315,000 – for a married couple filing a joint return, or $157,500 for all other taxpayers – will no longer be eligible to take advantage of the deduction for qualified business income if they are in a specified service trade or business – like health, law and accounting – or if they are performing services as an employee.
As previously reported by FOX BusinessOpens a New Window., the new tax law modified the treatment of alimony payments.
Under the previous statute, the higher-earning spouse could deduct alimony payments on his or her tax filings. The recipient included the payments as part of his or her taxable gross income.
However, for divorces finalized in 2019 and after, alimony payments will no longer be a deductible expense for the payor.