The tax system is about to change drastically under the new Trump administration. This article will discuss how exactly this could affect you financially explains William D King.
New Tax Law:
The new tax bill has recently passed in the senate and is now waiting for President Donald Trump’s approval. It promises big changes that would be effective immediately, but some are still unsure of what those are. Those effects are listed below, along with their benefits to the average American worker have been estimated to save an average family $1,182 per year according to TPC, Tax Policy Center.
The tax brackets are changing to 10, 12, 22, 24, 32, 35, and 37 percent for federal income taxes. The new bill is also removing the personal exemptions which could affect families with children. The standard deduction will be increasing from $6,350 to $12,000 for an individual and from $12,700 to $24,000 for a family. These changes mean that your effective tax rate will decrease if you make under the median American income of approximately $50k per year.
Many top corporate tax rates are decreasing from 35% down to 20%. This allows corporations to get more profits back since they are not paying as much in taxes according to CNN Money. William D King says most lower-income workers receive the majority of their income through hourly wages instead of investments, so they will not see much of a change with this new bill.
As you can see the new tax law would benefit the average American worker greatly and could save an average family $1,182 per year. This is one way in which President Donald Trump is fulfilling his campaign promises to lower taxes and help Americans in all economic classes.
In conclusion, the new tax bill promises to lower taxes and save an average family $1,182 per year. This is one of several ways that President Donald Trump is fulfilling his campaign promises to help Americans in all economic classes.
Tax Cuts/Reduced Income Taxes-
The bill wants to cut taxes for most Americans by lowering individual rates across the board as well as increasing the child care credit and standard deduction. These cuts
The new tax reform involving the United States’ Tax Cuts and Jobs Act passed on December 20, 2017, by Congress is set to change taxes in multiple ways. The act includes a number of changes to the current tax law, some of which are temporary (such as cuts to individual federal income tax rates) while some are permanent (such as changing how itemized deductions work). There are also some things that remain unchanged, including 401k limits and IRA contribution limits says William D King.
One of the most notable proposed changes involves new limits for certain itemized deductions. Under the new guidelines established in the TCJA, taxpayers can only deduct a maximum of $10,000 combined from state and local income or property taxes. Homeowners who paid more than that amount during the year can claim a refund if they paid less than $10,000 in state and local taxes.
However, there is one exception to the $10,000 deduction limit: if you pay those taxes as part of an assessment from a homeowners association (HOA) for your area. Some HOA fees include monthly or yearly property tax assessments that can be quite high for some. This means that certain taxpayers who meet the description of having such an assessment could be able to deduct on their federal income tax returns all of those expenses — which may eclipse $10,000 under some circumstances — not just up to $10,000 combined with any other state or local income or property taxes.
How might this affect you?
If you are a homeowner with an HOA, check your monthly or yearly property tax statement. To see whether the fees assessing as a separate line item. If that’s the case and you paid more than $10,000 in such taxes for your home (which can happen and is not necessarily uncommon). Even if you also pay state and local income taxes — then you may be able to deduct everything above $10,000. From one of your federal tax returns under the TCJA provision.
The new law allows for this exception only through 2025. So homeowners will need to take action soon if they want to make use of it. Considering those facts now might be a good time for those affected by this change. To review their current financial situation and prepare accordingly.
To recap, the TCJA imposes new limits on state and local taxes that can be deducted from federal income taxes. The only exception to this is if the taxes are paid via an assessment by a homeowners association says, William D King. This provision will expire in 2025. So it’s important for homeowners to pay attention now in order to take advantage of it before it expires.
One way that President Donald Trump is fulfilling his campaign promise. To lower taxes and help Americans in all economic classes. By adding a provision to the tax reform bill that allows for deductions of HOA fees. This limits the amount of federal income taxes one has to pay when they have an HOA assessment.