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Tax Reconciliation Bill Finalized
Saturday, December 16, 2017

As of yesterday, Congress has reconciled the two different versions of the tax bill and has produced a final version, which will be voted on sometime next week (right now they are saying it will be Tuesday or Wednesday).  The bill generally followed the rumors - meaning the following:
  • corporate tax cut
  • deductions for both large and small businesses
  • lowering of tax bracket rates, expansion of tax brackets
  • Doubling of standard deduction with simultaneous elimination of personal exemptions
  • Limitation of certain itemized deductions (Mortgage interest only allowed on $750,000 or lower mortgages, state and local tax deduction limited to $10,000)
  • Most personal tax changes will "sunset" (aka go away) at the end of 2025, meaning that the current tax law would come back into existence
  • Significant increase in  Alternative Minimum Tax (AMT) threshold meaning fewer people will be subject to it
  • Elimination of penalty for not buying health insurance
This bill still has to be voted on by both chambers of Congress, so is NOT law yet.  That said, it is predicted to pass so it's a good idea to prepare for its passage.

With the cap on state and local income taxes, it is generally a good idea to prepay your property taxes on your main residence if you can.  Under the same theme, if you are self-employed you can prepay your state income taxes for 2017 (basically, prepay your last quarterly payment).  However, if you are subject to Alternative Minimum Tax (AMT) these deductions will be limited for you - if you think you might want to utilize this planning technique please contact me and I can advise you on your specific situation.

With the doubling of standard deductions, some taxpayers will no longer itemize and thus not take advantage of the charitable contribution deduction in 2018.  Therefore, it would be a good idea to contribute to "frontload" your contributions to charities this year if you think you will be taking the standard deduction in 2018.  Again, please contact me if you think you can take advantage of this and I can advise you on your situation.

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