Julie Butterworth studied accounting at Kankakee Community College after high school graduation. She comes to Selby Tax and Accounting with 25 years of accounting experience. She lives in the Grand Haven area with her husband. They have 3 grown children and 1 grandson. She loves summer weekends at their Lake house, traveling and spending time with her grandson.
Tax rates: The new law lowers tax rates for individuals and adjusts the bracket amounts. For 2018 through 2025, the tax rates are 10%; 12%, 22%; 24%; 32%; 35% and 37%.
Standard deductions: The standard deduction is effectively doubled to $12,000 for single filers and $24,000 for joint filers, while the additional standard deductions for the elderly and blind are retained.
Personal exemptions: Personal exemptions, including exemptions available for qualified for dependent children and relatives, are repealed.
Alternative minimum tax: The alternative minimum tax (AMT) system is retained, but exemption amounts, as well as the thresholds for phasing out exemptions, are significantly increased. In addition, these figures will be indexed for inflation in future years.
Child tax credit: The child tax credit (CTC) is doubled from $1,000 per qualified child to $2,000, subject to a phase-out for high-income taxpayers. Under a late amendment, $1,400 of this credit is refundable. In addition, the new law creates a $500 nonrefundable credit for non-child dependents.
State and local taxes: In a controversial provision, the TCJA limits the deduction for state and local income taxes (SALT) to $10,000 annually for any combination of state and local property taxes or (2) state and local income taxes or sales taxes.
Mortgage interest: Although deductions for prior debt is grandfathered, the new law limits the mortgage interest deduction to interest paid on the first $750,000 of acquisition debt, down from $1 million. It also eliminates deductions for interest paid on home equity debt.
Medical expenses: While other itemized deductions are eliminated or scaled back, the deduction for medical expenses is temporarily improved. For 2017 and 2018, the threshold for deducting medical expenses reverts to 7.5% of AGI, the threshold in effect prior the law prior to the Affordable Care Act (ACA).
Casualty and theft losses: This itemized deduction is eliminated, but it is preserved, with certain modifications, for losses incurred in federal disaster areas.
Section 529 plans: The list of qualified expenses for Section 529 plans is expanded to include tuition at an elementary or secondary public, private or religious school, plus home schooling expenses, for up to $10,000 per year.
Roth IRAs: The rule permitting taxpayers to recharacterize a Roth IRA back into a traditional IRA after a conversion is repealed.
Health insurance: The new law repeals the health insurance mandate for individuals established by the ACA. This change doesn’t take effect until 2019.
Estate tax: The federal estate tax exemption is doubled, resulting in an inflation-indexed exemption of $11.2 million in 2018.
Business Tax Provisions
Unlike the individual tax provisions in the new law, the key provisions relating to businesses are generally permanent. Following is a brief rundown.
Corporate tax rates: The corporate tax rate structure, which features a top rate of 35%, is replaced with a flat 21% rate.
Pass-through entities: Under the new law, pass-through entities — such as partnerships, S corporations, limited liability companies (LLCs) and sole proprietors — can claim a 20% deduction on earnings, subject to special rules restrictions. The deduction is not available to higher-income personal service providers.
Section 179 deduction: The new law doubles the maximum Section 179 “expensing” allowance from $500,000 to $1 million. It also increases the phase-out threshold for Section 179 deductions from $2 million to $2.5 million.
Bonus depreciation: Similarly, the new law doubles the first-year “bonus depreciation deduction” from 50% to 100%, but phases it out after five years. The deduction generally won’t be available after 2026.
Luxury car rules: The new law raises the caps on depreciation deductions allowed under the “luxury car” rules for passenger vehicles for which bonus depreciation is not claimed.
Section 199 deductions: The new law repeals the deduction for qualified domestic production activities previously allowed under Section 199 of the tax code.
Corporate AMT: Unlike the individual AMT, the corporate version of the AMT is completely repealed.
