So it’s the end of April 2017, we have a new administration and pretty much the same old congress. The end of April also happens to give those of us who are CPA’s, Enrolled Agents, Attorneys and other tax preparers a break from the rush of our busy season.
This filing season we have few material changes to the tax code for most filers. While that doesn’t make the work any easier it does mean that we can focus on most of the work without having to apply a lot of new IRS code.
While there are few changes for the 2016 filing season, I believe that we will see a considerable amount of changes for the 2017 tax year. With any new administration, whether Democrat or Republican, come tax code changes that reflect the ideals of the new president. In 2009 and 2010 we had the ACA act (otherwise known as Obama Care) and the expiration of the Bush tax cuts. I only have a vague idea of what this year’s changes might be, but I do know that we will see changes. Here are some of the changes speculated by some of my esteemed colleagues.
1. The elimination of the Alternative Minimum Tax (AMT). This will likely involve the elimination of state income taxes as an itemized deduction and the lowering of all federal tax rates. So if you live in Nevada, Wyoming, Washington, Texas or Florida it’s really good news. If you live in California, New York, New Jersey or Pennsylvania it’s definitely bad news.
2. Lowering of Corporate tax rates. The most extreme version I’ve heard of is having the rates go from 39% to 5%. We currently have one of the highest corporate tax rates in the world. The theory behind this is that by lowering the rates, companies will return their offshore profits to the U.S. for investment here.
3. A substantial increase in the standard deduction. This would raise the standard deduction for those who don’t itemize by 8 to 10 thousand dollars. So, for a family of four they would only pay income tax on their income over $38,900.00. Some realtors feel that this change would lower the price of homes. I actually believe that it will have the opposite effect as lower income families will have additional money to save for a down payment.
I’m sure we’ll have a much clearer picture by the end of summer. Remember life is taxing, so hire a good CPA to lighten your load.