On behalf of Silver Tax Group posted in IRS Tax Audits on Tuesday, December 26, 2017.
While the new tax bill just signed by President Trump promises to cut individual income tax rates, the bill does not mean filing taxes will be any easier for Michigan taxpayers. The tax bill is complex.
As it is currently set up, the bill will raise $4.5 trillion by cutting a number of deductions for individuals and through elimination of the personal exemption. Nevertheless, the bill would during the next 10 years also add $1.4 trillion to our federal debt.
Highlights of the new tax bill
While some provisions are favorable to taxpayers, certain provisions will end the ability of taxpayers to take certain deductions.
For example, the bill will place a cap on itemized deductions. This includes deductions for state and local income taxes. It will change the amount of the mortgage deduction for certain homebuyers. The legislation nearly doubles the standard deduction. It will also repeal the alternative minimum tax.
With seven tax breaks in place, most taxpayers will see a deduction in their rates. The bill will also include an increase in the child tax credit along with the addition of a new family credit. On the other hand, it would eliminate several education-related deductions.
The bill will reduce corporate rates from 35 percent to 20 percent. But it is going to add an excise tax regarding foreign payments made to corporations. The bill also creates a tax deduction for owners of “pass-through” businesses including partnerships. Finally, it means the repeal of the federal estate tax within five years.
The big picture
Regardless of who is in the Oval Office or whatever party controls the two federal houses, taxes never seem to become any simpler. The laws are so complex that a comprehensive tax strategy is almost impossible without the assistance of an experienced tax lawyer who understands the new rules.