Ok- THE ELECTION IS OVER and Donald J Trump is the president-elect. I have summarized his tax plans below. Naturally, not everything is likely to make it all the way to law without any changes, but the bulk of it will likely pass, according to sources. It is very similar to speaker-of-the-house Paul Ryan’s tax plan. This is the most recent information I have, and not all details have been released as it is still November!
- Tax rates reduces to only three: 12%, 25%, and 33%
- 12% rate for income up to $75,000 couples; $37,500 singles
- 33% rate for $225,001 for couples, $112,501 for singles
- Eliminates the Head-of Household filing status (Married or Single only)
- Eliminates all surtaxes that were passed with Obamacare (1%;4%)
- Eliminates all Obamacare health insurance compliance penalties
- Eliminates AMT for both individual and corporate (Alternative Minimum Tax)
- Maximum capital gains tax rate at 20%. Lesser rates still available based on income, supposed to remain similar to the Bush tax cuts that stiull are in effect today.
- Standard deductions would increase to $15,000 singe; $30,000 couples
- Itemized deductions would be capped at $100,000 AGI singles; $200,000 AGI couples
- Expanded Child care/parent care deduction(s): Includes stay-at-home Mothers (does not with current law) up to four children under age 13, and elderly dependents, max deduction is $5,000 above the line (reduces AGI) Higher income taxpayers will not get this deduction (currently, no income limitation applies for the tax credit)
- New 15% business tax rate, including not only for “C” Corporations, but also LLCs, S Corps, and Schedule Cs. Now one has any detail on this- or how it would work since pass-thrus and Schedule C currently gets taxed at a person’s individual rate.
- Only Manufacturing business could fully expense any asset purchases, but would lose the interest deduction if financed.
- Most business tax credits would be gone, except for the R&D credit.
- Untaxed income brought in from a foreign country would get a special 10% rate, encouraging large business owners/CEOs to bring the money back to the US- and manufacture here, at home
- Import tax (if the company used to manufacture here in the U.S.) but now ships the same product into this country, creating loss of jobs. Tax would be of 35% (i.e. like a tariff)
- Removing all “executive orders” from President Obama, along with chopping back the infamous Dodd-Frank laws. This should easily encourage business lending for companies to grow. Elimination of all Obamacare penalties would also help this. Pulling back on coal, gas, and hundreds of recent EPA and other agency tough regulations will allow business to operate as they did under Reagan, or at least similarly. (5%-6% economic growth in some of those years)
- Military upgrades and infrastructure work should create higher-pay full time positions in all parts of the economy. And quickly. That as opposed to most new jobs today are part-time now and seasonal. And annual growth around 1%.
- JANUARY 2017- (law change) ALL W2s, and 1099s must be issued to both IRS and employees before January 31. Penalties apply if late.
- The IRS will be very busy writing new regulations to interpret all the tax code changes. I would not expect to see any of these changes take effect until tax year 2017 at the very earliest. (Just my opinion), but one never knows. Trying to implement these changes quickly now would render the IRS into total CHAOS!
RECENT OFFICE NEWS
- Bookkeeping Division– Many clients have been asking us for some time to do their bookkeeping. Some, for years! So, this year we partnered with an experienced individual that specializes in Bookkeeping, especially QuickBooks. The service can be performed either remotely, done at our office, or at your location. Prices are competitive. Contact Maureen Ehwa, operations director for details if interested! [email protected] All work will be billed and contracted through our office!
- Tax season: For the upcoming tax season, we will be the strongest in years with more qualified staff and resources than ever before! I feel really good about what is happening here…
Merry Christmas and Happy New Year to everyone! Have a safe, enjoyable holiday season!