Local CPAs break down new tax laws
Published 4:13 pm Tuesday, January 23, 2018
Three local CPAs presented portions of the new Tax Cuts and Jobs Act of 2017 at Rotary Tuesday.
It began with John Dowdy, CPA, who addressed the many issues of individual provisions. Some highlights of his presentation were how the act reduces income tax rates for the vast majority of individual taxpayers, substantially increases the standard deduction, eliminates the deduction for personal exemptions, eliminates itemized deductions subject to the 2 percent of AGI subtraction, increases the child tax credit and allows payment of up to $10,000 of K-12 tuition from a 529 plan. It provides a 20 percent deduction for “Qualified Business Income” from proprietorships, partnerships and S Corporations. Those who have been filing itemized forms, may choose to consider just taking the $24,000 standard deduction allowed for married, filing jointly, as many of the miscellaneous itemized deductions have been suspended under the new law.
He commented a couple of times during his presentation about how, “They giveth with one hand, then taketh away with another” on some of the issues.
Email newsletter signup
Richard Y. Youmans, CPA, then addressed the business and depreciation provisions of the new law, stating that generally the Act provides a flat 21 percent tax rate for “C” Corporations for tax years beginning after Dec. 31, 2017. There is no longer a 15 percent bracket on the first $50,000 and the corporate AMT has been repealed.
Generally, all trade or business income at the individual level is eligible for a 20 percent deduction if the taxable income is less than $315,000 (Married filing jointly) and $157,000 for single filers.
Estate and Gift Tax Provisions were covered by Al Newton, JD, CPA with Burke, Worsham & Harrell, LLC. He managed to add a few touches of levity to otherwise serious and detailed financial information. There is a $1000 increase in annual gift tax exclusion amount, going from $14,000 per donee to $15,000 per donee.
He also offered some advice regarding wills. He recommends reviewing your will, basically if you and your spouse’s estates aren’t likely to be subject to estate tax, stop and think before you do something that would take away the opportunity for the cost basis of highly appreciated assets to be stepped-up to their fair market value at your and your spouse’s death.
There are many, many details to understanding the tax law changes, and it is recommended you consult with your tax preparer to know how they will affect you personally.