Understanding Trump’s Tax Plan
What Changes Will you See on Your Taxes in the Next Few Years
The first thing to keep in mind is that all changes for households will expire after 2025.
The tax cuts for businesses are permanent.
What to expect:
- Individual Income Tax Rates will decrease in 2018. To see the rates click here.
- The personal exemption which is $4050 per person for 2017 is repealed in favor of a higher standard deduction and higher child tax credit.
- Standard deduction is raised to$ 12,000 for single tax payers and $24,000 for married filing jointly
- The child tax credit is raised to $2000 per child with the cut off for the credit increasing to $400,000 for married filing jointly.
- State and Local tax deductions will be capped at $10,000
- Mortgage Deductions: No change for current mortgage holders, but limit drops from $1.1 million including $100,000 on home equity, to $750,000 for new mortgages and no deductions for home equity.
- Taxpayers will be able to deduct medical expenses that exceed 7.5% of AGI in 2017 and 2018 but this goes back to 10% in 2019.
- Previous itemized deduction limits are repealed through 2025 tax year.
For more information read this article.
Enrolled Tribal Member Certification
New for 2017, form FTB 3504 (Enrolled Tribal Member Certification) will be used to certify that tribal members qualify for tax exemption for income earned on Indian country. The form is used to certify that you live within Indian country and meet the following tax exemption requirements:
- You are an enrolled member of a federally recognized Indian tribe
- You live in that tribe’s Indian country
- The income earned is sourced in that same Indian country
Form 3504 should be filed between January 1st and October 15th of the year following the tax year you are reporting. For example, for the 2016 tax year you would file the form between Jan. 1, 2017 and Oct. 15, 2017. You can file it with your Form 540 or separately.
O’Conner’s Tax Service can help you with this requirement. Call us at 619-220-5277.
For more information visit the California Franchise Tax Board’s website:
Income Taxation of Native Americans
Trump tax proposals
Thank you for visiting our site. We would be happy to discuss the changing future of the tax law directly with you. Please call to make an appointment. O’Connor’s Tax Service… 619-220-5277, ask for Steve or Doug. In the meantime take a look at this post which is a good summary of what may come down from the new administration… http://www.taxpolicycenter.org/publications/analysis-donald-trumps-tax-plan/full
In 2015, Various Tax Benefits Increase Due to Inflation Adjustments
WASHINGTON — For tax year 2015, the Internal Revenue Service announced today annual inflation adjustments for more than 40 tax provisions, including the tax rate schedules, and other tax changes. Revenue Procedure 2014-61 provides details about these annual adjustments.
The tax items for tax year 2015 of greatest interest to most taxpayers include the following dollar amounts –
In order to prepare the financial statements, it is important to adhere to certain fundamental accounting concepts.
Going Concern: Unless there is evidence to the country, it is assumed that a business will continue to trade normally for the foreseeable future.
Accruals and Matching: Revenue earned must be matched against expenditure when it was incurred.
Prudence: If there are two acceptable accounting procedures choose the one gives the less optimistic view of profitability and asset values.
Consistency: Similar items should be accorded similar accounting treatments.
Entity: A business is an entity distinct from its owners.
Money Measurement: Accounts only deal with items to which monetary values can be attributed.
Helps existing and potential investors and creditors and other users to assess the amounts, timing, and uncertainty of prospective net cash inflows to the enterprise
Separate Valuation: Each asset or liability must be valued separately.
Materiality: Only items material in amount or in their nature will affect the true and fair view given by a set of accounts.
Historical Cost: Transactions are recorded at the cost when they occurred.
Realization: Revenue and profits are recognized when realized.
Duality: Every transaction has two effects.