2018 Tax and Jobs Act Analysis

Visit my website at http://www.davidasnydercpa.com and call me at 928-445-0104 x9 with any business or tax issues.   I want to thank all my clients for the great year and hope you all have a prosperous and Happy New Year!!

Here are some key items of the new tax bills:

  1.  The standard deduction was increased to $24,000 married and $12,000 Single, almost doubling the deduction.  However, personal exemptions were eliminated.
  2. The new tax rates are 10%, 12%, 22%, 24%, 32%, 35% and the top rate of 37%, down from 39.6%.  The brackets themselves are also changed.
  3. Individual deduction for state, local and property taxes are limited to $10,000 married and single filer and $5,000 for married filing separately.  Miscellaneous itemized deductions were eliminated.  Medical Expense deduction floor was reduced back to 7.5% of AGI.
  4. Individuals are generally allowed an itemized deduction for interest on a principal residence and second up to a combined $750,000.  Home Equity Lines of Credit (HELOC) interest is no longer deductible.
  5. Distributions from 529 plans of up to $10,000 per year and per student can be used for tuition for elementary and secondary public, private or religious schools instead of just college.
  6. Cash gifts to public charities are deductible as long as it does not exceed 60% of the taxpayers AGI, up from 50% in prior years.
  7. The Estate, Gift and GST tax exemptions were doubled to $11.2 million per US domiciliary.  This exemption sunsets in 2025 and may cause a claw-back at death if not changed.
  8. The Child Tax Credit increases to $2,000 per qualified child, with $1,400 being refundable.
  9. The individual mandate for Health Insurance will be repealed.
  10.  Drilling in the ANWR in Alaska will be allowed.
  11.  The Alternative Minimum Tax (AMT) exemption amount increased to $109,400 married and $70,300 single with   the phase out of the exemption increasing to 1 million married and $500,000 single.

Analysis:  Overall this is a great bill for my clients and great for the American people.  Although the personal exemptions were eliminated, some of that, but not all, will probably be offset by the increase in the standard deduction.  The last higher 5 tax brackets are better.  Even though there is a new cap on state and local taxes, it will not be a problem for most of my AZ clients and may be offset by the change in medical expense deductions for those that itemize.  529 plans, the cash charitable contributions, the Estate and gift tax exemption, child tax credits, the repeal of the individual mandate, and the changes in the AMT should makes the tax situation for the majority of the American people better.

There are many other key items in the new tax bill and we may discuss them in more detail in another newsletter or during tax preparation.  Please come and see me for all your accounting and tax needs, I look forward to assisting you in any way possible.  If you need further information on these tax tips, please call me at 928-445-0104 x9 or contact me at dsnyder141414@gmail.com.

David A. Snyder CPA, PLLC www.davidasnydercpa.com

325 Montezuma Street, Prescott, AZ 86303 (928)445-0104 Ext. 9
Fax (928) 717-1076  dsnyder141414@gmail.com