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Financial Focus: The Good, Bad & Ugly of Trump’s Tax Bill

What was hailed as a simplification idea is anything but simple.

This Trump tax bill has three effects: a good effect, scheduled for Feb 1, 2018; a bad effect, scheduled for Jan. 1, 2018; and an ugly that should start Jan 1, 2019 when you start to have your 2018 (the following year) taxes prepared.

The Good Effect: Individuals will be receiving on average a three percent tax cut. The average New Yorker making $50,000 a year will receive back $1500, and through your paychecks (say biweekly) $58.

The Bad Effect: Your eligibility to deduct for lifestyle items: job expenses, dependents (exemptions), moving expenses, alimony, advisory and tax preparation fees are GONE. Your ability to deduct your mortgage, state and city property tax is REDUCED.

The Ugly Effect: Well, let’s look at simple math logic. If you’re paying less in taxes in 2018 then I guess your 2018-2019 tax preparation filing and your refund, should be $1500 less.

Now don’t forget those loss of deductions! According to the IRS, itemized deductions can bring you back, on average 30 percent more. But if they are now gone then I guess that means that $1500 of deductible will be lost.

Simple math: $1,500+$1,500 equals $3,000 of a tax refund loss. Welcome to the ugly!

What is important now is not tax preparation but tax planning. You should be calling your tax preparer now to help you understand the good, bad and ugly of our new tax code.

The good is easy to understand. The bad is very troubling, to say the least. The Ugly? Let me put it this way: Unless you want the same tax refund, in the future don’t blame your tax preparer for a $3000 drop on April 15, 2019. But alas, the best news of them all, you have 12 months (but try to do it ASAP) to prepare!

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: Klipingers Personal Finance, The New York Post, News12 The Bronx, Bloomberg News Radio, BronxNet, the Norwood News, The West Side Manhattan Gazette, Labor Press Magazine, Financial Planning Magazine, WINS 1010 Radio, The Bronx News, and The Bronx Chronicle. Mr Rivieccio is also currently an Adjunct Professor of Business & Personal Finance for City University of New York.  For financial assistance or a FREE 2017 Income Tax Analysis. Anthony can be reached at 347.575.5045

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