TAX BILL HEADED TO PRESIDENT

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• AMT for individuals is retained but exemption amounts are increased, and the corporate AMT is repealed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• The NOL carryback is repealed and the NOL deduction amount is limited
• The domestic production activities deduction is repealed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.