TaxesSubmitted by Destination Wealth Management on February 8th, 2019
As you well know, 2018 tax reform adjusted taxation for individual and companies. With the new year, there is now talk about reversing the direction of taxation. This includes adjusting the current level of estate taxation as well as income taxes on high income earners.
Policy issues can affect the economy and is of great interest to us as an investment firm (particularly as we invest assets). We will continue to monitor conditions closely.
See below on some of the changes made from the Tax Cuts and Jobs Act that President Trump signed into law on December 22, 2017. (Source: https://www.thebalance.com/trump-s-tax-plan-how-it-affects-you-4113968):
Individual Income Tax Rate
The Act created the below chart. The highest tax bracket is $500,000 for single people and $600,000 for married couples.
- Under this tax plan the standard deduction doubles. A single filer's deduction increases from $6,350 to $12,000. The deduction for married and joint filers increases from $12,700 to $24,000.
- This plan eliminates personal exemptions, most itemized deductions, but keeps deductions for charitable contributions, retirement savings, and student loan interest.
- Your deduction on mortgage interest is the first $750,000 of the loan and interest on home equity lines of credit can no longer be deducted. Current mortgage holders aren't affected.
- Taxpayers can deduct up to $10,000 in state and local taxes. They must choose between property taxes and income or sales taxes.
- The new law will no longer allows taxpayers in California to write off more than $10,000 of state and local income and property taxes from their federal returns.
- The deduction for medical expenses for 2017 and 2018 expands. It allows taxpayers to deduct medical expenses that are 7.5 percent or more of income. Before the bill, the cutoff was 10 percent.
- The Act doubles the estate tax exemption to $11.2 million for singles and $22.4 million for couples.
- The Act increases the Child Tax Credit from $1,000 to $2,000 and allows for a $500 credit for each non-child dependent.
If you would like to see how these changes may affect you, here is an online calculator.
As a reminder, at Destination Wealth Management we offer complimentary planning services for all our clients. Destination Wealth Management encourages you to consult your own tax, legal and accounting advisors before engaging in any transaction. If you would like to discuss any questions about these new changes, please feel free to contact our office at 925.935.2900 or send us an email at firstname.lastname@example.org.
As always, if you have any investment and economic questions as well, please send them our way. Happy to provide our thoughts and clarifications. Have a great day!
*DWM does not provide tax, legal or accounting advice. This material is provided for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice.