This is part three of a three-part series shedding light on
how the new presidential administration and its proposed
policies and reform may impact you and your business.
> To read parts one and two,
visit www.reacpa.com/new-presidential-administration.
Enhanced standard deduction
A bigger (err, double?) standard deduction sounds great –
how could it not be? But for people who are cons idering
buying their first home or making charitable contribution, or
who rent homes, sell homes, or manage charitable organi-
zations, this initiative could prove to be a more of a curse
than a blessing.
For example, consider those who are trying to justify the leap
of buying their first house. What if they got no tax benefit for
their mortgage interest and real estate taxes? For many buy-
ers of smaller homes, including retiring baby boomers, the
enhanced standard deduction may do just that.
The larger standard deduction may also come at a cost
of limitation or elimination of the charitable deduction for
many individuals – after all, if the standard deduction is big-
ger than the itemized deductions (which includes charitable
deductions), why would you take the itemized deductions?
With little or no tax benefit, will those people give less? Will
charities find that a segment of donors just disappears?
How should I plan for the year ahead?
As we go to print, there’s still so much unknown in the tax
world. We can only make assumptions based on informa-
tion that has come out in the past few months about what
the federal government is considering. And we can only
plan for as much as we know.
That being said, here are some
recommendations:
1. Don’t be fooled by “good news!” Unfortunately, every-
thing that is under the guise of “good news” isn’t always
good for you. Pay attention to the smaller changes that
might make more impact to you than a general rate cut.
The reduction of your tax rate by 5 percent might not be
worth the loss of that deduction.
2. Don’t panic. Stay informed. One of the best things you
can do as we move into the New Year is remain calm and
stay up-to-date on the latest developments. Don’t make
any sudden financial decisions until you fully understand
how any tax changes will impact you and your business.
3. Stay close to your financial advisor and reach out
to them with questions or concerns. There are a lot of
moving parts when it comes to tax reform. And there’s a
lot to keep track of. Be sure to keep in close contact with
your financial advisor as they can help keep you informed
of any tax changes that may impact you and your business.
They can run the numbers for you and let you know what a
new set of rules next year might bring.
Our team is committed to keeping you updated on any
changes that may financially impact you and your business.
To stay up-to-date, be sure to check out www.ReaCPA.com
for timely, relevant articles on the latest developments.
It’s unclear at press time if mortgage interest and charitable contributions would be deductible
on top of or instead of the enhanced standard deduction. “Instead of” would likely mean that the
majority of taxpayers would simply get no tax benefit for those two deductions. Ohio tax is based on
federal adjusted gross income, so remember that loss of federal deductions “above the line” will also
hit you at the Ohio tax level.
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