PRACTICE CORNER FROM THE
BY MICHAEL ROZBRUCH
Senate and House Republicans recently agreed in principle on the final new tax reform bill. People who plan on buying homes in 2018 in “high-rent” districts across the country will be hurt the most by this bill by paying more in federal taxes than they would have in 2017. As I write this, it is not law yet, but if it passes in its current form, this is what you can expect some of the major provisions to be: mortgage interest deductions limited
singles, and $24,000 for joint filers, and the AMT (finally!) would only kick- in for individuals earning at least $500,000 and for couples earning at least $1,000,000. The bill also has major benefits for corporations, with the corporate income tax rate going down to 21 percent from 35 percent. The agreement would also allow deductions for pass-through entities whose owners pay taxes based on individual tax rates. The Bill is still in flux and may change some more.
to interest on the first $750,000 of indebtedness. The Senate and House deal that’s on the table would allow taxpayers to choose a property tax deduction or a deduction for state and local income taxes, up to $10,000 in total combined. Initially they wanted to eliminate the state and local income tax deduction altogether and cap the property tax deduction on the first $10,000 of property taxes. .
The bottom line of all of this means more money and more business for us. The IRS will continue to send out millions of incorrect, collection and exam computer- generated notices, and even more so once the bill becomes law, which taxpayers will need to defend and get resolved. There will be another 750,000– 1,000,000 new tax problem clients added to the existing 14,000,000 who are already in collection and who need professional representation. One thing we can all count on is change. Embrace it and profit from it!
On the bright side, the bill will reduce the top individual tax rate to 37 percent from 39.6 percent. The standard deduction will nearly double to $12,000 for
–Michael Rozbruch
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