Taxes are changing.
It has been said by one wise wag that there are two things you should never watch while they are being made - sausages and tax laws!
Taxes can be confusing.
They can be more confusing when they change.
In fact, they already changed.
What does this mean for you?
According to the recent The Chicago Tribune article titled “What happens next with the Republican tax plan, month by month,” there are a few basic things you can expect.
What are they?
As of January 1, the new tax laws are official.
What are some of the changes?
The 529 College Savings plan has been expanded.
Before the new laws, the plan was limited to paying for college.
Now the plan can be used to pay for education from kindergarten through high school as well.
The deduction you can take on your mortgage decreased.
It dropped from $1 million to $750,000.
Do you own a business or stock?
Businesses now will pay lower tax rates.
This may help stock holders because businesses may begin to buy back stock with money tax savings.
Also, the estate tax threshold increased to more than $11 million per taxpayer.
The IRS will publish new tax rates.
This month, the IRS will publish the new tax rates.
Chances are you may have had too much withheld from your January paycheck.
Now, you will likely see a higher take home pay.
Nothing like a little more of your on jingle in your own pocket.
Alimony payments will change.
If you can prepay alimony before the end of the year, you should.
You will no longer be able to take a deduction in 2019.
The Obamacare individual mandate will end.
What does this mean?
The penalty fine for not having insurance is eliminated.
If you do not have insurance, you can keep a little extra from your taxes.
The alternative minimum tax (AMT) threshhold will increase.
That is a good thing.
You have a little time before this happens.
It will increase in April of 2019.
Individual tax cuts will expire in 2026.
This is quite a ways in the future.
Congress could choose to change this.
We will see.
Although there are comes changes, a few things remain the same.
You will still file taxes in April.
You should still consult with your tax advisor whenever there are changes to the tax law.
Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.
For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.
Reference: Chicago Tribune (December 23, 2017) “What happens next with the Republican tax plan, month by month”