On behalf of Silver Tax Group posted in Back Taxes on Wednesday, August 30, 2017.
Changes to the tax code that some politicians propose could actually hurt many individual taxpayers. This is because simplification of the tax code could eliminate a large number of tax write-offs. Such changes in turn could eliminate incentives to itemize deductions on tax forms.
Currently, approximately 30 million Americans reduce their taxable income through the mortgage interest. Such deductions total around $70 billion. However, under proposed rules, over half of all homeowners would discontinue itemization concerning the mortgage deduction.
Such a tax proposal reducing the availability of the mortgage deduction would injure prospective homebuyers and individuals who just recently purchased a home. Such a disincentive to homeownership would also explain why homebuilders for the most part oppose these proposed changes.
Taxpayers also deduct $13 billion from their taxes each year due to charitable donations. But the proposed rules would provide taxpayers less benefit in giving to charities. This likely would lead to less charitable giving.
What the Taxpayers Should Do With the Tax Write-Offs
Michigan taxpayers will want to follow the progress regarding such tax proposals. There are lobbyists already fighting the proposed changes to the tax code. Some opponents to the changes suggest we simply cut rates rather than restructure the tax code. In any event, what actually takes place will impact taxpayers across the nation.
Every new administration has ideas about “fixing” the tax code. Due to widespread dissatisfaction with current tax law, efforts to change the tax code will be continuous. This makes it difficult for taxpayers to keep up with all of the changes. It therefore can prove useful to have on your side legal representation who keeps up on tax changes, and who can advise you concerning possible actions to take in light of such changes.