UPDATE - HIGHLIGHTS OF SOME OF THE TAX LAW ISSUES FOR 2017 and 2018
As of December 18, 2017, the U. S. Senate has reached an agreement on the new tax bill. Based on the "final version" agreed to over last weekend, here are some of the highlights that might affect your income taxes.
The good news is that most individual taxpayers will be paying less because the tax brackets have been lowered for 2018.
Here are some of the other highlights:
Personal exemptions are eliminated, but the Child Tax Credit is increased
The Standard Deduction has been increased to $12,000 for single and $24,000 for joint filers
The compromise on the State & Local Income Tax allows an annual deduction up to $10,000
The exemption for Estate Tax has been doubled to $11.2 million
Small Business Owners will be allowed to deduct a portion of their business income
Itemized Deductions for medical expenses will revert to the 7.5% threshold for two years
Education credits remain unchanged
So, how does this affect your personal situation and what can we do to maximize our deductions for 2017 and 2018?
First, if you normally pay more than $10,000 worth of itemized deductions for the combination of real estate taxes and state income taxes, you should probably pay those items in 2017 as you will be limited in 2018.
Second, if you normally itemized but your total is less than $12,000 for a single taxpayers and less than $24,000 for a jointly filing taxpayer, then you should look at the possibility of paying some of those deductions in 2017. If you wait and pay those items in 2018, you may receive no tax benefit.
There are several other important changes and everyone's income taxes are different. So, make sure to contact us if you have any questions about your particular situation.