• Turner's Tax Service
  • Contact Us
  • Directions
  • Recent Tax Updates
  • Fees and Policies
  • Forms

TAX BILL HEADED TO PRESIDENT

12/20/2017

0 Comments

 
Courtesy of Spidell Publishing -

Both the House of Representatives and the Senate passed the tax reform bill today, and President Trump is expected to sign it as soon as it reaches his desk. Here is a partial list of provisions included in the bill:

  • Individual rates will range from 10% to 37%, and the corporate tax rate will be 21% 
  • The standard deduction is increased and personal and dependent exemptions are eliminated
  • The Child Tax Credit is enhanced and a new Family Tax Credit is enacted
  • Mortgage interest deductions will be limited to underlying indebtedness of up to $750,000 ($375,000 for married filing separate) and no deduction is allowed for equity debt
  • Individuals may deduct a maximum of $10,000 in state income tax and/or property tax 
  • No deduction is allowed for miscellaneous itemized deductions subject to the 2% floor 
  • State income tax paid in 2017 for the 2018 tax year is not deductible
  • The exclusion for moving expense reimbursements and the moving expense deduction are generally eliminated
  • The ACA individual mandate is eliminated and the shared responsibility payment is $0 effective in 2019.  The requirement to have health insurance or pay a penalty remains for 2018. 
  • AMT for individuals is retained but exemption amounts are increased, and the corporate AMT is repealed
  • The gift and estate tax is retained with an increased exemption amount
  • IRC §179 expensing and bonus depreciation are increased
  • Deductible business interest is reduced and the business deduction for entertainment is eliminated
  • The NOL carryback is repealed and the NOL deduction amount is limited
  • The domestic production activities deduction is repealed
  • IRC §1031 treatment is limited to certain real property
  • A deduction is allowed for qualified business income for passthrough entity owners and
  • Recharacterization to an IRA cannot be used to undo a Roth conversion.

The IRS will now promulgate regulations to implement the legislation.  This will take months, given budget cutbacks at the IRS and the complexity of the law.  Until the new rules are available, calculating how the legislation will impact individual taxpayers and families will be challenging.  Turner's Tax Service will be monitoring the situation closely and will provide each client with an individualized assessment as quickly as possible. 
0 Comments

GOP TAX BILL IS RELEASED

12/15/2017

0 Comments

 
The final version of the Tax Cuts and Jobs Act was just released.  The House and Senate are expected to vote on it early next week and it appears the Republicans have enough votes to pass it.  These changes will not impact the 2017 tax return you will file in a few months as they are all effective either January 2018 or January 2019.  Here's a rundown of what's in the final bill according to the Washington Post -

A new tax cut for the rich.  The tax rate for top earners is reduced from 39.6 percent for a married couple earning over $470,70 and a single person earning over $418,400.  The bill would drop that to 37 percent for married couples earning over $600,000 and a single person earning over $500,000.

There are still seven tax brackets but the percentages change and the threshold for each bracket has changed.  Until the bill passes and the IRS issues new withholding tables, employees will not see any change to the taxes coming out of their paychecks.  It will probably take several months for payroll systems to be updated.

A massive tax cut for corporations.  Starting in January 2018 the corporate tax rate falls from 35 percent to 21 percent.  This is the largest one-time rate cut in US history.

You can deduct just $10,000 in state, local and property taxes.  The bill originally restricted the $10,000 deduction to just property taxes, but the final bill allows any state and local taxes to be deducted, whether for property, income or sales taxes.

Working class families get a bigger child tax credit.  The child tax credit was increased from $1000 to $2000.  Families making up to about $400,000 get to take the credit and up to $1400 of the credit is refundable, meaning families that work but don't ean enough to actually owe any federal income taxes will get a check back from the government for up to $1400. 

The individual health insurance mandate goes away in 2019.  Americans would no longer be required by law to buy health insurance or pay a penalty if they refuse to do so.  Current law remains in place for 2018.  The Congressional Budget Office projects the change will increase insurance premiums and lead to 13 million fewer Americans with health insurance in a decade.

