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The New Tax Plan Has Been Released, How Will It Affect You?

David M. Robson - September 29, 2017

 

The quick answer is it's too early to tell. This is only a tax reform structure and the details have been left to Congress to iron out the details. So, we will have to wait to see the outcome, if it passes.
What we can determine so far is that the standard deductions will be raised, although the additional deduction for being over 65 and/or Blind have been removed. There does not appear to be a provision for the Head of Household status, so we must assume that these people would fall under the Single category. There are also questions related to the fact the personal exemptions have been rolled into the standard deduction, this affects how much the itemized deduction would have to be to make it favorable over the standard deduction. Another interesting proposal is the comment that "most" of the itemized deductions are being eliminated except for the mortgage interest and charitable contributions. The word "most" leaves many unanswered questions. Does this mean that casualty losses may be removed? I'm sure the recent victims of the hurricanes and forest fires would be horrified to learn that. It also may mean that gambling losses would no longer be available to offset gambling winnings. But these are only a couple of examples outside of the usual medical expenses, unreimbursed employee business expenses and taxes that are often associated with the itemized deductions.
Another interesting proposal is the reduction for 7 tax brackets to just 3 brackets. It is impossible now to determine the actual effect of this due to the fact the income ranges have not been determined yet. There is also no mention of the changes to capital gains rates.
There are more questions than answers, we will have to wait to see how the plan will be implemented.
What should you do now? Well, just because the tax reform has not been finalized doesn't mean that you can't improve your tax situation now. In my experience, most people are not taking advantage of all the strategies that could be saving them significantly on their tax bill. Let's do a free tax analysis and see if you are paying more than your fair share. There are many legitimate deductions that when implemented correctly can dramatically affect your tax bill.
If you want to see a summary of the tax reform plan cfollow this link to download a copy.

 

 

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