2017 TAX CUTS AND JOBS ACT
The 2017 Tax Cuts and Jobs Act lowers corporate and individual tax rates, raises the standard deductions, increases the child tax credit and in time eliminates the individual health care mandate. The bill was created quickly and we anticipate there will be many revisions to close loopholes and /or clarify the rules.
Below is a quick summary of the new tax bill.
WHAT DID NOT CHANGE
Gambling losses
Above the line deductions
Most Employee Fringe Benefits (although the bicycle commutes has been suspended)
Dependent Care Assistance
Adoption Assistance
Identifying Shares Sold- Taxpayer still allowed to choose which shares are considered sold if they are adequately identified
Education Provisions
Home Sales Exclusion
Tax Credits
Real Estate Recovery Periods
WHAT CHANGED
PROS
Estate and Gift Tax Exclusion maintained
Standard Deductions has increased ($12,000 Individual, $18,000 Head of Household, $24,000 Married filing Jointly
Medical deduction- Allowed for 2017 and 2018 with a threshold of 7.5% then back to 10% threshold
20 percent pass through deduction for small businesses
Expanded use of 529 plan
Repeal of phase out of itemized deductions
CONS
The deduction for state and local income taxes and property taxes is capped at $10,000 . And one cannot prepay 2018 state and local income taxes
Home Mortgage Interest- limited to $750,000 of debt acquisition; $1,000,000 grandfathered for the debt acquisition prior to 12/15/2017
Bans charitable deductions in exchange for college athletic event seating
Most personal causality losses suspended
Repeals the special rule to characterized IRA contributions from Traditional to Roth or visa versa
1031 Exchange can only be used for real property
NOL carryback is generally repealed
NOL deduction is limited to 80% of taxable income
Exemptions suspended
Tier 2 Miscellaneous deductions suspended (suspended employed business expenses, tax preparation fees, investment expenses)
Moving deductions suspended
Entertainment deduction disallowed