The inheritance tax threshold was doubled.  For single taxpayers that means the first $11 million you inherit won't be taxed and for a married couple the first $22 million won't be taxed.

"Pass through" companies get a 20 percent reduction.  S corporations, LLCs, partnership and sole proprietorships all pass through income to the business owner's individual tax return.  The majority of these companies will now get to deduct 20 percent of their income tax-free.  Service businesses such as law firms and doctor's offices can only take the deduction if their income is below certain levels.

Corporations no longer have to pay the alternative minimum tax (AMT)  and fewer families will have to pay the individual AMT.  The AMT will apply to single taxpayers earning over $54,300 and couples earning over $84,500, although nearly everyone who ends up paying the AMT earns considerable more than that.

The student loan deduction, the medical expense deduction and the graduate student tuition waivers remain.

The Johnson Amendment stays in place.  
Churches, synagogues, mosques and other nonprofits can't get political and endorse candidates in elections.

How this all gets paid for remains unclear.

This is a massive bill - more than 1100 pages.  Analysts and tax experts will be pouring over it all weekend and many more details will be available next week.  Turner's Tax Service will continue to keep you updated as more information becomes available.  


0 Comments

CONFERENCE COMMITTEE REACHES TENTATIVE DEAL ON TAX BILL

12/15/2017

0 Comments

 
Courtesy of Parker Tax Publishing

Yesterday, December 14th, the conference committee reconciling the House and Senate versions of the Tax Cuts and Jobs Act (TCJA) ("House Bill" and "Senate Bill", respectively) is reported to have reached a deal in principle and is working rapidly to finalize legislative language for the massive tax bill. The legislators are rushing to get a bill passed before the holiday recess, a self-imposed deadline made more urgent by a Democratic victory in the Alabama special Senate election earlier this week.

The conference committee has not released a summary of its agreement, but a number of key details have emerged through comments (on and off the record) by members of Congress close to the negotiations and their staffs. According to the sources, negotiations between the House and the Senate have yielded the following compromises, concessions, and changes:

(1) A top individual tax rate of 37 percent (compared with 39.6 percent rate in the House Bill and 38.5 percent rate in the Senate Bill);
(2) A top corporate rate of 21 percent (compared with a rate of 20 percent in both the House and Senate Bills);
(3) Full repeal of the corporate alternative minimum tax (AMT) (adopts provision from the House Bill; the Senate Bill had retained the corporate AMT);
(4) A 20 percent deduction against qualified business income from passthrough business entities (compared with a 23 percent deduction in the Senate Bill, from which the provision is derived) and a likely tightening of the rules for calculating "qualified business income" (moving them toward the generally stricter ones in the House Bill);
(5) Repeal of shared responsibility payments (individual healthcare mandate) under the Affordable Care Act (provision was in the Senate Bill but not the House Bill);
(6) A maximum $10,000 deduction for state and local property taxes for individuals, with taxpayers being able to choose between deducting either property taxes or income taxes (the House and Senate Bills allowed for only the deduction of property taxes up to the limit; it's not clear whether taxpayers would be able to deduct sales taxes instead of income taxes, as they can under present law);
(7) A lowered $750,000 limit on the loan amount for which a mortgage interest deduction can be claimed by individuals, with existing loans grandfathered (splits the difference between the House and Senate Bills; the limit under present law is $1 million);
(8) Continued deductibility of unreimbursed medical expenses of individuals (the House Bill repealed the deduction);
(9) Retention of individual AMT with an exclusion of $1 million for joint filers and $500,000 for all others (the House Bill repealed the individual AMT; the Senate Bill retained it with far less generous enhancements to the AMT exemption amounts);
(10) Likely enhancement in the refundability of the child tax credit; As of last night this became a potential sticking point as Senator Rubio and Senator Lee indicated the refundable amount would need to be increased in order for them to vote yes on the bill. 
(11) Continued deductibility of student loan interest and exclusion from income of graduate student tuition waivers (both breaks would have been repealed by the House Bill);
(12) Continued tax-exempt status for qualifying private activity bonds (the House Bill ended the tax break).

How the final bill will pay for the many taxpayer-friendly changes on the above list and still stay within the $1.5 trillion dollar increase to the deficit (in a 10-year timeframe) allowed by the instructions constraining the Senate is not known. Relative to the bill that passed the Senate earlier this month, the only known "pay-fors" are the increase in the corporate tax rate, the decrease in the percentage of the deduction against passthrough business income and the tightening of the rules for calculating "qualified business income"; and the tightening of the mortgage interest deduction. Those changes would not be enough to pay for the enhancements to other tax breaks on the list.

Unconfirmed rumors circulating Wednesday suggest that another possible pay-for might be an increase in the repatriation rates for foreign-earned income. Another likely candidate would be a tightening of the generous child tax credit phase-out provisions in the Senate Bill. Phaseouts don't begin until modified adjusted gross income reaches $500,000, more than double the threshold for joint filers in the House Bill and more than four times the threshold single and head of household filers.

Beyond the pay-fors, the list of unknowns about the final tax bill remains long and will not be addressed until the text of the legislation is released, which could happen as early as this morning, according to the Wall Street Journal. Until then, the status of dozens of conflicting provisions in the House and Senate bills will likely remain a mystery.

Multiple reports have indicated that final votes on TCJA will follow quickly on the heels of the release of legislative text. The Senate is expected to vote first, possibly as soon as Monday.

Turner's Tax Service will, of course, keep you up to date as this bill moves through the legislative process.
0 Comments

SENATE PASSES TAX BILL - BILL GOES TO JOINT COMMITTEE

12/3/2017

0 Comments

 
UPDATE PROVIDED BY  THE NATIONAL ASSOCIATION OF TAX PROFESSIONALS

In the early morning of December 2, the Senate passed by a 51-49 vote their version of the Tax Cuts and Jobs Act. Sen. Susan Collins (R-ME) agreed to a yes vote when several amendments she offered were incorporated into the bill, including the restoration of a $10,000 deduction for property taxes and a lower threshold for deducting medical expenses. 
Previous Republican holdouts — Senators Jeff Flake (R-AZ), Steve Daines (R-MJT) and Ron Johnson (R-WI) threw their support behind the bill once they were assured their concerns were addressed – including increasing the deduction for pass-through entities from 17.4 to 23 percent and a gradual phase-out of §179 expensing. Also included was the return of the alternative minimum tax provisions for individuals and corporations. Thresholds would be increased and adjusted for inflation. 
The Senate bill includes the repeal of the individual mandate clause of the Affordable Care Act, which requires most to have health insurance or pay a penalty. If the Senate's proposal remains in the final version, then beginning in 2019, there would be no penalty if taxpayers go without coverage. The penalty would remain for 2018.The House and Senate are expected to work out the differences between the two proposals over the next weeks in joint committee. Several key differences remain. Once an agreement is reached between both chambers of Congress, the bill will go to the president for signature.

0 Comments

     

    Federal and state tax laws and regulations change regularly.  As we become aware of changes, we will post them here and, if you are a client who has provided us with an email address, we will also email them to you.

    Archives

    January 2021
    December 2020
    April 2020
    March 2020
    October 2019
    January 2019
    November 2018
    June 2018
    January 2018
    December 2017
    November 2017
    October 2017
    September 2017
    July 2017
    May 2017
    April 2017
    January 2016
    June 2015
    May 2015
    July 2014
    March 2014
    December 2013
    November 2013
    October 2013
    September 2013
    February 2013
    January 2013
    August 2012
    January 2012
    June 2011
    August 2010
    January 2010
    September 2009

    Categories

    All

    RSS Feed

Powered by Create your own unique website with customizable templates.