Welcome, clients and friends! Given all the uncertainty about taxes, I’m using this to communicate, as often as facts can be separated from fiction, information that you may find helpful in your planning. As the last Presidential campaign focused a great deal on tax reform and President Trump campaigned on that issue, here is what we know based on one of the tax policy changes proposed on his official website:
The personal exemption will be eliminated. Currently, it is $4,050 per person, and is expected to be no longer available. Large families could be affected most since parents depend on the exemptions to reduce their tax liability. If your filing status is Head of Household (unmarried with dependents) and have two children, the current income exemption (standard deduction plus dependent exemption) is $21,450. Under the Trump plan it will lower to $15,000 making $6,450 more of your income subject to tax*. The reason I use this example is that the Head of Household filing status would be eliminated under the Trump plan, putting a heavier burden on taxpayers that fall into this category.
* Information provided by the Tax Policy Center, a non-partisan, non-profit organization that analyzes tax policy for current and long-term effect.