New Tax Code … New Stuff to Know

 

We have been reading about the 2017 Tax Cuts and Jobs Act for a week now.  OVER 500 new pages of code changes and even new sections of code, with much detail yet to be released.  Our advice to you?  Step one…take a breath and don’t feel like you need to make a mad dash to major changes.  It may be months before we get some of the most important details about our new reality.  Step two, take all the water cooler, social media and barbershop advice you receive with a grain of salt, and with a “note to self” that you will need to go find out the FACTS about the rumored item (and yes, I am saying this on a social media blog!).  You’ll find you can put many things in a simple and absolute category, so if it’s actionable you can then move forward.  For instance, Section 529 education accounts have been expanded to allow payments to private schools and lower grades.  It’s pretty cut and dried with very little ambiguity, so open one up or take money from one to pay for private school payments.  On the other hand, the Act is allowing a new 20% deduction for small business income.  It has different rules and limitations for some kinds of businesses but not others.  Numerious “if this then that”, or “the smaller of these two calculations”, making it very difficult to figure out what the right adjustment might be to achieve the best tax outcome.  All these new rules will become more clear over time, but at the moment, no one is really 100% sure what to recommend.  If they say they are…be very suspicious.  Some things you likely do need to act on sooner rather than later.  Home equity interest is no longer tax deductible, where regular mortgage interest is.  Should you go get a new mortgage to replace your HELOC?  Well, the standard deduction has increased substantially, and you may find that you no longer even need to file a Schedule A to write off the interest, so perhaps not.  This all sounds very complicated, so what do I do?  That answer is not too complicated!  This is a hard year to be a do it yourselfer.  Go see a tax planner and get some help.