Deduction and Exclusion for Moving Expenses Suspended. The deduction for
moving expenses is suspended. During the suspension, no deduction is allowed for use of an
automobile as part of a move. This suspension does not apply to members of the U.S. Armed Forces
on active duty who move pursuant to a military order related to a permanent change of station. Also,
employers will include moving expense reimbursements as taxable income in the employees’ wages
because the new law suspends the former exclusion from income for qualified moving expense
reimbursements from an employer. This suspension does not apply to members of the U.S. Armed
Forces on active duty who move pursuant to a military order related to a permanent change of station
as long as the expenses would qualify as a deduction if the government didn’t reimburse the expense.
Alternative Minimum Tax (AMT) Exemption Amount Increased. The AMT
exemption amount is increased to $71,700 ($111,700 if married filing jointly or qualifying
widow(er); $55,850 if married filing separately). The income level at which the AMT exemption
begins to phase out has increased to $510,300 or $1,020,600 if married filing jointly. This means that
far fewer taxpayers will pay the AMT.
Repeal of Deduction for Alimony Payments. Alimony and separate maintenance
payments are no longer deductible for any divorce or separation agreement executed after December
31, 2018, or for any divorce or separation agreement executed on or before December 31, 2018, and
modified after that date. Further, alimony and separate maintenance payments are no longer included
in income based on these dates, so you won’t need to report these payments on your tax return if the
payments are based on a divorce or separation agreement executed or modified after December 31,
Repeal of Deduction for Amounts Paid in Exchange for College Athletic Event Seating Rights.
No charitable deduction shall be allowed for any amount paid to an institution of
higher education in exchange for which the payor receives the right to purchase tickets or seating at
an athletic event.
Recharacterization of a Roth Conversion. You can no longer recharacterize a conversion
from a traditional IRA, SEP or SIMPLE to a Roth IRA. The new law also prohibits recharacterizing
amounts rolled over to a Roth IRA from other retirement plans, such as 401(k) or 403(b) plans. You
can still treat a regular contribution made to a Roth IRA or to a traditional IRA as having been made
to the other type of IRA.
Kiddie Tax. The parent’s tax rate is no longer used to calculate kiddie tax. Instead, taxable
income attributable to net unearned income is taxed according to the tax brackets applicable to trusts
and estates, with respect to both ordinary income and income taxed at the preferential net long-term
capital gain rates. Ask your tax preparer for details.
Estate and Gift Tax Exemption Amount. For 2019, the estate and gift tax exemption
amount is $11,400,000 and $11,580,000 for 2020.
Net Operating Loss (NOL). For losses arising in tax years beginning in 2018, the NOL
deduction is limited to 80% of taxable income (taxable income for the year in which it is carried to,
determined without regard to the NOL deduction). The new law repeals the 2-year carryback and the
special carryback provisions but provides a 2-year carryback in the case of certain losses incurred in
the trade or business of farming. NOL carryovers are adjusted to take into account the 80% of
taxable income limitation and may be carried forward indefinitely (until used up).
Check back each week for more tax tips from Tax & Accounting Plus