Federal and state tax laws change every year. From subtle deduction rulings to major overhauls such as the 2018 Tax Reform. We will assist you with comprehensive individual and small business tax planning and preparation.
To take full advantage of the 2018 Tax Reform your planning for 2018 should begin now. Our experience in tax preparation, estate planning and business advisory services will help you minimize your tax burden.
We help you identify all options and work with you to determine the best path for you now and in the future. Please contact our office to setup a free consultation to get started now.
Summary of Tax Cuts and Jobs Act of 2017
The Tax Cuts and Jobs Act changes are quite extensive and also quite complicated. Contact our office at your convenience so we can discuss how these changes will impact your tax situation, and what kind of strategies we can adopt to ensure that you get the best possible outcomes under the new rules.
Overview for individuals:
On December 22, the Tax Cuts and Jobs Act of 2017 (TCJA) was signed. Generally, the new law goes into effect in 2018, with many of the provisions relating to individuals are expiring at the end of 2025. Here is a brief rundown of what's in the new law and how it might affect you:
Most Tax Brackets have lowered by 3%, but not consistently.
Personal Exemptions have been eliminated. This removes a $16,000 deduction for a family of 4.
However, the Standard Deduction nearly doubles to $24,000 for joint filers and to $12,000 for single individuals. This benefits some, but not those who have higher itemized deductions.
The child tax credit increased to $2,000 for children up to age 16, and provides a $500 tax credit for dependent children over age 16 and all other dependents.
Deduction for State and Local Taxes (SALT). TCJA imposes a $10,000 limit on the deduction for state and local taxes, which can be used for both property taxes and income taxes (or sales taxes in lieu of income taxes) and repeals the deduction for foreign property taxes. Many taxpayers’ itemized deductions will be reduced because of this new law. There was no limit on the amount of the SALT deduction under prior law.
Deduction for Certain Miscellaneous Expenses. TCJA repeals the deduction for most miscellaneous itemized deductions.
Repeal of Alimony Deduction. In 2019 TCJA repeals the deduction for alimony paid and the corresponding inclusion in income by the recipient. Agreements prior to 2019 will generally be grandfathered under the old rules.
Alternative Minimum Tax. TCJA sharply increases the income level where the exemption is phased out. This will help many high income taxpayers.
Expanded Uses for 529 Plan Distributions. TCJA allows up to $10,000 in aggregate 529 distributions per year to be used for private elementary and secondary school tuition.
Repeal of Individual Healthcare Mandate. For 2019 TCJA repeals the tax penalty on individuals who fail to carry health insurance enacted as part of the Affordable Care Act (ACA).
Estate and Gift Tax Exclusion. TCJA doubles the basic exclusion amount for estate and gift tax purposes from $5.6 to $11.2 million, but to revert in 2026.
Passthrough Tax Break. TCJA creates a new 20 percent deduction for qualified business income from sole proprietorships, S corporations, partnerships, and LLCs taxed as partnerships. The new tax break is subject to some complicated restrictions and limitations, but the rules that apply to individuals with taxable income at or below $157,500 ($315,000 for joint filers) are simpler and more permissive than to individuals with incomes above those thresholds.
The above information is just an overview. Contact our office and we will create the right tax strategy for your situation.
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