by Professor Anthony Rivieccio MBA PFA
December 6, 2018
Do you own a Home? a Condo or Coop? Do you pay Job Expenses or Alimony? So you have dependents?
Guess what, your in Income Tax trouble!!!.
Welcome to Income Taxes, 2018!.
Starting in January of 2019, taxpayers will learn the true effect of the 2017 ” Tax Reform” bill. In my opinion, : The Good, The Bad ,The Ugly & The Ugliest.
The Good: Well, since January of 2018, you have received more money in your check. Yes I know it’s not that much ( on avg 2%; ) but still, if you make $50,000, you are going to receive by the end of 2018, $1,000. Yes, that’s good- for the moment
The Bad: So that’s $1,000 that you did not pay taxes on!. Well don’t worry, on your next year’s tax form (2018) you can pay the taxes on it. If your in a Federal, NY State & City tax bracket of 40%, that’s $400- that you have to pay- so unless you adjusted your w-4- it’s coming out your refund
The Ugly: I hope your not keeping all those receipts that your tax person told you to keep. According to the new tax law, many deductions & credits have been eliminated or reduced.
Just one example ( and don’t have a heart attack) exemptions!
What are those? well, with my Clients I explain it as ” household dependents”. In 2017, say a married couple with 2 kids were able to put “4 exemptions” on their tax return. Each exemption is worth ( apx) $4,000 so this couple can lower their taxable income by $16,000. In a 40% tax bracket, that’s tax savings $1,600 each or $6,400 total .
Exemptions are no longer in the IRS tax code.
Yep, that’s ugly
So, another example, an avg Single person in NYC, with a child making $50,000 a year, this is what is happening to them:.
Jan 1, 2018- $1,000 total tax cut (2%)
Jan 1 2019 payback time on the $1000 ($400)
Jan 1 2019- loss of 2 exemptions
($8, 000- loss lowers refund by $3,200)
-3200. = -$2,600
Yes, that’s right. This person now owes money. If this person was getting a $2,000 refund last year, and not prepared for the upcoming changes, this means the refund is GONE and they now OWE $600…..
Now , of course the Single person works for a living. Of course don’t forget those old job expenses…….wait!!!…NO MORE Job expenses!.
Of course they pay State & City Taxes- WHICH WILL NOW BE CAPPED
AND SADLY, I can go on and on and on
And it gets even UGLER, We now have NEW TAX FORMS, SCHEDULES & WORKSHEETS – and the new US Government ” Tax Postcard” ( attached picture) that the Government will encourage you to file.
You might say why not? Remember this: Why is it a postcard? Because there NO TAX DEDUCTIONS on the form. And if there is less tax deductions being used, The Government gets to keep more of your money.
But relax, there are still plenty of tax deductions in the tax code , new even more liberal, some, NEW!.
It has been, in our opinion, over 100 years in which our US Tax code has been changed so dramatically.
What’s even worse, these changes, as of now are temporary- which means- they can CHANGE AGAIN & AGAIN
And with the divided Government that we have seemed to have over the last 6 years, I am not sure of if they can find any permanent agreement on anything more or less The US Tax Code
So make a permanent decision for yourself NOW!. Talk to a tax advisor to find out how the new ” tax reform” plan – first designed to make your taxes go down- will now effect many many Americans as their taxes will now ( with the loss of deductions & credits) go UP , with a Tax INCREASE.
Anthony Rivieccio is the founder and CEO of The Financial Advisors Group, celebrating its 20th year as a fee-only financial planning firm specializing in solving ones financial problems. Mr. Rivieccio, a recognized financial expert since 1986, has been featured by many national and local media including: Klipingers Personal Finance, The New York Post, News 12 The Bronx, Bloomberg News Radio, BronxNet Television, the Norwood News, The West Side Manhattan Gazette, Labor Press Magazine, Financial Planning Magazine, WINS 1010 Radio, The Bronx News, and The Bronx Chronicle. Mr Rivieccio is also currently an Adjunct Professor of Business , Finance & Accounting for both, City University of New York & Monroe College, a Private University. For financial assistance , Anthony can be reached at (347) 575-5045. Feel free to visit their FACEBOOK Business page for past Financial Focus articles:
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