Trump won, now what? The 2016 presidential election will have many implications for taxpayers moving forward. With Republicans now in control of both houses of congress and the White House, a tax cutting agenda is all but certain to be implemented in the following years. Tax areas where both the GOP and the President-elect agree on include lower, broader tax rates with only 3 marginal tax brackets of 12, 25 and 33 percent for individual income taxes. They agree on increasing the standard deductions while also eliminating personal exemptions for individuals. And lastly, both branches agree on a full repeal of the Alternative Minimum Tax (AMT), Affordable Care Act (Obamacare) and the Net Investment Income Tax. On the corporate side of tax law both congress and the President-elect agree on repealing the corporate AMT while also allowing the immediate expensing with no interest deduction. The elimination of the estate tax is also found on both of their agendas.
Taking Action Now
Keeping this in mind, it is a prime situation where both businesses and individuals should look to accelerate deductions to take towards the 2016 tax year. With lower rates possible in the near future, the value of these deductions will decrease. Some options available to the taxpayer include making those charitable contributions before the calendar year switches or pre-paying deductible expenses for 2017 in the current year.
2016 also brings with it the PATH Act of 2015 signed by President Obama in December of that year. This piece of tax legislation provides permanent extensions for the following: research credits, 5 year built-in gains periods, permanent extension of the Section 179 limits, and charity rollovers from IRAs. Bonus depreciation was also extended but not on a permanent basis. This act also delays the “Cadillac Tax”, a tax on Premium Insurance policies that was imposed in the Affordable Care Act.
April 15, 2017 falls on a Saturday and because Monday, April 17, 2017 is Emancipation Day, the filing deadline for Federal Taxes is Tuesday, April 18th. This is also the first year that partnerships now have an accelerated due date of March 15th while C corporations get an extra month to file with their date now coinciding with Individual 1040s.
Article compiled by Benjamin Rusnak. For additional information please email us at firstname.lastname@example.org.