“Well, there’s a new tax law this year. You may have heard about it on the news once or twice,” said local CPA Andrew Hartung as he opened a keynote speech to the Fountain City Business and Professional Association Jan. 11.
Who says tax law and humor don’t mix?
Hartung, treasurer and past president of the FCBPA opens each year with a talk about taxes, that bane or blessing of each first quarter. This year, he gave an overview of key changes in the Tax Cuts and Jobs Act, that infamous tax bill that spawned December 2017 controversy.
While some of the changes are cut-and-dried, Hartung said it’s early days yet for interpretation of this bill, which takes effect with tax year 2018.
“There is absolutely no guidance out yet,” he said. “We don’t know how it will look on a tax form.”
Here are some key changes that Hartung addressed:
- Tax brackets remained roughly the same, but all were lowered slightly.
- The standard deduction was raised to $12,000 from $6,500 for singles, and to $24,000 from $12,600 for married.
- Personal exemptions were repealed and rolled in with the standard deduction.
- Child/Family Credit increased to $2,000 per child and $500 for dependent adults.
- Employees will no longer be able to deduct work expenses like travel and mileage not provided by their employers. Hartung recommended that employees approach their employers for reimbursement going forward.
- Donors may no longer claim a charitable donation made in exchange for the right to buy tickets to athletic events. Sorry, Vol fans!
- Effective in 2019, alimony will no longer be taxable income for the recipient and tax-deductible for the payer. Current divorce decrees will be grandfathered in. “So if you’re planning on getting a divorce, be sure you do it before Dec. 31,” said Hartung.
- Business tax has changed from a sliding scale to a flat 21 percent for C-corporations. While this represents a tax cut for bigger corporations, it is an increase for corporations making $50,000 or less, who were previously taxed 15 percent.
- The Alternative Minimum Tax was not repealed except for corporations. “This really affects the upper middle class, especially in the wealthy states. Well, we call them wealthy states, but the overpriced states,” said Hartung.
The Fountain City Business and Professional Association meets at noon every second Wednesday in the fellowship hall at Central Baptist Church Fountain City. Lunch is $10, and all are welcome.