1. Impress your clients and prospects with a discussion on the Tax Cut and Jobs Act (TCJA)
Ted Denbow
VP, Head of Sales

2. Agenda Brief overview of RightCapital Overview of TCJA
Engage your prospects and clients with TCJA discussions
Planning opportunities for clients

3. More planning in less time through our innovative platform.
Differentiated value for more clients.
Create a simple plan in as little as 10 minutes.
Our innovation empowers you.

4. Overview of TCJA

5. Overview of the TCJA changes
New tax brackets
Merging personal exemption into standard deduction
Schedule A itemized deduction changes
Expanded child tax credit
Alternative minimum tax exposure reduced
Qualified Business Income deduction
Expanded 529 tax free distribution
A great resource for tax changes summary: Michael Kitces’ blog post
Individual Tax Planning Under The Tax Cuts And Jobs Act Of 2017

6. TCJA – New tax brackets For Individual For Married Couple
Current Law
TCJA
Current
Rate
TCJA Rate
$0 - $9,525
10%
$9,525 - $38,700
15%
12%
$38,700 - $93,700
$38,700 - $82,500
25%
22%
$93,700 -$195,450
$82,500 - $157,500
28%
24%
$195,450 - $424,950
$157,500- $200,000
33%
32%
$424,950 - $426,700
$200,000 -$500,000
35%
$426,700 +
$500,000+
39.6%
37.0%
For Married Couple
Current Law
TCJA
Current
Rate
TCJA Rate
$0 - $19,050
10%
$19,050 - $77,400
15%
12%
$77,400 – $156,150
$77,400 – $165,000
25%
22%
$156,150 -$237,950
$165,000 - $315,000
28%
24%
$237,950-$424,950
$315,000 - $400,000
33%
32%
$424,950 -$480,050
$400,000-$600,000
35%
$480,050 +
$600,000 +
39.6%
37.0%
Long term capital gains and qualified dividends retain old thresholds under TCJA

7. TCJA – Merging exemption into standard deduction
Current Law
TCJA
Exemption
$4,050 for individuals
$8,100 for married couples
Removed
Standard deduction
$6,350 for individuals
$12,700 for married couples 
$12,000 for individuals $24,000 for married couples

8. TCJA – Schedule A itemized deduction changes
Current tax law
TCJA
State, Local Income Tax & Property Tax
No Cap
Capped at $10,000
Mortgage interest deduction
Capped at $1,000,000 loan
Capped at $750,000 loan
for loans issued after December 15th of 2017
Home equity interest**
Fully deductible
Only deductible for acquisition debt
Charitable Contribution
Capped at 50% of AGI
Capped at 60% of AGI
Medical expense
Deductible in excess of 10% of AGI
Deductible in excess of 7.5% of AGI for 2017 and 2018
Other Misc itemized deductions
Deductible in excess of 2% AGI floor
Not deductible
Itemized deduction
Phase out
3% phase out over threshold
$261,500 for individuals
$313,800 for married couples
Completely removed
** “Home equity indebtedness” as defined under IRC Section 163(h) is no longer deductible, only ‘acquisition indebtedness’. This determination is not based on whether the loan is a “home equity loan” or “home equity line of credit” but is based on how the mortgage proceeds are used.

9. Lower to 7.5% for 2017 and 2018
Capped at $10,000
Capped at $750,000 loan

10. Increase Cap to 60% AGI
Many are removed
Phaseout is removed

11. TCJA – Expanded Child Tax Credit
Current
TCJA
Tax credit amount
$1,000 per qualified child
$2,000 per qualified child
Phase out
$75,000 for individuals
$110,000 for married couples
$200,000 for individuals
$400,000 for married couples

12. TCJA – Alternative minimum tax exposure reduced
AMT
Current
TCJA
Exemption
$55,400 for individuals
$86,200 for married couples
 $70,300 for individuals
$109,400 for married couples
Phase out
$123,100 for individuals $164,100 for married couples
$200,000 for individuals
$400,000 for married couples

