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Archive for Tax Cuts and Jobs Act

Tax Cuts And Jobs Act Summary Of Changes (2018 To 2025)

Chortney Ruesch, TaxAdvisor

Now that congress has made final the latest tax act, I thought I would take a moment to share with you a summary of the changes so you may understand how they may affect you. These are in place 2018 until 2025. 

Individuals

Income Tax Rates

The 39.6% tax bracket has been removed and the rates have been condensed.

The system for taxing capital gains and qualified dividends did not change except the income levels for the 15% rate will start at $77,200 for married filing joint and $38,600 for single filers. The 20% rate will start at $479,000 for married filing joint and $425,800 for single filers.

The Standard Deduction

The standard deduction has been modified making it $24,000 for married filing joint and $12,000 for single filers. This will make the standard deduction more attractive than itemizing for many taxpayers.

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Tax Cuts And Jobs Act Policy Highlights – House And Senate Conference Committee

The Tax Cuts and Jobs Act (H.R. 1) overhauls America’s tax code to deliver historic tax relief for workers, families and job creators, and revitalize our nation’s economy. By lowering taxes across the board, eliminating costly special-interest tax breaks, and modernizing our international tax system, the Tax Cuts and Jobs Act will help create more jobs, increase paychecks, and make the tax code simpler and fairer for Americans of all walks of life. With this bill, the typical family of four earning the median family income of $73,000 will receive a tax cut of $2,059.

For Individuals And Families, The Tax Cuts And Jobs Act

  • Lowers individual taxes and sets the rates at 0%, 10%, 12%, 22%, 24%, 32%, 35%, and 37% so people can keep more of their hard-earned money.
  • Significantly increases the standard deduction to protect roughly double the amount of what you earn each year from taxes – from $6,500 and $13,000 under current law to $12,000 and $24,000 for individuals and married couples, respectively.
  • Continues to allow people to write off the cost of state and local taxes – up to $10,000. Gives individuals and families the ability to deduct property taxes and income – or sales – taxes to best fit their unique circumstances.

Takes Action To Support More American Families By

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No More Miscellaneous Itemized Deductions

The list of miscellaneous itemized deductions is an odd mixture of various deductions that didn’t fit anywhere else in the tax code. It includes items such as losses from Ponzi-type investment schemes, tax preparation fees, and certain safety deposit box fees. There does not seem to be much rhyme or reason to why these deductions were all lumped together.

Perhaps because these deductions are so obscure, the new Tax Cuts and Jobs Act (TCJA) has suspended miscellaneous itemized deductions for all tax years beginning before January 1, 2026. Taxpayers who previously took advantage of these deductions will now be out of luck.

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How Home And Security Ownership Is Affected By Tax Reform

In 2018, The Tax Cuts and Jobs Act of 2017 will create tax changes to home and securities ownership by changes to itemized deductions on Schedule A. If you own or are buying a residence and/or second home, you may have the following limitations on your itemized deductions:

1. The combination of real estate and state income or sales taxes paid each year will be limited to a maximum deduction of $10,000.  This will be a killer in high state and local tax states. State and local taxes (SALT) normally include state income taxes or state sales taxes (usually the higher of the two) and state and local property taxes, which can include real estate and personal property tax.

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Tax Cuts And Jobs Acts: Impact On Businesses

The Tax Cuts and Jobs Act, a $1.5 trillion tax cut package, was signed into law on December 22, 2017. The centerpiece of the legislation is a permanent reduction of the corporate income tax rate. The corporate rate change and some of the other major provisions that affect businesses and business income are summarized below. Provisions take effect in tax year 2018 unless otherwise stated.

Corporate Tax Rates

  • Instead of the previous graduated corporate tax structure with four rate brackets (15%, 25%, 34%, and 35%), the new legislation establishes a single flat corporate rate of 21%.
  • The Act reduces the dividends-received deduction (corporations are allowed a deduction for dividends received from other domestic corporations) from 70% to 50%. If the corporation owns 20% or more of the company paying the dividend, the percentage is now 65%, down from 80%.
  • The Act permanently repeals the corporate alternative minimum tax (AMT).

