TIP OF THE WEEK
With the newly passed tax reform bill, the Tax Cuts and Jobs Act (TCJA), now is the time to start thinking about how this will affect you so that you can plan ahead for the outcomes you will start to feel in your paycheck as early as February 2018.
This tax reform affects virtually everyone; however, families, homeowners, residents of high-tax states, the medically uninsured and small businesses will be especially affected.
Families. Like most taxpayers, many families will be affected by the loss of personal and dependent exemptions of $4,050 per person. However, families with income under $200,000 ($400,000 for joint filers) will be eligible for an increased child tax credit of $2,000. Those with income over that amount may be eligible for a smaller credit.
Homeowners and residents of high-tax states. Homeowners and residents of high-tax states like California, New York and New Jersey, who typically itemize because they have large expenses like real estate taxes and state and local income taxes, may not be able to get the full tax benefit for these expenses, which are capped at $10,000. Some may not find it worthwhile to itemize going forward. Itemizing deductions is only worthwhile if all expenses exceed the standard deduction.
Medically uninsured. Starting in 2019, there will no longer be a penalty for those without health insurance. The penalty, which had become more and more expensive since first implemented in 2014, will not apply to taxpayers without insurance in 2019. Taxpayers who did not have insurance for all of 2017 and do not expect to be insured in 2018 need to make sure to talk to a tax professional, who can help you identify if you qualify for a penalty exemption.
Small-business owners. Some of the largest changes in the tax reform legislation apply to businesses, both large and small. These changes may also affect some rental activities. Corporations will see their top tax rate reduced to 21 percent from the current top rate of 35 percent, starting in 2018.
Retirement. Under the current law, taxpayers can reconvert a Roth IRA into a traditional IRA. This allows taxpayers to avoid paying high tax bills on an amount of money that had fallen in value after the conversion. Now, taxpayers will no longer be able to reconvert a Roth IRA to a traditional IRA.
According to Forbes, the top 10 vehicles with the best resale values are:
1. Toyota Tacoma
2. Toyota Tundra
3. Toyota 4Runner
4. Jeep Wrangler
5. GMC Sierra 1500
6. Chevrolet Silverado 150
7. Ford F-150
8. Chevrolet Colorado
9. Honda Ridgline
10. Subaru WRX
NUMBER TO KNOW
$39 million: Netflix recently announced that it took an “unexpected” $39 million charge for content that the streaming company decided to not move forward with because of the projects association with actor Kevin Spacey.
Apple to release HomePod
Apple recently announced that it’s version of the smart speaker, the “HomePod,” will be released on Feb. 9. Apple originally planned for the speaker to be released before the end of 2017, but delayed the release in mid-December. The Apple version is focused on music and sound quality, instead of intelligence like other smart speakers. The speaker features an always-on voice assistant, but will be more limited than other smart speakers.
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