Bayley Davis Associates, Inc.
Tax Professionals serving you since 1992
Resources for understanding the Tax Cuts & Jobs Act of 2017
There is no easy way to talk about the various changes happening with the US Tax Code.
At this time the IRS has not issued any regulations or instructions for interpreting the new
rules. In a nutshell, not everything about the new rules is known or even knowable and will
not be until the IRS creates definitions, regulations and releases instructions. Analysts
have estimated that it will be close to mid-summer before the technical corrections come
flooding out. This means we won't have enough information to fully advise you until then.
For the time being we will be posting information that we find useful in helping to interpret
and understand the changes. When we have some final details we will do our best to help
you understand what the changes mean to you.
One very important thing to know is that these changes will not effect your 2017 taxes.
Following are some articles and resources that can help you understand the changes that are coming for 2018.
With regard to K-12 Education, for Tax Payers with school age children one of the changes allows distributions from 529 plans to be used to pay up to a total of $10,000 of tuition per beneficiary (regardless of the number of contributing plans) each year at an elementary or secondary (K-12) public, private or religious school of the beneficiary’s choosing.
This overview of "What Taxpayers Need to Know" by Kathy Miller Parrish is a nice quick guide that we think our clients will find useful.
We highly recommend that you follow the Tax Girl blog on Forbes. Kelly Phillips Erb's many articles offer timely, easy to understand, and entertaining analysis and advice. https://www.forbes.com/sites/kellyphillipserb/
This article by Timothy M. Todd, also from Forbes, provides information about changes to the Home Mortgage Interest deduction. Our main takeaway was that they changed the cap and eliminated the deduction for home equity indebtedness as previously defined. Note that if one gets a home equity loan and uses it to improve one's residence, it then becomes original indebtedness subject to the new cap. So, in essence they have eliminated the ability to use one's home as security to borrow up to $100k for any purpose (such as to buy a car, take a vacation pay off credit card debt, etc.)
Here's one for the advanced students. In this article, Toni Nitti attempts, "Making Sense of the New '20% Qualified Business Income Deduction'. This article will give you some insight into the complexity involved with trying to reconcile these new laws with our current reality. If you can get through this and actually understand what's going on, we might want to hire you.
The following resources were helpful in understanding the proposals in the House and Senate.
There is plenty of advice going around about pre-paying certain taxes and expenses in 2017 to ensure you can deduct the expense. While in some cases this is good advice, but be sure to check your State and local laws to be sure it will be allowed. For example, at this time Washington State will not allow you to deduct your 2018 Property Taxes in 2017. As of 12/22/17 King County was returning checks to customers who prepaid.
Here are some resources and information that we find useful:
This article from the Journal of Accountancy goes over, "How tax overhaul would change business taxes"
One of our favorite writers is Kelly Phillips Erb from Forbes. Her articles are easy to understand and timely.
Here are some of her recent articles that we find helpful in understanding the current tax proposals:
IRS quick links to updated forms and info: