The beginning of a new tax year is one of the most practical times to take stock of whether your financial and legal arrangements are working as they should. For many taxpayers, the months surrounding the close of one tax year and the preparation of returns offer a clear opportunity to identify what needs to change — and to act before too much of the year passes.
Mandelbaum Barrett PC attorneys were featured in an NJ.com article discussing key considerations for taxpayers thinking about their 2018 tax returns. The piece highlighted the practical guidance the firm’s attorneys provide to individuals, families, and businesses navigating federal and New Jersey tax obligations. The firm’s tax law practice advises clients on personal and business tax planning, estate and gift tax matters, and related legal issues throughout New Jersey and New York.
The Tax Cuts and Jobs Act and 2018 Returns
The 2018 tax year was the first in which taxpayers were subject to the Tax Cuts and Jobs Act, the most significant overhaul of the federal tax code in decades. The TCJA made substantial changes affecting individuals and businesses alike — from restructured income tax brackets and a new flat corporate rate to a $10,000 cap on the deduction for state and local taxes and the elimination or modification of numerous deductions that taxpayers had previously relied on.
For New Jersey taxpayers, the SALT deduction cap was particularly consequential. New Jersey consistently ranks among the states with the highest property tax and income tax burdens, meaning that many residents who previously deducted substantial state and local taxes found those deductions significantly curtailed under the new rules. Understanding the net effect of these changes on total tax liability was a priority for many households and businesses as they prepared their first returns under the new law.
Common Questions During Tax Season
Taxpayers and their advisors typically focus on several recurring questions when reviewing annual returns and planning for the year ahead. These include whether retirement contribution strategies — IRA, 401(k), SEP-IRA — have been fully utilized, how investment gains and losses should be characterized and timed, whether business entity structures remain optimal given the new rate landscape, and whether prior estate planning arrangements reflect current law and family circumstances.
According to the Internal Revenue Service, the Tax Cuts and Jobs Act made significant changes to both individual and business taxation that required many taxpayers and their advisors to reassess prior planning strategies. Knowing which changes applied to a specific situation — and which required proactive action — was central to effective tax season planning in 2019.
New Jersey-Specific Tax Considerations
New Jersey has its own income tax system, estate rules, and business taxation framework that interact with federal law in ways that require careful attention. New Jersey eliminated its state estate tax as of January 1, 2018, a development with significant implications for estate planning for residents of the state. New Jersey’s inheritance tax remains in place, however, and continues to affect estate planning strategies for many families, particularly those with non-lineal heirs.
Contact Mandelbaum Barrett PC for Tax Law Guidance
If you have questions about federal or New Jersey tax planning, business tax matters, or estate and gift tax strategies, the tax law team at Mandelbaum Barrett PC can help you evaluate your current approach and identify opportunities to plan more effectively going forward.
Reach out through our contact page to speak with our team. We are here to help you make informed decisions about your tax obligations and planning options.