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New 2018 Capital Expense Rules

John Adams, Tax Advisor, Tax Blog, Cherry Hill, NJ, TaxConnections

There are many provisions in the tax reform bill (The Tax Cuts & Jobs Act) passed in late 2017 designed to benefit small business owners. They include a lower corporate tax rate as well as a special tax reduction for business structures taxed as pass-through entities. There are also a variety of new tax tools affecting how small businesses account for deducting the cost of capital purchases under the new tax law.

Here’s what you need to know about them: Read more

Section 199 Repeal Opportunities

John Manning, Tax Advisor, Bethesda, ML, TaxConnections

With section 199 repealed for tax years beginning after 12/31/17, now is the time for a final review of domestic production activity deductions (“DPAD”).  A properly conducted review will optimize 2017 DPAD and identify refund opportunities in prior tax years.

With internal resources likely committed to 2017 compliance and implementation of the Tax Cuts and Jobs Act, chief tax officers should consider success-based-fee DPAD reviews for years prior to 2017.   Read more

Additional Details About The Tax Reform Act

Kazim Qasim, Orlando, FL, Tax Advisor, Tax Blog, TaxConnections

In last month’s newsletter we presented some general facets of the Tax Cuts and Jobs Act (TCJA). In this article, we will explore some portions of the new bill in greater detail.

In general, the law cuts corporate tax rates permanently and individual tax rates temporarily. It permanently removes the individual mandate, a key provision of the Affordable Care Act, and it changes other policies in dramatic ways, such as the SALT deduction (which will be explained in more detail below). Read more

New Tax Bill May Eliminate Right To Deduct Fees Expended “In Connection With The Determination, Collection, Or Refund of any Tax”

Kevin Sweeney, Tax Advisor, Tax Blog, Philadelphia, PA, TaxConnections

All taxpayers, whether individuals or not, may deduct as business expenses the costs relating to tax matters that are ordinary and necessary in the conduct of their trade or business under Section 162 of the Internal Revenue Code.

However, certain non-business expenses are also deductible under Section 212, “Expenses for production of income.”  Notwithstanding the somewhat limiting title of Section 212, subsection (3) currently permits a deduction for non-business expenses that can have nothing to do with the production of income, namely expenses paid or incurred “in connection with the determination, collection or refund of any tax.”  Read more

New Tax Law Gives Pass-Through Businesses A Valuable Deduction

William Rogers, Tax Advisor, Ranchoi Santa Fe, CA, Tax Blog, TaxConnections

Although the drop of the corporate tax rate from a top rate of 35% to a flat rate of 21% may be one of the most talked about provisions of the Tax Cuts and Jobs Act (TCJA), C corporations aren’t the only type of entity significantly benefiting from the new law. Owners of noncorporate “pass-through” entities may see some major — albeit temporary — relief in the form of a new deduction for a portion of qualified business income (QBI). Read more

President Trump’s “Tax Cuts and Jobs Act”

Kazim Qasim, Tax Advisor, Tax Blog, Orlando, FL, TaxConnections

President Trump signed the “Tax Cuts and Jobs Act” into law on Dec. 22, as noted and summarized from a report by Investopedia. The Senate passed the bill on Dec. 20 by a party-line vote of 51 to 48. The House passed the bill later in the day by a vote of 224 to 201. No House Democrats supported the bill, and 12 Republicans voted no, most of them representing California, New York and New Jersey. (Taxpayers who itemize and rely on the state and local tax deduction in these high-tax states will have their state and local tax deductions capped at $10,000 or $5,000 if Married Filing Separate). Read more

Meals, Entertainment, And Transportation May Cost Businesses More Under The TCJA

William Rogers, Tax Advisor, Rancho Santa Fe, CA, Tax Blog, TaxConnections

Along with tax rate reductions and a new deduction for pass-through qualified business income, the new tax law brings the reduction or elimination of tax deductions for certain business expenses. Two expense areas where the Tax Cuts and Jobs Act (TCJA) changes the rules — and not to businesses’ benefit — are meals/entertainment and transportation. In effect, the reduced tax benefits will mean these expenses are more costly to a business’s bottom line. Read more

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