FLEMINGSBURG — Some changes to the income taxes were discussed during a Fleming County Chamber of Commerce breakfast on Thursday.
Tim Eldridge and Janet Jackson, with Baldwin CPA, said there were several things people needed to be aware of this year when filing taxes.
One of those changes includes the SECURE Act, which stands for setting every community up for retirement enhancement.
According to Eldridge, that means that now it is easier for people to be involved in multiple employer plans.
“This is going to pave the way for small employers to join together in associations and things like that and to have 401Ks and maybe more sophisticated retirement plans without incurring as much of the detailed costs,” he said.
There is a $500 credit available for employers to create new retirement plans, according to Eldridge.
He also said that graduate students who work in fellowships or get stipends for their work while in school will now qualify for retirement.
“They can use that money and start retirement plans, where they previously couldn’t,” he said.
Another change was the repealing of an age limit for making IRA contributions. Previously, IRA contributions could not be made after the age of 70.5, but now there is no age limit.
“You still have to take the minimum distribution, but you can be putting new money in,” Eldridge said.
Another change was for part-time employees eligibility for 401K plans.
“In the past, the 401K could be set up to restrict anyone who didn’t work more than 1,000 hours,” he said. “Now, if you work 500 hours in three years and you’re 21 years old than you can’t be excluded from a 401K. The second one is if you work at least 1,000 hours in the prior year, then you will be eligible for the 401K the following year.”
According to Jackson, some other changes include the return of the tuition deduction and the way the home mortgage interest has been modified.
“Whole mortgage indebtedness is deductible as long as it is for acquisition or improvements,” she said. “The main change with this is on the home equity lines of credit. It depends on what that interest is used for. A lot of people used to use it to buy a car, but now you have to look at the underlying use of the home equity. If you do that now — sorry, it’s not deductible now.”
Jackson also said the limitation on charitable contributions has changed. Previously, only 50 percent could be counted as a deduction, but now it is 60 percent.
Eldridge also said something new this year is house visits for those who have not filed taxes in a couple of years.
“If you make $100,000 or more each year and you didn’t file last year or the year before, you may get a visit from the IRS,” he said.
Anyone with questions regarding tax changes are encouraged to talk to a tax specialist.
