Faw Casson

Tax Reform: Benefits for Individual Taxpayers

April 17, 2018

Hi, I’m Tammy Ordway, Director of Entrepreneurial Services, with Faw Casson, and today I’m going to discuss with you the Jobs Act (2017 Tax Cuts and Jobs Act) and how it will benefit individuals.   There are several benefits from the 2017 Tax Cuts and Jobs Act.
Tax Rates are still divided into seven different brackets but they have been adjusted.  So, for example, the 10% stayed the same, but the 15% went to 12%, 25% went to 22%, 28% went to 24%, 33% went to 32%, 35% remained the same, and 39.5% went to 37%. 
The Child Tax Credit increased from $1,000 to $2,000 per eligible child.  Phase-outs till apply, but these phase-outs were substantially increased.  Estate and gift tax exemptions will double to approximately $11M per person.  This is a really huge adjustment over the $5,450,000 that was previously offered.  So now, estate taxes will not exist for a lot of taxpayers.
Congress also repealed the ACA Individual Responsibility Payment after 2018.  So what that means is that if you had health insurance that was considered to be illegal under ACA, or you were not covered, currently you have a penalty but AFTER 2018, that penalty has been repealed.
Another benefit is that pass-through income of business owners are now going to receive a 20% deduction on their personal return. 
Finally, AMT, which is Alternative Minimum Tax, exemption has been raised to $1M married, filing joint, $500,000 for single taxpayers.  So, what this means for high-income earners that used to pay Alternative Minimum Tax they will no longer be subject to the tax.
Under the 2017 Tax Cuts and Jobs Act there are several items that did remain the same.  One of them is the Annual Gift Exclusion.  For 2018, you can give a gift per person, of up to $15,000 without having to file a Gift Tax Return.  Also, the Net Investment Income Tax of 3.8 remained the same.  This tax came about a couple of years ago with ACA and has NOT been repealed.
Another good item that remained the same is excluding gain on sale of a principal residence.  So, if you qualify, which basically means you lived in the house two out of the last five years, you can exclude up to a $250,000 gain, and if you own the property joint, that’s a $500,000 gain.  And finally, long-term capital gain rates.  There was some speculation that these would change but they actually stayed the same with this new act.
If you have any questions on the 2017 Tax Cuts and Jobs Act, please contact team Faw Casson.  If you’d like information on how to adopt these adorable puppies, please contact Doggone Happy Animal Rescue.

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