How will the new tax laws impact you?

In December, Congress passed the “Tax Cuts and Jobs Act” which will affect the tax situation of nearly every family.  The changes will be beneficial for many taxpayers, but for some, the effects could be neutral to significantly unfavorable.  The law contains several potentially offsetting positive and negative factors depending on your specific tax situation.  Some key provisions include:

Positives

  1. Reduced marginal tax rates at most taxable income levels.
  2. Increased standard deduction (nearly doubled).
  3. The child tax credit is doubled to $2,000 per qualifying child. More families will qualify for the credit.
  4. A new 20% deduction for owners of “passthrough” small businesses (subject to complex limitations and exceptions).
  5. Fewer people will be subject to the Alternative Minimum Tax.

Negatives

  1. The itemized deduction for state & local income taxes and real estate taxes is now capped at a combined total of only $10,000 per year.
  2. Personal exemptions are eliminated.  Personal exemptions were deductions against taxable income of $4,050 per person in your household for years prior to 2018.
  3. Interest on home equity loans is no longer deductible. There are new limitations on interest deductions for primary mortgages over $750k.

While these key provisions affect nearly everyone, there are several other provisions in the new law which could provide tax planning opportunities.  Do not be caught off-guard in 2018 by unexpected tax surprises!  One thing is for certain, Congress did not deliver on it’s promise to simplify the tax code.  The professionals at Dublin Advisors LLC, CPA can help you to understand, and plan for, how the new tax law will affect your specific tax situation.  Call today for an appointment 614-674-1482.

For a more detailed overview of the provisions of the Tax Cuts and Jobs Act for individuals, please refer to the document attached below.

PDF: Overview of the 2017 Tax Cuts and Jobs Act for Individual Taxpayers



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