Okay the tax reform machine is now in business. Many
taxpayers in high income and property tax states doled out their money before
December 31, 2017 to try to take advantage of the last vestige of deductibility.
But now it is 2018 and the new tax law takes effect. Taxpayers will be
scrambling with their advisors to figure out their personal situation. Nobody
is an expert, including the IRS, of all the changes and what the effects will
be. Hell, Congress didn’t know what it was doing either so how can we
professionals expect to know a whole lot more. But the pundits are churning out
their newsletters as fast as they can. And there’s nothing like major changes
in the tax law to bring once reluctant clients out of the woodwork and to the
conference table. This reform bill more perhaps than any since 1986 could be
called the Tax Attorney and Accountants Full Employment Act of 2018. So among
those that appear to be really part of the law are the following:
- Slightly lower and broader tax brackets
- Elimination of the personal exemption
- Double the standard deduction, $12,000 for single and $24,000 for
couples
- Limit mortgage interest deduction to that on a $750,000 mortgage
- Elimination of home equity deduction for interest
- Limit the deduction for property and state income taxes to
$10,000
- Repeal all 2% allowable deductions for employee business expenses,
casualty, theft losses and gambling expenses
- Allow casualty losses only in federally declared disaster areas
- Create a pass-through deduction of 20%
- Lower the corporate tax rate to 21% maximum
- Increase bonus depreciation to 100%
- Increase the estate tax exemption
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