Posted by Harry Mueller

Sid Fahsholtz, CPA, of Brock and Company, presented his analysis of the recently passed 2018 Tax Cuts and Jobs Act.  His high-level summary was that, for both individuals and businesses, individual circumstances will determine whether they will be winners or losers.  Summary of some of the significant changes:

Most tax brackets have been lowered by 1% to 3%; Personal Exemptions have been eliminated; Standard Deduction has been approximately doubled; Alimony: not deductible by payer, not income to recipient; Medical Deductions: threshold 7.5% of AGI in 2018, 10% of AGI after; Property, State, & Local Income Taxes: deductible up to $10,000 if MFJ; New Mortgages: interest deduction capped at $750,000; Home Equity Debt: no interest deduction through 2025 except if $ is used for improving your home; Charitable Deductions: limited to 60% of AGI; contributions from IRA RMD not counted as income and not deductible; Miscellaneous Itemized Deductions: eliminated; Moving Expense Deduction: eliminated; Estate/Gift Tax: now $15,000 per year; $11m total for life; Pass-Through Income: treatment seems to have gotten more complex; Child Tax Credit: up to $2000 for each child with higher phaseout levels; Casualty & Theft Losses: no deduction; Kiddie Tax: earned income at rates for singles; unearned income at brackets applicable to trusts & estates; Net Operating Losses: limited to 80% of taxable income, no carryback option, indefinite carryforward period; Obamacare Individual Mandate: permanently repealed; Corporate Tax Rate: flat tax rate of 21%; Alternative Minimum Tax: effectively eliminated; Fringe Benefit Expenses: entertainment deductions disallowed except 50% for meals; Employer-Paid Family/Medical Leave: at least 12.5% credit if rate of payment is 50% or greater of normally paid wages.