http://www.fox8live.com/clip/13872486/john-snell-talks-with-kemberley-washington-cpa-about-tax-reformWithin the last few days, the GOP unveiled its tax bill, the Tax Cuts and Jobs Act (TCJA). The plan is expected to be one of the most significant tax overhauls since 1986.
#1 Corporations and wealthy individuals will win big
Corporate business owners will benefit from the tax plan. Tax rates are expected to decline from 35% to 20%, thus providing a major tax benefit for corporations. Also, those who are in the highest tax bracket will also benefit greatly. Currently, those who earn amounts over $415,050 ($466,950 married) are taxed at the 39.6% tax rate. The new plan seeks to increase the income threshold, therefore taxing high-income individuals at the 39.6% tax bracket only when income exceeds $500,000 ($1,000,000 married).
#2 Expect the child tax credit to expand
Under the tax plan, individuals can expect to see an expansion of the child tax credit. At this time, a child tax credit of $1,000 is available for those who have children under the age of 17 by year-end. This plan seeks to increase the child tax credit from $1,000 to $1,600 per child. Also, the expansion provides for $300 for non-children dependents, which is not available under the current tax law.
#3 Some deductions will be eliminated
The plan calls for the elimination of certain deductions. One, in particular, is the personal exemption. Individuals can take personal (or dependency) exemptions for themselves, spouses and qualified dependents in the amount of $4,050 per person. However, the plan proposes to double the amount of the standard deduction for households to offset the elimination. Certain itemized deductions such as state and local taxes will no longer be available for deduction.
Keep in mind; this bill has not passed. However, if the proposal passes, expect changes to your 2018 tax return.
Remember your choice, your future!