Individual focused – Tax Cuts and Jobs Act H.R. 1 expires after 2025.
1. All of these changes do not affect tax year 2017 unless stated.
2. Inflation adjustments (tax brackets, standard deduction, AMT etc.) but it is “chained CPI” which is a slower measure of inflation.
3. Individual Mandate – ELIMINATED (penalty will still be assessd in 2017 and 2018)…
4. Personal exemptions – ELIMINATED
5. Standard Deduction – raised to $12,000(single)/$24,000(Married filing Jointly)
6. Schedule A –
a. Deduction for
i. State income tax or sales tax paid – Now grouped with Property taxes and total combined is capped at $10,000
ii. Property taxes – capped at $10,000
iii. Tax Prep Fees – ELIMINATED
iv. Personal casualty losses – ELIMINATED if the loss is not an official national disaster.
v. Mortgage Interest – Home Equity interest ELIMINATED if the HELOC isn’t used for home acquisition debt on up to $100,000.
vi. Mortgage Interest – Threshold lowered to $750,000 of debt. Will apply to debt incurred after December 15, 2017. Older mortgages grandfathered in.
vii. Medical Expenses – deductibility kept and temporarily lowered to 7.5% for 2 years then up to 10% of AGI.
viii. All 2% AGI deductions (employee business expnses etc.) – ELIMINATED
7. Moving Expenses – ELIMINATED except for certain members of the military.
8. Adoption Credit preserved.
9. Child tax credit – $2000 For children 16 and under. Phase-out begins at $200,000/$400,000.
10. Family tax credit – new concept; $500 for non-child dependent
11. Educator Expense deduction – Kept at $250
12. Principal Residence gain exclusion – Must own home for 2 out of 5 years. Amount that can then be excluded is $250,000/$500,000.
13. College accounts that are Section 529’s – New concept – $10,000 annually can be withdrawn to pay to send the child to a public, private, or religious or secondary school.
14. Alimony – No longer deductible to the paying spouse and no longer taxable to the receiving spouse. This applies to the final divorce decrees that happen after December 31, 2018.
15. Pass-through income – New Concept – Shareholders, Partners, Schedule E’s and Schedule C’s get a 20% deduction on their business income. So if the K-1 shows $100,000 then 20% of that is excluded and the $80,000 is taxed. There is a cap on this. The full 20% deduction is available for $157,500(single)/$315,000(married filing jointly). Income above the limit has to go through a formula which will include employee wages paid and/or value of qualified property purchased. Real estate investors are most likely to benefit from this. Special Service trades get lower phase-out amounts. Types of special service trades are CPA’s, Lawyers, Doctors.
16. Discharge of student debt – excludes from income in event of death or disability.
For help with any income tax question call one of our offices:
Plymouth 734.454.4100, Allen Park 313.388.7180,
Grayling 989.348.4055, Livonia 734-462-6161,
Royal Oak 248.399.7331, or St. Clair Shores 313.371.6600