Entertainment deductions: The deduction for business-related entertainment is repealed. Businesses can still generally deduct 50% of the cost of qualified meals.
Interest deductions: Deductions for business interest expenses are capped at 30% of AGI, subject to certain special rules. However, a small business with average gross receipts of $15 million or less for the past three years is exempt.
Foreign taxes: A one-time repatriation tax of 15.5% for liquid assets and 8.0 percent for illiquid assets is imposed on earnings from overseas. Furthermore, a complex new system for international taxation is being implemented.
~Information courtesy of CPA Practice Advisor~
So what should you do before year-end?
If you typically itemize, considering moving your 2018 expenses into 2017. For example, pay real estate taxes, state/local income taxes, auto registration, mortgage/home equity interest, investment advisory fees, tax preparation fees early. Consider donating more to charity in 2017.
Move more income into 2018. If you are employed and expecting a bonus yet this year, ask for it to be paid to you in 2018. If you are a business owner, wait to invoice your customers until 2018.
Business owners move expenses into 2017 to get your income down more now at the higher tax brackets.
Rena Curry studied accounting at Muskegon Community College after graduating high school in 1988. She worked in the financial services industry for over 25 years. Rena is a Grand Haven native and is married with two grown sons. She enjoys camping, photography and time with her family.
Abby Selby graduated from Ferris State University with Bachelor’s Degrees in Accountancy and Health Care Systems Administration in 2006. Soon after graduation, Abby earned her CPA certification. She formed Selby Tax & Accounting, PC in August of 2009. She lives in Norton Shores with her husband and three children. She enjoys running, reading, and spending time with family.
Carol Takas graduated from Calvin College in 1989 with a Bachelor’s degree in Elementary Education. Recently, she returned to college to obtain a Bachelor’s degree in accounting from Baker College. She lives in Grand Haven with her husband and three children. She loves to read, waterski and attend her children’s activities.
Our mission at Selby Tax & Accounting is to focus on each client’s unique and individual needs,
with dedication and integrity, to ensure all of their accounting and tax needs are fulfilled
Managing and filing your personal taxes can be a long, confusing process. We want to help you save time and money by offering you a variety of individual tax services.
Changes in your life or in the tax world may mean that there are new opportunities for you. We take these changes into account when providing you any of our individual tax services in order to best serve you and your needs. We focus on each of our clients’ individual needs because we know that you’re unique and so is your tax situation.
Tax Services We Provide For You:
Annual Tax Filings: Our tax experts stay up-to-date on the latest laws surrounding the tax industry. Ensure your annual filings are processed correctly following the latest laws and allow our experts to find savings that you may not have known you qualified for!
Bankruptcy: There is life after bankruptcy, and that life includes filing your taxes. We will help you navigate taxes post-bankruptcy and help you get back on your feet financially.
Divorce: Though taxes may be the last thing on your mind during this time, they’re still important. We can help you figure out filing status, exemptions, and payments if necessary.
Purchases and Sales: If you’ve recently made a big purchase, it will have an effect on your taxes. That boat won’t pay for itself! On the other hand, if you’ve recently made a big sale, that will also have an effect on the way that you file your taxes this year. Let us help you decide on how to claim your purchase this year.
Family Additions: Are you experiencing a family change and not sure if you now need to claim a dependent or not? We can help you figure out if you have any qualified dependents and how to file your taxes accordingly.
Career Changes: If you’ve recently started a new job, many changes are in order, filing taxes being an important one. When figuring out W-2’s and miscellaneous expenses dealing with a new career, it can be tough. That’s why we’ll do it for you!
Individual Tax Planning
We also offer individual tax planning. Tax planning helps you in case you’re experiencing a change and aren’t sure how it will impact your taxes.
Options That Fit Your Needs
We want doing your tax returns to be an easy, convenient process for you. That’s why we offer two options of doing your returns with us. You can always drop your information off at our office and we will call or email you with questions, or we can set up a meeting and go over everything together in person.