Tax Reform – What’s in it for Me?
Tax Cuts & Job Act Impact on Individual Taxpayers
Nelson County, Virginia
By Julia Rogers, CPA
The 2017 tax reform bill has created an entirely different playing field for taxpayers – this isn’t just a simple change in tax rates or rules. While the changes will not affect 2017 tax filings, taxpayers should make plans to discuss the impact on their individual situation with a tax professional as soon as possible.
What’s in the new rules? Lower tax rates, enhanced child credits and a larger standard deduction. There is also a special 20 percent reduction in taxable income for small business owners. This means that many taxpayers will pay less in federal income tax. Taxpayers that previously itemized their deductions will likely qualify for the larger standard deduction.
What’s not in the new rules? The tax bill eliminates exemption deductions for you and your family members, special deductions for moving expenses, and many itemized deductions – including limitations on tax payments, certain mortgage interest and employee business expenses.
Changes in the federal tax withholding calculations for employees may also result in insufficient withholding for some taxpayers. Adjustment to these withholdings as soon as possible is necessary to avoid a large balance due next year.
Rogers & Associates, provides clients with 2018 income tax projections as they prepare their 2017 returns and providing proactive recommendations. Early implementation of changes is encouraged. For example, taxpayers with a home equity line of credit (HELOC) should consider refinancing to a traditional mortgage since HELOC interest will no longer be deductible. Employees that traditionally have large travel or other work-related expenses should discuss the possibility of a reimbursement policy with their employer since these expenses will no longer be deductible.
Julia Rogers is a CPA and the founder of Rogers & Associates, P.C.
Located in downtown Nellysford, Rogers & Associates provides tax and accounting services to individuals, fiduciaries and small business owners throughout the United States.
Julia W. Rogers, CPA