Tag Archives: Standard Deduction

Three Key Tax Items from the New Tax Laws – So Far

Recently, in a study group of six long time Professional Financial Planners – including yours truly – someone in the group asked if they had their arms around the new tax code?

None of us were 100%- too many changes and too many possible changes-

That being said, here are three key observations

Three Key Tax Changesirs

  1. The new $12k standard ($24k for couples) will render many itemizers useless and will mandating clumping
  2. Tax Rates are going down- across the board – see our chart here
  3. Largely a loss of deductions – Especially small business owners

The last bullet point may give you pause, but it should not, the net effect (most likely) will be positive for most tax payers —

Have a Great “Less Taxing” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
www.jkfinancialinc.com
www.street-cents.com

Clumping – A must given new tax laws … Friday

We are finally digging our teeth into the new tax laws … they are not 100% set in stone yet as there are many unanswered items… and likely IRS statements that will clarify and change items as the year progresses…

There is one item we are pretty confident-

Clumping of Expenses

We are going to speak at length on this over the year, so not to worry about being reminded…

The new standard deduction amount is $12k – Making for a hefty hurdle to itemize for married couples ($24k), especially with a NEW $10k SALT (State and Local Taxes) deduction limit…

Clumping TaxesAre your eyes glazed over yet? It’s ok, we will be digging deeper into this throughout the year ….

Drawing from IRA’s is also in play under the appropriate circumstances … look for more on this shortly as well…

Today is a Friday … and while a little heavier than our normal post for the weekend … it sets us up for what is to come on our tax talks… get out and have some fun … talk to you next week!

Oh… and for those wondering, the 13 year old had 9 matches total and won 6 – in some VERY HOT conditions… All good!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
www.jkfinancialinc.com
www.street-cents.com

High points of the Tax Reform Announcement due out today… Our favorite and least favorite

So we finally get through Tax Season, sunset the tax discussions until next year, and along comes an announcement that tax reform plans are due out today.

Keep in mind, no one knows for sure what the final outcome will be even after today’s announcements as approval and compromises will ensue.

Here are the high points from our perch.

Standard Deduction AdjustmentUncle Sam

An announcement for a large increase in the standard deduction is expected. If passed the net result could be tax savings for many especially those that do not itemize. In our view, this change, if approved would likely have the largest total number of filing changes. Needless to say the tax planning possibilities are huge….

Corporate Tax Changes

There is much anticipation of lowered corporate rates. US corporate tax rates according to many , are too high, a proposal for relief from higher corporate tax rates is expected.

There is also a possibility of smaller, flow through entity corporation, think S corporation income i.e. K-1 tax rate relief.

Tax Repatriation

Our favorite, and hopeful agreed upon, tax change would allow stranded income, already taxed in a foreign country, to move more freely back to the US with less tax burden.  International corporations would have greater access to foreign country stranded capital if this were to be approved.

We have heard less of this lately and hope it does not hit the cutting room floor!

Estate Tax Reform

There has been much talk of an Estate Tax reform as well. The gist is a disallowance of a step up in basis but a removal of the $5.49 million Estate tax rate.

If passed as mentioned, and the current tax laws held “as is” on capital gains, this could be a huge nightmare. We think there may be major compromises on this before actually passed. We will keep you posted on this as it develops. This is our least favorite possible reform at this point.

Have a Great “Tax Reform Announcement” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
www.jkfinancialinc.com
www.street-cents.com

Our Most Interested Tax Item in the works

While there is much to be debated, approved, voted and bantered before any final legislation is likely approved, there is one very interesting tax item we are keeping our eye on.

Major Increase in Standard Deduction

So far the GOP and the new president seem very strong proponents of a HUGE increase in the standard deduction. Currently the talk is $30k for joint filers. The current standard deduction is $12,600.

Digging deeper into the facts, a couple of probably outcomes may be seen:4911abd2-4b9c-408a-a953-d805a2ea9c1a-9907-0000085a4bc97ada_tmp

  • A married couple with no kids or dependants and negligible deductions really get a big break
  • Larger families may actually come out worse as there is currently talk of eliminating standard deductions (think dependent kids)
  • Itemization may be much less – this may be a goal of the new plan- with such a higher standard deduction, those on the cusp of deductions may not even be close anymore

We will keep our eyes on this one and update you as clarity occurs…..interesting though !

Have a Great “Less Taxing” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
http://www.jkfinancialinc.com
http://www.street-cents.com