28 Dec The Effects of the Tax Cuts and Jobs Act as approved into law
By Atty. Crispin Caday Lozano
President Trump signed the $1.5 trillion tax reform package into law on December 22, 2017, Friday, officially marking his first major legislative triumph since he took office.
Here are the key takeaways of the tax bill.
Q. Do corporations get a big tax cut?
Yes. The new bill lowers the corporate tax rate from 35 to 21 percent.
Q. How does it impact my personal income tax?
The bill keeps the seven tax brackets while reducing the rates for five of them. The new rates start at 10 percent and rise to 12, 22, 24, 32, 35 and 37 percent.
The highest rate — 37 percent — applies to individuals whose income exceeds $500,000. For joint filers, the threshold is $600,000. This rate is being lowered from 39.6 percent.
Q. Will I still be penalized if I don’t have health insurance?
No. Starting in 2019, the new legislation eliminates the Affordable Care Act’s individual mandate.
Q. What about the alternative minimum tax rate (AMT)?
The alternative minimum tax rate is essentially a secondary tax on the wealthy, put in place to offset the benefits a person with a high income could receive. The new bill eliminated the AMT for corporations, but keeps it for individuals. It raises the exemption to $500,000 for single taxpayers and $1 million for couples.
Q. How does the new bill affect the child tax credit?
Under the new bill, taxpayers can claim a $2,000 credit for each qualifying child under the age of 17. The tax credit applies to single filers and married couples, and is fully refundable up to $1,400.
Q. And what about estate taxes?
The new bill keeps the estate tax at 40 percent but doubles the exemption levels — which are currently at $5.49 million for individuals and $10.98 million for married couples.
Q. What about my state and local tax deductions, or SALT?
Under the finalized bill, families can deduct up to a total of $10,000 in local property and state and local income taxes.
Q. What if I want to buy a new home?
For new homebuyers, the mortgage-interest rate deduction will be available for mortgages up to $750,000. That’s down from $1 million.
Q. How are pass-through provisions affected?
Pass-through businesses are typically sole proprietorships, joint ventures, limited liability companies and S corporations. They are not taxed as corporations. Instead, the profits from these businesses are counted in the owners’ personal tax returns.
The finalized bill gives businesses a 20 percent deduction for the first $315,000 of joint income.
Q. What if I have student loans? And what about medical expense deductions?
The new tax bill keeps the current deductions for student loan interest. Additionally, the tuition waivers that are received by graduate students will remain tax free.
If you have expensive medical bills, this portion of the bill could be beneficial to you. The legislation allows taxpayers to deduct medical expenses that exceed 7.5 percent of their adjusted gross income.
Fox News’ Madeline Farber, Sam Chamberlain and Kaitlyn Schallhorn contributed to this report.
- On December 15, 2017, we received an approval from USCIS for an adjustment of status for same sex marriage for an applicant who entered without inspection but has Sec. 245 (i).
- On November 16, 2017, we received an approval from Immigration Court for a waiver of misrepresentation for entering as single daughter of U.S. citizen but actually married. On October 25, 2017, we received an approval of I-485 adjustment of status for our client who has a DUI but has proof that he has cleared his record.
- On October 20, 2017, we received an approval of naturalization for a client who was granted a waiver of misrepresentation in Immigration Court.
- On October 16, 2017, we received from USCIS an approval for an adjustment of status for same sex marriage, after two scheduled interviews.
- On October 9, 2017, we received an approval from USCIS for adjustment of status for a client who entered as a seaman but has Sec. 245 (i) eligibility.
- On October 2, 2017, we received an approval of adjustment of status from USCIS for a client who entered without inspection but has Sec. 245(i).
- For the week ending September 15, 2017, we received three Immigrant Visa Approvals in U.S. Embassy Manila for three applicants who entered as seaman under the Provisional Waiver Program.
- For the week ending September 8, 2017, we received four N-400 Naturalization approvals.
- On August 31, 2017 we received an approval of adjustment of status for a client who has problems with birth certificate which we corrected.
- On August 25, 2017, we received approval of I-751 removal of condition on same sex marriage/
If you have immigration problems the Law Offices of Crispin C. Lozano can help you find a solution before your problem gets worse which could lead to deportation and family separation.
Crispin Caday Lozano, Esq. is an active member of the State Bar of California, the American Immigration Lawyers Association and San Francisco Trial Lawyers Association. He specializes in immigration law and personal injury. For free consultation email or call (firstname.lastname@example.org / 1-877-456-9266)