Financial experts in Milford discuss new tax law
TMB Financial Solutions of Milford welcomed the community and invited tax professionals on March 14 to participate in a question and answer roundtable discussion regarding the Tax Cuts and Jobs Act of 2017.
The free event was held in two sessions at the Milford Bank, 33 Broad Street, as hosts and financial advisors John Kuehnle and Lorenzo Gaudioso “provided insights on the changes and how they may affect individuals and businesses” in addition to discussing suggestions of “what you should be doing now to prepare yourself for these changes.”
“The main reason we’re holding this is because we have had a lot of questions since the new tax laws went into effect from both the banks clients and my clients, so I asked a CPA and a tax attorney if they’d be willing to comment in a question and answer discussion,” said Keuhnle. “We hope to get people in that are interested and want to get from the horse’s mouth what the new tax laws mean to them and if what they’re hearing is true. We want to inform the public. It’s an opportunity for people to come in ask questions about what’s concerning them so they get a good answer.”
On Dec. 22, 2017, President Trump signed into law the Tax Cuts and Jobs Act, a sweeping $1.5 trillion tax cut package that fundamentally changes the individual and business tax landscape. While many of the provisions in the new legislation are permanent, others, including most of the tax cuts that apply to individuals will expire in eight years.
Among major changes included in the legislation affecting individuals for tax years 2018-2025 are, legislations replacing most of the seven current marginal income tax brackets (10%, 15%, 25%, 28%, 33%, 35% and 39.6%) with corresponding lower rates: 10%, 12%, 22%, 24%, 32%, 35% and 37%. The legislation also establishes new marginal income tax brackets for estates and trusts, and replaces existing “kiddie tax” provisions (under which a child’s unearned income is taxed at his/her parents tax rate) by effectively taking a child’s unearned income using the estate and trust rates.
The legislation roughly doubles existing standard deduction amounts but repeals the deduction for personal exemptions. Higher standard deduction amounts will generally mean that fewer taxpayers will itemize deductions going forward. Itemized deductions include state and local taxes, home mortgage interest deductions, medical expenses, charitable contributions, and casualty and theft losses along with miscellaneous itemized deductions.
Additionally, the child tax credit has doubled from $1,000 to $2,000 for each qualifying child less than 17 years of age; the alternative minimum tax (AMT) has changes and more.
Among major changes affecting businesses is a permanent reduction of the corporate income tax rate change - the previously graduated corporate tax structure with four rate brackets (15%, 25%, 34% and 35%) now offers a single flat corporate rate of 21%. The Act reduces the dividends-received deduction (corporations are allowed a reduction for dividends received from other domestic corporations) from 70% to 50%. If the corporation owns 20% or more of the company paying the dividend, the percentage is now 65%, down from 80%. The Act permanently repeals the corporate alternative minimum tax (AMT).
Also changed are pass-through business income deductions, “bonus” depreciation, and Internal Revenue Code (IRC) Section 179 expensing, as well as foreign income tax rules.
Guest speakers Glenn Beck, CPA of Discenza, Beck & Lee LLC and Noel Langerman, Attorney at Karp and Langerman, P.C. fielded the public’s questions and concerns.
Beck stated, “This is a round table of getting information out about the new tax law, the changes and about what’s going to happen in 2018 and going forward.” Key points discussed include, “For individual taxes as our President (Trump) said, the standard deductions are simplified and have increased, some of the deductions have gone away and the Alternative Minimum Tax (ATM) is a big issue and I think the biggest issue is the Business Tax Credit or deduction - there’s a new deduction for small businesses - 20% of income is deductible from the tax return based on some parameters to offset the 21% corporate tax rate that was put into place.”
When asked of the discussion’s goal Langerman said, “To answer any questions people have about the new tax laws - including 20% deduction for business income. There are a lot of unknowns but we are going to try to answer questions about what we know now.” Key bullet points discussed included, “How the deduction works, who it applies to, when does it phase out, and who can expect to get benefits out of it. I think it’s a great positive for business owners.”