Atlanta Financial Newsroom

The New Tax Bill: Tallying the Results

The New Tax Bill: Tallying the Results
Chris Blackmon, CFP®, CPA
May 13, 2019

“How did the new tax bill affect me?” was the question on everyone’s minds this tax season, and for good reason. Even though this was touted as the greatest simplification of the tax code in my lifetime, I didn’t notice any reduction in time spent preparing returns. Those of you who reviewed your returns in detail noticed that the schedules look drastically different although contain all the same information. The short answer for many is that it didn’t materially change your overall tax liability. The outliers fell into one of a few buckets:

– Those that paid more in taxes: These were generally married couples or individuals with W2 wages in excess of $250,000. Because the new tax law limited the amount of state income and property tax deduction to $10,000 combined, for those with higher incomes and living in a home or area with significant property taxes in excess of $10,000, the loss of ductions led to a higher overall tax.

– Those that paid less in taxes: These were generally business owners who benefited from the 20% passthrough deduction; couples with children whose income previously adjusted them out of the child tax credit but are now were able to benefit from the $2,000 child tax credit; or those that had comparable income and deductions to prior year, but benefited from the lower marginal rates.

My takeaways and planning tips coming out of tax season are:

– Whether self-employed or working and receiving a W2, reach out to your CPA or tax professional during the year and have them review the amount of tax being withheld or your estimated tax percentage to ensure you know where you stand and won’t be surprised next year at tax time. It has become apparent through news stories that companies made mistakes when adjusting withholding and many employees had less withholding than needed.

– Many retirees will take the standard deduction of $26,600 as most of our clients do not have mortgage interest to deduct and do not pay enough in property tax or state income tax (due to the Georgia retirement income exclusion or Alabama pension income exclusion) to deduct the full $10,000.

Therefore, charitable giving should be done directly from your IRA. This will reduce your overall AGI and could help with taxability of Social Security and/or Capital Gains and will allow for you to still receive the tax benefit from giving to charity. If you are charitably inclined, contact your advisor to discuss whether a Qualified Charitable Distribution makes sense for you, and how we can assist with the details of making these kinds of contributions.

Share This:

Share on facebook
Facebook
Share on linkedin
LinkedIn
Share on twitter
Twitter
Share on google
Google+

Where Does the Travel Industry Stand as Summer 2021 Kicks Off?

The travel industry has begun to see growing demand as we move closer to summer. However, not all travel will be the same, as much of the demand is directly related to the COVID-19 vaccine and reduced CDC restrictions. Instead, industry trends have emerged based on individual comfort levels as they apply to different modes of travel.
Below we will explore some of the factors that have contributed to an increase in travel and how different industries are responding to it.

Read More »

Understanding Inflation in 2021: What Investors Need to Know

Following a year of economic instability, it appears that many of us are turning our attention to something that’s been around for decades, but has recently piqued national interest – inflation. In fact, a recent study found that people are Googling the word “inflation” at a rapid rate, with a peak not seen since 2010…

Read More »

Yearly Archive

Author Archive