It's good to take two minutes to reflect on those unsung heroes who have quietly changed the world.

Full disclosure: this video was produced by my brother, who does damn good work!   If you have a need for damn good video production, he can be found at This email address is being protected from spambots. You need JavaScript enabled to view it.


While accountants and preparers are still studying the massive changes to tax law in the Tax Cuts and Jobs Act (12/22/17), Congress slipped in another batch of changes, only this time the effects are retroactive to 1/1/17, and in most cases expire after 12/31/17.  No matter that these changes affect 2017 tax returns that we have already filed, and many more that we will file before the IRS decides how to implement these changes, and tax software providers can modify their software. Who wouldn't want to spend all summer amending returns because Congress can't amend 2017 tax law during 2017?

The new tax law contains a remarkable new deduction for individuals who earn "pass-thru" business  income.(Yup, the law actually spells it "pass-thru".)  Basically, if you are reporting business  income from K-1, a Schedule C, or a Schedule F, you get a deduction for 20% of your net business income, subject to some limitations.

The NY Times and the LA Times described this a the "Gig" deduction, and the biggest loophole for the next decade. They worry that salaried employees will forgo their paycheck, benefits, and job security (whatever that is), and become independent contractors to qualify for the 20% deduction.

They're both wrong.

Mortgage Interest Round Two

Q.  The new tax law eliminates the deduction of interest for home equity loans, but  I can’t seem to get an answer on whether the interest on our “Home Equity First Mortgage” from our federal credit union will be deductible. We refinanced our existing FHA first mortgage last month based on the equity in our home, and the mortgage docs shows it as a conventional fixed rate loan for 10 years.  I’d hate to have to do a whole new refinance if we don’t need to for the mortgage deduction…

A.  Chances are pretty good that your refinance is deductible, but that depends on how the proceeds of the loans were used.

I will assume all of the proceeds from the original FHA loan were used to acquire the  residence. 

When refinancing, proceeds can be used for various purposes, such as:

1) pay off the old loan,

2) to make improvements to the residence, and

3) other purposes, like college or wedding costs.

Of these, proceeds used for 1 .and 2. qualify as acquisition debt, so interest on this portion of the refinance would still be deductible.

Proceeds used for other purposes (3.)  is not acquisition debt;  the related interest would be deductible as home equity interest under 2017 law, but is not deductible under 2018 law.


Under 2017 law, alimony and separate maintenance payments were deductible by the payor spouse and includible in income by the recipient spouse.

Child support payments were not treated as alimony.  

Under the new law, alimony and maintenance payments are not deductible by the payor, and are not considered taxable income to the recipient. This will likely result in alimony being taxed to the spouse with the higher tax rate.

Wait, don't panic! This provision applies to divorce/separation agreements executed after December 31, 2018. If you untied the knot before that date, you can stay under the old rule, or, if you like the new law better, you can modify your prior agreement.

 What's to complain about?

They doubled the child tax credit for "the little guy", and made it easier for rich guys to qualify too.

If you have children under the age of 17, you are probably familiar with the child tax credit. For the most part, the new law improves and expands the credit, and dramatically raises the AGI limits at which the credit begins to phase-out. Below is a brief summary of the old law, and analysis of how the child credit changes under the new law.

The short answer to your question: most people will not see a change in their mortgage interest deduction.  Your deduction for interest on home equity loans, however, is toast*.

The new tax law makes some changes to the deductability of home mortgage interest, but the changes apply within the framework of prior law. And, the prior law is automatically reinstated 1/1/26.  So, to understand the changes, we need to review prior law.

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