13. TCJA – Qualified Business Income
Current
TCJA
LLC, S Corp, Partnership
Straight passthrough – all income taxable
20% below the line deduction
LLC, S Corp, Partnership:
Service sector
Phaseout
$157,500 - $207,500 for individuals
$315,000 - $415,000 for married couples

14. Tax free distribution for college expense
TCJA – 529 Plan
Income
Current
TCJA
529 distribution
Tax free distribution for college expense
Tax free distribution for college expense and private elementary and secondary school expenses (up to $10,000 per year per student)

15. TCJA – Other changes Items TCJA Individual Mandate on health insurance
Repealed effective 2019
Estate & Gift Tax
Exemption amount doubled

17. Standard deduction increased Many changes in Schedule A
Exemption removed
LLC/S Corp income deduction
New tax brackets
AMT reduced
Child credit increased

18. Engage your prospects and clients with TCJA discussions

19. How many of your clients have asked these questions?“
Am I paying more or less taxes?
How does TCJA impact my long term financial goals?
What happens if TCJA expires in 2025?” “

20. RightCapital can help TCJA RightCapital Implementation
New tax brackets
Capital gains and dividends
Exemption
Standard deduction
Schedule A
Alternative minimum tax
Child credit
Qualified business income
Option to turn TCJA on and off
Option to Sunset TCJA or not

21. Planning opportunities for clients

22. Case Study 1 Meet the Jackson’s John and Sarah: Married Current ages:
40/41
Target retirement age:
65/65
Salary:
$75,000/ $100,000
Social Security: 67
Monthly expenses:
$5,000
Invested assets:
$400,000 qualified
$250,000 non qualified

23. Identifying opportunities in tax savings
What are your clients going to do with savings from TCJA? First, identify how much it is!
Total tax liability – upcoming year
2017 Tax Rules TCJA Tax Rules
$48,417 $41,921
Appx $6,500 savings / yr through 2025

24. Identifying opportunities in tax savings
Saving your savings
Saving additional $6,500 /yr
Spending additional $6,500 /yr

25. Identifying opportunities in tax savings
Saving your savings
Proposed: additional $6,500 /yr is saved; Current: additional $6,500 /yr is spent

26. Case Study 2 Meet the Brady's Mike and Amanda: Married Current ages:
56/57
Target retirement age:
65/65
Salary:
$150,000/ $50,000
Social Security: 70
Monthly expenses:
$7,000
Invested assets:
$1,500,000 qualified
$100,000 non qualified

27. Evaluating business opportunities
With the new qualified business passthrough, some have questioned the value of working as an independent contractor rather than at their current firm
Salaried Employee
Full income taxable
Independent Contractor
20% deduction reduces taxable income
Self employment tax offsets savings vs

28. Identifying opportunities in tax savings
Tradeoff will often depend on individual circumstances
In this case moving to self-employment income increases their total taxes paid

29. Case Study 3 Meet the Brady's Mike and Amanda: Married Current ages:
56/57
Target retirement age:
65/65
Salary:
$150,000/ $50,000
Social Security: 70
Monthly expenses:
$7,000
Invested assets:
$ 1,500,000 qualified
$ 100,000 non qualified

30. Sequential strategy: liquidate taxable account first and let IRA Compound
Liquidate your taxable accounts first.
Let retirement accounts such as IRA/401(k) accounts compound, while deferring income taxes.
This approach can result in tax savings.

31. Using Optimization to derive a balanced approach
Opportunities to convert assets under TCJA rules at relatively lower brackets / rates
Don’t w/d from IRA
Current tax rate
Future tax rate
W/d from IRA and Roth conversion
Future tax rate
Current tax rate
Expiration of TCJA in 2025 will result in higher relative future taxes

32. Roth conversion opportunities
Opportunity to convert assets under TCJA rules at lower brackets/rates
Valuable strategies become more so under TCJA:
Using 2017 Tax Rules
Using TCJA w/ 2025 sunset

33. Take Aways
Change the conversation you are having today with clients and prospects and differentiate yourself from other advisors
Utilize RightCapital’s tools to make conversations with clients easy to understand and interactive
Hold educational webinars/seminars incorporating client slides
Schedule a demo at for more information

34. Thank you!