Congressman Paul Ryan: “I would like to see a new tax system in place when we wake up January 1, 2018.”
President Donald Trump: “It’s a once in a lifetime opportunity to fix an outdated and complex tax system. We should have a tax plan that lowers taxes, creates higher growth and brings more jobs.”
Well, here it comes! As you might have heard in recent days, our new government is about ready to change our tax and financial life forever by:
- Simplifying personal tax brackets from 7 to 3
- Increasing child and elderly tax credits
- Decreasing business taxes, significantly, from major corporations to the mom and pop grocery store on the corner to the jewelry store in your bedroom
- Significantly decreasing and eliminating over 90 percent of itemized deductions from medical to job expenses to rental and small business expenses
While I am sure that you are now learning pieces of the plan- WE CAN NOT STRESS ENOUGH TO SIT DOWN AND START YOUR TAX PLANNING FOR THE FUTURE AT ONCE.
How much of a tax refund is no longer in question. You will get less. The question now becomes, what “tweaks” do you have to make in your tax and financial lifestyle so you will not be shellacked come tax refund season time in February 2018.
Schedule a meeting with your advisor and start the process of “preventive financial medicine.”
At first glance (but we are already doing some preliminary number crunching) we expect “the average” middle class taxpayer to receive an eight percent tax decease.
We also expect that person to lose, minimum, 20 percent of tax deductions and credits. Therefore, based on this scenario, their taxes would go up by 12 percent- while at the same time their refund going down via their last year return.
Now, there are many tools that can adjust this: a revised submitted W4 is the easiest way. But a tax planning session should provide you with a comprehensive set of tools and strategies to both: put you in your correct tax bracket while receiving a “healthy” tax refund.
Since everyone’s case is different, call your tax preparer. Or look for an advisor, or feel free to give us a call.
Anthony Rivieccio is the founder and CEO of The Financial Advisors Group, celebrating its 20th year as a fee-only financial planning firm specializing in solving financial problems. Mr. Rivieccio, a recognized financial expert since 1986, has been featured by many national and local media including: Kiplinger’s Personal Finance, The New York Post, News 12 The Bronx, Bloomberg News Radio, BronxNet Television, the Norwood News, The West Side Manhattan Gazette, Labor Press Magazine, Financial Planning Magazine, WINS 1010 Radio, The Bronx News, and The Bronx Chronicle. Anthony is also a current Instructor for Certified Financial Planning (CFP) classes at Lehman/ CUNY College. For financial assistance or a FREE 2017 Income Tax Analysis. Mr. Rivieccio can be reached at (347) 575-5045.