CHRISTIAN: Hello, my name is Christian, today I’m going to interview Joshua Beal from DeafTax.com about the new tax bill and how it might affect you.
This tax bill was just signed into law. But how will these changes impact us? Joshua will explain.
JB: Thank you, DPAN.tv, for having me on your show to talk about the “Tax Cuts and Jobs Act of 2017”.
JB: The first important change is the change of the Standard Deduction. It has increased to $12,000 for Singles and $24,000 for Married Couples.
This benefits people who are Single and filing their taxes. Before, Singles filing taxes could claim a standard deduction of $6,350 plus $4,050 personal exemption. That is a total of $10,400.
Now, under the proposal that was just passed, the new standard deduction is $12,000, an increase in tax exemption of $1,600.
CHRISTIAN: So that explains singles. And what about those who are married and have children?
JB: Now, let’s compare that to married couples with 4 children. You would be paying a standard deduction of $12,700 along with 4 exemptions that totals up to $16,200 which means a family of 6 would have $28,900 in exemptions. Under the new plan, the new deduction would be at $24,000. This is a reduction of $4,900 in exemptions.
So, those who are single or married with no children would have more benefits because they would pay less taxes. However, singles with 1, 2 or 3 children would pay more in taxes.
CHRISTIAN: So how will those single parents, especially those who are low-income, get support?
JB: Now they have increased the Child Tax Credit from $1,000 to $2,000 per child. This will help those who are low income. Those who are lower income might earn less than $20,000-$30,000 every year.
CHRISTIAN: What about those who are elderly or over the age of 65?
JB: For the elderly in the Deaf community, those over age 65 will get a big benefit. This bill will increase your standard deduction by $1,550 if you are single or head of household.
If you both are married and over 65, that is another deduction of $2,500. Singles have $12,000 plus $1,500, up to $13,500 in exemptions.
Again, if you’re married and over 65, that’s $24,000 plus $2,500, so $26,500 can be deducted. This gives senior citizens more deductions.
CHRISTIAN: On the news, there has been an uproar on how this bill will hurt people…. Could you elaborate on that?
JB: There’s been dialogue on who this bill could harm. The 4.1 million taxpayers who are making at least $100,000 could be negatively affected. These people usually deduct using state, local and property taxes. Now, there’s a limit of $10,000 that can be deducted. There was no limit before.
CHRISTIAN: Okay, where do most of these people live, who could likely be negatively impacted?
JB: This means the bill hurts those who live in New York or California. Those states have high property, local, and state taxes.
That will impact those who use itemized deductions, meaning you can deduct mortgage interest, property taxes and more. For those 4.1 million Americans, 90% of their itemized deductions are called SALT (State and Local Taxes). Without those deductions, there will be a great impact.
CHRISTIAN: Moving to businesses, how will this bill impact them?
JB: There are 2 parts: First, if you’re self-employed, you would pay a maximum of 25% tax rate on your business income. What you pay in business taxes will be included in your individual tax rate.
Also, with corporations, there’s big issue being debated. Right now, the U.S. has the highest corporate tax rate in the world. Their current tax rate of 35% will be reduced to 21%. The goal is to bring money back to the U.S. instead of sending it out of the country. This encourages more investment and spending within the country.
CHRISTIAN: So that’s it then? There will not be future changes to the tax bill?
JB: In that bill, there are provisions for spending that still need to be passed. They are still being debated on because, over time, some of those provisions will expire.
JB: Like I mentioned, some of those provisions will expire, so some say that these provisions will need to be re-passed in the next 5-8 years. The result has yet to be determined.
CHRISTIAN: The bill will take effect when we file our 2018 taxes. Thank you, Joshua, for your time and for explaining some of the bill!
JB: Thank you for having me here on DPAN.tv!