KGEZ recently interviewed attorney Brian Tanko of Tanko Law regarding the new tax laws. Listen to that interview below, or continue reading to learn more.
The new tax laws are very confusing to a lot of people. If you listen to one side of the argument, it’s the apocalyptic end of all things. If you listen to the other, it’s the magic fix to our financial woes. In truth, it’s got benefits and drawbacks for many people. Let’s look more closely at the new tax laws, and how having the right tax consulting services in your corner can save you a great deal of money when tax time comes around.
The changes to inheritance and estate taxes present a great planning opportunity; the new law doubles the exemption amount, up to 22.4 million. This means for most people there will be no federal estate tax for a long time. Those who own land are going to benefit from the new laws in a big way.
This is huge for people in Montana who own tracts of land, eliminating complex planning, valuations and the like, replacing them with much greater flexibility. Most people will never hit the thresholds for dollar savings.
There are risks, however, and everyone should look carefully at your wills and trusts. The new tax laws have complications regarding things like second marriages, where old wills that refer to prior provisions can accidentally disinherit your own spouse. This makes it important to amend your will and trust to be sure everything is properly addressed under current laws.
Capital gains taxes have undergone significant changes under the new tax laws. Qualified business income on pass-through businesses is now subject to a 20% deduction, whether it’s a sole proprietorship, LLC, and S-Corps. This deduction applies to individuals with an income of under $157,500, double for married couples.
These numbers phase out with more income, but it allows for small businesses to expand and grow. By dividing your assets and interests, you can get even greater savings. There are even ways this can be done for single-owner companies by dividing business assets among relatives and heirs, with the right estate plan.
For larger companies, the corporate tax rate comes down from 35% to 21%, which affects C-Corps, and a few small family businesses are organized in this way. Overall, this is the largest tax cut in American history.
Benefits for Individuals
Everyone will be affected by the new tax laws, regardless of income level. The brackets are changed to bring tax rates down in general across the board. Rates are down to 37% for the highest marginal rate, which is huge money.
The biggest change is that the standard deduction has increased to $24,000 from $12,000. That’s going to put a lot of money into the pockets of just about every family. The bill retains the interest deduction for existing mortgages, but reduces new mortgages from $1 million to $750,000. For most people, you’ll still be able to deduct interest on your mortgage.
Medical expenses stay at 7.7% of adjusted gross income for 2017 and 2018, but the numbers increase to over 10% after 2018. Charitable contributions are limited to 50% of AGI in 2017, but go up to 60% next year.
Moving expenses, alimony, IRAs and the like are still there. Home office deductions are still there and can be a great way to maximize your savings.
Tax Consulting Services
If you’re confused about the new tax laws and whether they will benefit you in Montana (hint: it probably will), you can call Tanko Law. We have years of experience in this area and are eager to help you. Give us a call today!