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December 28, 2018

The Tax Cut and Job Act or TCJA for Short

Rick Hannafan

Rick Hannafan
Agency Owner/H&R Block

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Have you ever wondered what will the "Trump Tax Plan" or TCJA do for me??? Well, read on. The TCJA is one of the largest pieces of tax legislation to come down the pipe since 1986 when President Reagan was in the Oval Office. It will affect every taxpayer a little different depending on what kind of income you have.

Do you earn self-employment, or do you have a w-2 income, are you a C-Corp or an S-Corp? All these things matter in a different way.

Let's start with the w-2 employee had a with 2 kids. For starters last year you had a standard deduction of 12,600 and four exemptions of 4050 for a total of 16,200+12,600=$28,800 before the amounts hit the tax tables. This year the standard deduction is $24,000. You may be thinking that 28,800 is better than 24,000 but he comes the TCJA. Each of the children under 17 years old was worth $1000. This year they are worth $2000. You also may say had too large of AGI last year I never got the $1000 per child. Good news the limiter has been raised.

If you own a partnership or S-Corp or are a sole proprietor, you probably think what does this have to do with me? The C-Corps got the lower tax rates. BUT, the rest of us got the sec199 deduction for QBI. Qualified Business Income gives you a deduction of up to 20% of your income to lower what passes through to your personal return.

There are changes to AMT, Depreciation, and many other things for other articles thank you for reading and have a great year.

Comments? You can contact me directly via my AdvisoryCloud profile.

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