President Biden’s administration has outlined a tax policy built upon the agenda introduced during his campaign. Biden’s tax plan focuses on raising taxes on corporations and affluent households, while increasing credits for moderate- to lower-income households. With Democratic control of Congress, changes outlined in President Biden’s tax plan have an increased possibility of becoming a reality. At what time, in what form, and to what extent remains to be seen; however, another round of tax law changes is likely on the horizon.

Having adapted to frequent, and sometimes major, legislative changes in recent years (namely the TCJA, the SECURE Act, the CARES Act, and most recently, the American Rescue Plan Act), you may be understandably concerned about what changes could be imminent. High-income households, in particular, have been targeted for tax increases under Biden’s tax plan.  By familiarizing yourself with President Biden’s tax plan now, you can be positioned to take action and seize planning opportunities when changes are implemented.

Take a look at this checklist to help guide you through conversations regarding the highlights of President Biden’s tax plan, along with the companion piece “How Might President Biden’s Tax Plan Affect Me?”.

You may find this flowchart on Acumen’s Resources page: As a High-Income Taxpayer, How Might President Biden’s Tax Plan Affect Me?

If you’d like to discuss your personal situation and learn more about how Acumen can help you Invest Intentionally®, please contact us.

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Our mission is to help you and your family Invest Intentionally®.
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Income tax planning is critical to solid financial planning. Navigating our complicated federal pay-as-you go income tax system can be difficult. Adding further complexity, you must understand and adapt to changes in tax laws and in your personal circumstances. In each tax year, it is important to ensure you are properly paying your federal income tax liability in order to avoid penalties. Frequently, you may need to make estimated payments to avoid penalties for late payments and/or underpayments.

We have a flowchart to help you guide through an estimated payments analysis. The decision points identify factors that may trigger a need to make or increase estimated payments, including:

You may find this flowchart on Acumen’s Resources page: Do I Need to Start Making Estimated Federal Income Tax Payments for 2021?

If you’d like to discuss your personal situation and learn more about how Acumen can help you Invest Intentionally®, please contact us.

This report is provided as a courtesy for informational purposes only. The information has been obtained from sources we believe to be reliable; however, no guarantee is made or implied with respect to its accuracy, timeliness, or completeness.

Report Not a Solicitation
Do not act or rely upon the information in this publication without seeking the services of competent and professional legal, tax, or account counsel.

Report Does Not Provide Legal, Tax, or Accounting Advice
This report does not provide legal, tax, or accounting advice. Before making decisions with legal, tax, or accounting ramifications, you should consult appropriate professionals for advice specific to your situation.

For More Information
You should seek the services of your legal and/or tax advisors when making financial decisions. It is also recommended that you visit the IRS website at for additional information.

Acumen Wealth Advisors, LLC® is a Registered Investment Advisor. Advisory service are only offered to clients or prospective clients where Acumen Wealth Advisors, LLC® and its representatives are properly licenses or exempt from licensure. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by Acumen Wealth Advisors, LLC® unless a client service agreement is in place.

Ready to Connect?

Our mission is to help you and your family Invest Intentionally®.
Contact us today to start your journey.

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Retirement is a whole new phase of life. You’ll experience many new things, and you’ll leave others behind – but what you won’t avoid is taxes. If you’ve followed the advice of retirement plan consultants, you’re probably saving in tax-advantaged retirement accounts. These types of accounts defer taxes until withdrawal, and you’ll probably withdraw funds in retirement. Also, you may have to pay taxes on other types of income – Social Security, pension payments, or salary from a part-time job. With that in mind, it makes sense for you to develop a retirement income strategy.

Consider when to start taking Social Security. The longer you wait to begin your benefits (up to age 70), the greater your benefits will be. Remember, though, that currently up to 85 percent of your Social Security income is considered taxable if
your income is over $34,000 each year.

Be cognizant of what tax bracket you fall into. You may be in a lower tax bracket in retirement, so you’ll want to monitor your income levels (Social Security, pensions, annuity payments) and any withdrawals to make sure you don’t take out so much that you get bumped into a higher bracket.

Think about your withdrawal sequence. Generally speaking, you should take withdrawals in the following order:

These factors are complex, and you may want to consult a tax professional to help you apply these tips to your own financial situation. You can test different strategies and see which ones can help you minimize the taxes you’ll pay on your savings and benefits.

To learn more about how Acumen can help you Invest Intentionally®, please contact us.

ACR# 3493422 03/21

Acumen Wealth Advisors, LLC® is a Registered Investment Adviser. Advisory services are only offered to clients or prospective clients where Acumen Wealth Advisors, LLC® and its representatives are properly licensed or exempt from licensure. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by Acumen Wealth Advisors, LLC® unless a client service agreement is in place. Acumen Wealth Advisors, LLC® is affiliated with RPAG and utilizes their robust retirement plan consulting tools and resources to deliver enhanced value to plan sponsor clients. RPAG™, a wholly owned subsidiary of NFP (NFP Corp.), provides retirement advisors premier technology, systems, training, and resources through its practice management platforms.

