Much to the surprise of many people, including myself, the GOP Tax Bill Passed and big changes are coming to our tax system in 2018. There’s lots of rumors and misinformation going around about what these changes will be, so let’s dig into it. This bill isn’t perfect, but there are some great benefits we can all enjoy.
Much to the surprise of many people, including myself, the GOP Tax Bill Passed and big changes are coming to our tax system in 2018.
The first most important element that will affect most people is the doubling of the standard deduction, which we’ve talked about before. With the doubling of this deduction, it’s going to make sense for most people to stop itemizing. My suggestion to those who love itemizing? Get creative this year and itemize as much as possible.
Accelerate your charitable giving. Do you give a monthly tithe to your church? Go ahead and pay for January and February before the end of the year. Your church won’t mind getting the money upfront and you’ll still be able to deduct that money for your 2017 taxes. Have you been thinking about donating your old, beat up car? Do that now! Anything you can deduct this year, take advantage of it.
Your church won’t mind getting the money upfront and you’ll still be able to deduct that money for your 2017 taxes.
This bill has increased the controversial estate and death tax as well. Previously, a married couple with an estate of over 11 million would get taxed 40% on any amount over that 11 million after their death. That limit has now been doubled to 22 million.
One of the changes I’m most excited about is the expanded use of 529 Plans. If you have children, you’re probably familiar with a this plan, which is an education savings plan that has a big tax benefit. Previously, the 529 plan could only be used for colleges, but that’s been expanded to apply to all education, including private elementary, middle and high schools. This is great because now parents and grandparents can set up these savings accounts to help their children attend better schools.
The majority of people will see a large tax cut this year which is good and bad.
Finally, the majority of people will see a large tax cut this year which is good and bad. We’ll see a benefit immediately, so what’s the problem? These tax cuts are set to run out in about ten years because we can only cut a certain amount from the national deficit to fund this, which brings us to be the elephant in the room: government entitlement programs which includes social security.
I’ve gotten a lot of flak in the past for lumping social security in with entitlement programs, especially since we all pay into social security. But overall, this program contribute to half of our deficit. The social security system we have now is failing. We as a country and as a society can’t allow it to continue on as-is. I definitely agree with and empathize with those who say that they deserve to keep the program because they’re been paying into it, but that’s the same as someone on the Titanic saying “I paid for my ticket, I deserve to get to New York.” I agree with you, it’s not fair, but the ship is going down and something going to have to give. While I doubt anyone will vote to get rid of social security completely, we do need to find a new system that works long term and that may be a conversation you can expect to see in 2018.
It’s crucial to evaluate your situation early on, because big changes are coming.
We’ve gone over just a few of the basics here, but you probably still have a lot of questions about how this bill will impact you. I encourage you to sit down with a financial planner and look over everything. It’s crucial to evaluate your situation early on, because big changes are coming.
Please know your situation. You can ask any question through the link below, and I will personally respond. You can also sign up for a free consultation with me so we can get a look at your situation.