New York – Financial advisers and accountants are working overtime as many U.S. taxpayers scramble to pay the rest of their 2017 taxes before Jan. 1 when the proposed Republican tax overhaul would sharply cut the amount they can deduct on federal tax bills.
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The tax legislation, which top U.S. Republicans said on Sunday they expected Congress to pass this week, caps the amount of state, local and property taxes individuals can deduct from their federal tax bills at $10,000.
The average American who itemized his or her tax bill in 2015 claimed more than $27,000 in deductions. While taxpayers have until Jan. 15 to pay the final installment of their 2017 taxes, Tom Holly of the accounting firm PwC said he received dozens of calls over the weekend from concerned clients eager to pay sooner.
“It’s going to be a very busy holiday season for advisers,” said Holly, who heads the firm’s wealth and asset management division.
Lisa Featherngill, managing director of wealth planning at Wells Fargo’s Abbot Downing, said she was skipping a family trip to the Valero Alamo Bowl football game in Texas on Dec. 28 in order to work.
Featherngill said wealthy clients and their accountants were not just trying to figure out if it makes sense to estimate and pay the rest of their 2017 itemized taxes this year, but also working to see if they should itemize at all.
Some taxpayers, particularly those in high-tax states who have income above $100,000, may end up paying the alternative minimum tax, which limits the deductions a person can take against his or her federal income tax.
“People really have to run the numbers because … if they are subject to alternative minimum tax, some of those taxes wouldn’t be deductible anyway,” said Featherngill.
Last week, according to media reports, state officials in New York received calls from residents asking to pay their 2018 state, local and property taxes before Jan. 1 in an effort to claim the higher amount of deductions before the Republican tax bill takes effect.
In response, the U.S. Treasury Department issued guidance over the weekend saying that any pre-payments for 2018 tax liabilities would not be deductible on federal tax bills.
If passed, the tax bill would be the biggest U.S. tax rewrite since 1986.
The legislation would cut the corporate income tax rate to 21 percent from 35 percent but offer a mixed bag for individuals, including middle-class workers, by roughly doubling a standard deduction that does not require itemization, but eliminating or scaling back other popular itemized deductions and exemptions.
Two Trumos:
Trump campaigned as the champion of the little man. “You will never be ignored again” he roared at cheering crowds of the little people…drain the swamp…defeat the elitist system, he screamed.
…Yet, once in office he has consistently made decisions championing the wealthy at the expense of the little guy. A tax bill whose single largest beneficiaries are real estate developers, like himself…tax cuts which overwhelmingly do not go to the working middle class (And which, by the way, will seriously hurt Yeshiva Rebbeim, who now for the first time will have to pay income tax on the value of free education given to their children)…but instead favors the wealthy…a tax bill which discriminates against dollars earned as wages, as opposed to earned as stock dividends or capital gains…
…Legislation that enshrines and elevates “the swamp” – from an administration with a cabinet made up of the largest and wealthiest group of billionaires ever seated together in Washington.
Drain the swamp indeed! How many of you people actually follow what’s going on?
Revolution anyone?
“who now for the first time will have to pay income tax on the value of free education given to their children”
“a tax bill which discriminates against dollars earned as wages, as opposed to earned as stock dividends or capital gains”
Since none of those things was in the article, you need to elaborate or give some sources.
For all of you, who are moaning and screaming about federal income taxes, kindly be advised that in other countries (i.e. Scandinavian countries, Canada, etc.), the income taxes are much higher. Considering the protection which we receive from our government (i.e. the armed forces), and other federal benefits, the U.S. income taxes (even before Trump’s bill goes through), are still a bargain.
America-Love it or leave it!