5 Ways to Put the New Tax Reform to Work for You
Time to rethink some of life’s major financial decisions?
There’s a lot to learn and to understand about the provisions within the recently-passed 2017 Tax Reform.
One thing for sure is that the new tax law could change how you think about the financial decisions you make whatever your stage of life –– everything from what job you take, if and when you change careers, whether or not you get married and when, if you buy a home or rent, if you move or remodel your existing home, what schools your kids attend, if you go back to school and when, if you take a vacation and where you travel, if and when you retire, the size and timing of charitable contributions, and the list goes on and on.
The reality is that the financial strategy and plans you currently have in place will likely need to be revisited. “This can be both an exciting and confusing time,” notes Steve Reder, President of Lenox Wealth. “Changes in tax laws have a ripple effect that tends to affect most parts of our lives. This is the time for people to talk to their financial advisor, tax planner or accountant to reassess their financial picture taking into consideration how the new tax reform will affect them and how to use it to their advantage in the short and long term.”
Here’s a good place to begin –– 5 ways the new tax reform might affect you.
1. You are among the projected 80% of taxpayers who will receive a tax cut.
According to the office of Congressman Brad Wenstrup (OH), “In 2018, taxes will be reduced by about $1,600 on average, increasing after-tax incomes by 2.2%. In 2018, 80% of taxpayers will receive a tax cut from the included provisions––averaging about $2,100.”
2. You have dependents (children) eligible for the Child Tax Credit.
In the new law, the child tax credit doubles from $1,000 to $2,000 per child, with $1,400 of that amount refundable (indexed to inflation).
3. You are a student or an educator.
Student loan interest and graduate school tuition waivers are maintained under the new law, as are deductions for educator expenses.
4. You may not itemize anymore on your taxes anymore.
The standard deduction doubles with the new tax bill and things you typically itemized may get reduced. The Tax Policy Center estimates that the number of people who can itemize will drop from 37 million to 16 million (a drop of 57%). For those who don’t itemize, this will eliminate the tax deduction for state/local taxes, medical expenses, donations to charity, and home mortgage interest. It will be even more important to work with your CPA / financial advisor to determine how to best navigate these changes.
5. Your business is organized as an S corporation, partnership, LLC, or sole proprietorship.
Among our nation’s job creators, your corporate tax rate is now lowered to 21% from 35%. The tax reform package also includes a first-ever 20% tax deduction that applies to the first $315,000 of joint income earned by businesses organized as an S corporation, partnership, LLC or sole proprietorship.
Don’t go it alone. Get the help of a financial advisor to help you plan for the future. You may think you don’t qualify or can’t afford professional financial advice. Truth is, you can’t afford not to get professional guidance. Financial advisors not only complement your tax advisor, they also know the ins and outs of 401Ks, IRAs, funding education, buying a house or car, retirement savings, and investment strategies. They help to guide you beyond financial hurdles and challenges whatever your stage of life, income or net worth. At Lenox, we call it helping you Fund A Life You Love™.
If you’re ready to discuss financial planning that will allow you to Fund a Life You Love®, we’d love to tell you more. Let’s talk. It’s your tomorrow.
Call us for a complimentary 1 hour review. Call 513.618.7080 or contact us here to Fund a Life You Love.
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This blog is limited to the dissemination of general information pertaining to its investment advisory/management services. This is not intended to be personalized investment advice. Please contact a Lenox adviser if you would like additional information.
Facts presented have been obtained from sources believed to be reliable. However, Lenox cannot guarantee the accuracy or completeness of such information. Lenox does not provide tax or legal advice, and nothing contained herein should be taken as legal or accounting advice. Individuals should seek such advice based on their own particular circumstances from a qualified tax or legal adviser.