Taxes

Proposed Tax Reform and How it Will Affect You and Your Business

It will be a busy week on Capitol Hill as lawmakers push towards a vote yet this week on tax reform.

Both the Senate and the House have passed tax reform bills, but there are differences between the two bills that must be resolved before final legislation can reach the President’s desk for signature. Likely, the current tax reform will be the most substantial changes to the U.S. tax system in the last 30 years.

Here’s how the latest tax reform legislation could affect you:

Standard Deductions:

Both the House bill and Senate bills nearly double the standard deduction level to $12,000 for the individual (up from $6,350) and $24,000 for couples (up from $12,700).

Itemized Deductions – Taxes

Both the House bill and Senate bill disallow state, local, and sales taxes deduction.  Both allow property tax deduction up to $10,000.


Sign Up to receive our newsletter, product updates, and discounts!

We hate spam too. You can unsubscribe at anytime.


Itemized Deductions – Mortgage Interest

The Senate bill retains the current limit for mortgage interest deduction up to $1 million dollars.  The House bill proposed a reduced limit of $500,000.

Personal Exemption

Both the House and Senate plans both eliminate the $4,050 personal exemption.

Child Tax Credit

The House bill proposes to increase child tax credit to $1,600 instead of the current $1,000 (phased out at $230k for a married couple). The Senate bill proposed a child tax credit of $2,000 (phased out at $500k for a married couple). Heated negotiation continues with the child tax credit.




Special Offer from our Sponsored Link Above

Small Business (Pass-through)

Current small business earnings are taxed at the individual level with the individual tax rate.  The House bill proposed the maximum tax rate capped at 25%.  The Senate proposes a deduction of 23% of qualifying “pass-through” income. As of December 13th, a tentative agreement has been reached for a 20% deduction. From a real estate perspective, 61% of investments would qualify for this deduction.

Corporate Tax Rate

In all likelihood, the corporate tax rate will be lowered from the current 35% to 21%.

Reform takes effect

Should tax reform passes before the end of 2017, most of the change will take effect on January 1, 2018.  The change will not have any impact on 2017 taxes.

Depending on individual or family circumstances, each of the provisions has the potential to benefit or negatively impact.  Start tax planning with the proposals in mind and understand how it would affect your business or personal finances.  With the help of an experienced CPA, you will be able to navigate through the complex tax systems and keep the most hard-earned money to yourself and your family.

If you liked this blog, please share it with a friend. Also, if you want to receive regular articles to help with your asset management, subscribe here.

Are you looking for a simple way to slice and dice your real estate data?
We can show you how.

Request a Demo
 
What else do you want to know about?
 
Stratafolio Thank you for your visit. 
Summary
Proposed Tax Reform and How it Will Affect You and Your Business
Article Name
Proposed Tax Reform and How it Will Affect You and Your Business
Description
A quick synopsis of the current state of affairs in several key areas as Congress continues their negotiations around tax reform.
Author
Publisher Name
STRATAFOLIO
Publisher Logo
Xuan Bravo

Xuan Bravo

I have utilized my in-depth accounting and tax knowledge to help small to mid-size businesses and real estate investors minimize tax liability, eliminate penalties from Federal, State, and Local tax authorities and increase profitability.

Our family business has owned rental units for more than 10 years. We have flipped over 10 homes in the past two years. We are now moving into the area of new home and multifamily construction.
Xuan Bravo

Also published on Medium.

Have something to share? We would love to hear from you!

This site uses Akismet to reduce spam. Learn how your comment data is processed.