Takeaways from the 2017 Tax Cuts and Jobs Act

Takeaways from the 2017 Tax Cuts and Jobs Act

Key Takeaways: 

  • Taxes are on Sale! Many of the tax brackets have been lowered by 3%-4% on average
  • The standard deduction has been doubled to $12,000 for single filers and $24,000 for married joint filers
  • Individual tax changes are scheduled to sunset after year 2025

Some of the Tax Planning Opportunities in this Act Include:

  • Roth Conversions – with reduced tax rates and increased standard deductions most people should see a slight reduction in their average tax bill. This might be the opportunity to convert taxable IRA’s that are forever taxed into Roth IRA’s that are never taxed. Roth IRA’s are also not subject to mandatory
    distributions after age 70 ½ years of age.
  • QCD’s are more valuable than ever – Qualified Charitable Distributions (QCD’s) have always been a great planning tool for clients with large IRA’s and are charitably inclined. The new standard deduction has eliminated the itemized
    deductions for some people and they won’t get a charitable tax deduction on a going forward basis. A QCD is a great way to still get a tax break for your charitable contribution and satisfy mandatory distributions from your IRA’s. You
    must be at least 70 ½ years of age when the gift is made and the maximum transfer amount is $100,000 per year.
  • Estate, Gift & Generation Skipping Tax Exemptions are Doubled – the new limits are $22,360,000 (married couple) and $11,180,000 per person for 2018. These changes are only good until 2025, or earlier, if reversed by future administrations. The sunset provision will set the exemptions back to the $5,000,000 per person, adjusted for inflation. The opportunity to move real estate, appreciated assets, business interests at the current exemption amounts may be a huge tax consideration for some families.

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