2018 Inflation Adjustments

The IRS just announced over 50 annual inflation adjustments for 2018 tax provisions. Some of the more significant ones are listed below:

1. The standard deduction goes up $300 to $13,000 for married filing jointly and up $150 to $6,500 for single taxpayers.
2. The personal exemption rises $100 to $4,150.
3. The estate exclusion rises from $5,490,000 in 2017 to $5,600,000 for those who die in 2018.
4. The gift tax annual exclusion increases $1,000 to $15,000. It has been $14,000 for many years.
5. The 2018 foreign earned income exclusion is $104,100 which is up from the 2017 amount of $102,100.

Medical Home Improvements

Some medical home improvements can qualify as a fully deductible medical expense since they don't add to the value of the home. Such items for people with physical handicaps include, entrance and exit ramps, wider doorways and hallways, railings, and support bars. The main purpose of other types of medical capital costs should be to provide medical benefits, and the deduction is limited to the cost over the increase in fair market value of the home. For example, if a doctor recommended a home elevator for someone with a medical condition and the elevator cost $20,000 and an appraisal indicated that the elevator added $2,000 to the value of the home, then the medical deduction would be $18,000. Medical deductions have been allowed for a swimming pool for therapeutic purposes, air purifiers, and house air conditioners prescribed by an allergist. The key to getting medical home improvements is to get documentation from your doctor that the cost is necessary and helpful for your medical condition.

Georgia Disaster Relief

This is a correction to my last post regarding the extension of time to file the 2016 tax return to 1/31/2018 due to hurricane Irma. You will still be subject to the late payment penalty of .5% per month with a max of 25% on any unpaid tax plus interest which is currently 4% annually for Fed tax and 7.25 % for GA. You can avoid the late filing penalty which is the big one of 5% per month on unpaid tax.