While major tax changes can be unnerving, a majority of taxpayers will still benefit in the end — some more than others.
RATES: Tax rates and the application of these rates have been recalibrated in a way that nearly everyone will see a rate decrease. The 2017 15% bracket is now the 2018 12% bracket. That’s 3% less!
DEDUCTIONS: Although personal exemptions have been discontinued, the standard deduction has almost doubled. So for some taxpayers, the increased standard deduction offsets the loss of exemptions. For those who lose deductions because of this change, the rate change plus other deductions generally offset negative tax effects.
IT’S IMMEDIATE: The IRS changed the withholding table earlier this year to avoid forcing taxpayers to wait until next tax filing season to see benefits. They also developed new tools to help taxpayers determine withholding amounts. There’s a new W-4 form, and an online tax withholding calculator(www.irs.gov).If you need guidance determining your withholding amount, please contact us to arrange a convenient meeting to review your details.
NOT-SO-SIMPLE: The new tax law is not as simple as originally touted, so our future communications to you will outline several other issues, including itemized deductions (including charitable contribution planning and use of home equity loans); child and dependent credits; and for business owners the new 20% qualified business income deduction; and more.
We are currently discussing many of these issues with clients and developing plans to increase benefits for them. If you have any questions or concerns, we’d be happy to review details with you as well.
We greatly appreciate your business. If you know someone who might benefit from our services, please tell them about us!