How the tax reform law will change deductions

NEW YORK (FOX5NY.COM) - Everyone from tax filers to tax professionals are asking questions about the new rules taking effect in 2018 after the passage of the GOP's tax reform legislation. Good thing we have some time to figure it all out.

The Republican-led tax reform legislation was supposed to make our taxes simpler than ever. But I'm not hearing too many people describe it that way. Everyone from tax filers to tax professionals are asking questions about the new rules taking effect in 2018. Good thing we have some time to figure it all out.

A lot of people were worried about the mortgage-interest tax deduction, which we now know will stay but at a lower cap. Right now it's $1 million. Starting in 2018, that will drop to $750,000. And that could be frightening some people.

Weekly mortgage applications were down 5 percent. That means that fewer people are looking to buy houses. Even if it is just a matter of perception that cap in the mortgage tax deduction could hurt the housing market especially in expensive areas such as New York and California.

A lot of questions are being asked this week about pre-paying your property and income taxes.

The state and local tax deduction is dwindling to just $10,000. People are wondering if they can pay those taxes early and claim the deduction for 2017. The answer: You cannot do that for your income taxes (provisions in the tax legislation prevent that).

But what about prepaying property taxes? The tax bill doesn't prevent it but it is really complicated. You can only prepay taxes that have already been billed or assessed. And even then, it is not so simple, especially if you have an escrow account.

It may also affect whether or not you have to pay the alternative minimum tax. And not all municipalities will allow it. Check with your accountant before running out to your town hall to pay those early.

Both outgoing New Jersey Gov. Chris Christie and incoming Gov. Phil Murphy are pushing for a property tax write-off on state returns. Christie floated the idea Wednesday at a news conference in Trenton, saying  it would cost the state between $150 million and $170 million. Christie stopped short of saying he'd push for the write-off before he leaves office on January 16.

But it looks like Murphy will pick up where Christie leaves off. Murphy said he will push back against the federal tax bill and that all options are on the table. Property taxes in New Jersey are the highest in the nation.

People still have tons of questions about their tax brackets and how the new bill will specifically affect them. Below is a helpful link to the Wall Street Journal. Check out how this bill will either cost you or cut you a break.