HERE are proposed tax changes that could affect individuals like you and me.
Individual Tax Rates:
President Trump plans to simplify the tax code by condensing the current seven rates into three – 12%, 25%, and 33%. Most Americans will go down in bracket but a few will go up to a higher tax rate.
Deductions:
The standard deduction for single individuals would more than double from $6,350 to $15,000 and married couples filing jointly from $12,750 to $30,000. This is great news to taxpayers who don’t have house mortgage interest and property tax deductions.
Child Care:
President Trump proposes a new above-the-line deduction for child and dependent care expenses. This deduction is available even to those who do not itemize deductions. The deduction would be available for up to four children or elderly dependents. Anyone making less than $250,000 ($500,000 if married) would be eligible to take this tax break.
Earned Income Credit (EIC):
He also proposes to increase the earned income tax credit for taxpayers who would not qualify for the new child care deduction discussed above. As a result, more taxpayers would qualify for the EITC. Low-income workers in the non-taxable category would be eligible for an earned income tax credit of up to $1,200 annually.
Capital Gains:
Current rates for long-term capital gains and qualified dividends would remain unchanged, but we would be freed from a surtax of 3.8% on investment income. The Affordable Care Act is funded in part by this surtax which pushed the top rate on long-term capital gains last year to 23.8% for high-earning couples.
Investment Income Tax:
The additional 3.8% tax on net investment income and capital gains would be terminated – gone.
Alternative Minimum Tax (AMT)
The dreaded Alternative Minimum Tax that has hit more taxpayers would be axed – gone.
Estate and Gift Tax:
We pay income tax throughout our lives and get taxed again on death. This would be repealed – gone.
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Victor Santos Sy graduated Cum Laude from UE with a BBA and from Indiana State University with an MBA. Vic worked with SyCip, Gorres, Velayo (SGV – Andersen Consulting) and Ernst & Young before establishing Sy Accountancy Corporation in Pasadena, California.
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He has 50 years of experience in defending taxpayers audited by the IRS, FTB, EDD, BOE and other governmental agencies. He is publishing a book on his expertise – “HOW TO AVOID OR SURVIVE IRS AUDITS.” Our readers may inquire about the book or email tax questions at [email protected].
