Connie Tritt, CPA Richmond Rotary Club 12/14/2018 TCJA Tax Law Update Connie Tritt, CPA Richmond Rotary Club 12/14/2018

Tax Rates are lower!!! New tax brackets (MFJ) Old Tax Brackets (MFJ) 10% 0-$19,050 10% 0-$19,050 12% $19,051-$77,400 15% $19,051-$77,400 22% $77,401-$165,000 25% $77,401-$156,150 24% $165,001-$ 315,000 28% $156,151-$237,950 32% $315,001-$400,000 33% $237,951-$424,950 35% $400,001-$600,000 35% $424,951-$480,050 37% $600,001 and over 39.6% $480,051 and over

Standard Deduction is Bigger! Filing Type New Std. Deduction Old Std. Deduction Joint $ 24,000 $ 13,000 Head of Household $ 18,000 $ 9,550 Single (and MFS) $ 12,000 $ 6,350 Additional for 65 and over $ 1,300 – married $1,600 Unmarried No More Personal Exemptions

Child Tax Credit and Family Tax Credits Increased Child Tax Credit from $1,000 to $2,000 per child (<17 years old) Non-refundable credit of $500 for other dependents (>17 years old) No credit if income is >$400,000 (MFJ)

Alimony Alimony is no longer deductible (nor included in recipient’s income) for agreements in place after December 31, 2018. But, Alimony paid pursuant to a divorce agreement in place before December 31, 2018 is grandfathered. (still deductible and still income to the recipient)

Itemized Deductions Bigger Standard Deduction will be better than itemized deductions in some cases. Changes: Limited deduction for state and property taxes = $10,000 Limited deduction for Mortgage interest if debt is > $750k No more deduction for Home Equity Line of Credit except for acquisition or improvement of primary residence (except as grandfathered in before 12/31/17) No more deduction for Miscellaneous Itemized Deductions (2% floor) Unreimbursed employee business expenses Home office for employees Union dues, and out of pocket expenses for uniforms, etc. Investment advisor fees or asset management fees

Alternative Minimum Tax AMT still exists, but it is harder to get into it. Higher exemption amounts Higher phaseout ranges for exemption amounts Filing Status New Law Old Law Single, HOH $500,000 $123,100 MFJ $1,000,000 $164,100 MFS $ 500,000 $ 82,050

Section 199A Small Business Deduction Small businesses can take 20% tax deduction (“Pass- through”) deduction Except some service businesses cannot get the credit (unless they are very small) Health, law, accounting, performing arts, consulting, financial services, brokerage services Some businesses are limited to 20% of wages paid

Questions???