In light of Tax Day arriving in a couple days, we thought you might enjoy this article we found with some interesting facts about taxes through the years.



“Fun tax facts” may seem like an oxymoron, but sometimes taxes can be amusing. From a tax on beards in czarist Russia to an American astronaut who forgot to pay his taxes before heading into space, here are 50 unusual, funny, interesting — and sometimes practical — tax-related tidbits.


Governments have imposed taxes for thousands of years. There are recordings of tax payments made in ancient Mesopotamia circa 2500 B.C. At the time, people who didn’t have money to pay taxes often had to pay with livestock, food, or labor.


America’s tax laws have been in flux for generations and remain so to this day. The first income tax in the United States came about with the Revenue Act of 1861. A flat 3 percent tax on income above $800 was used to fund the Civil War and repealed 11 years later. In 1894, a new flat federal income tax was ruled unconstitutional by the U.S. Supreme Court. It was not until the 16th Amendment was ratified in 1913 that the federal income tax finally stuck for good.


Federal tax returns were not always due April 15. In 1913, March 1 was the big day; in 1918 it was moved to March 15; and finally in 1954 the current Tax Day was established.


In the 1940s, the government needed a steady flow of cash to fund the war effort. It passed the Current Tax Payment Act of 1943, which required that companies withhold income taxes from employees’ paychecks and make ongoing payments on employees’ behalf. Before this (from 1916 to 1943), Americans paid income taxes quarterly or annually.


Before World War II, few individuals or families owed income taxes. Due to a high personal exemption, only 1.1 percent of working-age people filed a return, according to the Tax Foundation, and about 17 percent of those filers did not have to pay income taxes.


According to the Tax Policy Center think tank, 43.4 percent of tax filers owed no individual income tax or had negative taxable income in 2018


As of Feb. 22, the average income tax refund was $3,143, according to the Internal Revenue Service. With 47.7 million individual returns processed, the IRS has paid out more than 38.5 million refunds.


Because of the 2017 Tax Cuts and Jobs Act, the simple 1040EZ form is now gone, along with the 1040A and the standard 1040, which have all been replaced by a redesigned 1040 form.


Even Albert Einstein found taxes inscrutable. He once said, “The hardest thing in the world to understand is the income tax” (that is, according Leo Mattersdorf, the math genius’ tax preparer).


According to the IRS, the average time it used to take to complete a Form 1040 was 16 hours; a 1040A took seven hours; and a 1040EZ took five hours. Overall, the average was 13 hours. In 2019, the IRS processed more than 154 million individual tax returns, equivalent to about 83.4 million days’ worth of prep time.


Aside from the nation of Eritrea in Africa, the United States is the only country that requires citizens to pay taxes on their income if they work and live outside the country. Some wealthy individuals have renounced their citizenship and moved to another country to avoid paying taxes.


Americans collectively had to work until April 19 last year — 109 days — to pay the country’s tax burden, according to the Tax Foundation, which has declared that date Tax Freedom Day. On a state-by-state basis, New York residents had to work the longest, until May 14. Residents of Alaska and Louisiana had the earliest Tax Freedom Day, April 4.


Collectively Americans paid $5.1 trillion in federal, state, and local taxes last year — more than the combined cost of food, clothing, and housing, according to the Tax Foundation.


While there’s no dodging a federal bill, seven states do not have an income tax: Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming. New Hampshire and Tennessee tax only dividends and interest income.


States that don’t have an income tax get their revenue from other sources, such as sales or property taxes. In some cases, this actually places a higher tax burden on lower- and middle-income families. They could wind up paying a larger portion of their income to the state than high-income families.


Even though the personal exemption ($4,050) has been eliminated under the 2017 tax reform law, the standard deduction has nearly doubled to $12,000, so single filers don’t pay federal tax on the first $12,000 they earned in 2018. For married taxpayers, the deduction is $24,000.


Some people believe that moving into a higher tax bracket will net them less money in the end. But the United States uses marginal tax brackets, meaning the higher rate applies only to the earnings that fall within the higher bracket. If only a single dollar bumps a taxpayer into a higher bracket, only that one dollar is taxed at the marginal rate for that bracket.


To illustrate the difference between the marginal tax rate for people in a particular bracket vs. their effective tax rate — the average rate they actually pay — the Center on Budget and Policy Priorities once estimated the tax burden for a family of four with income of $110,000. Although the family fell into the 25 percent bracket, after accounting for standard deductions and credits and the progressive tax system in the U.S., their effective income tax rate was only 6.2 percent.


According to the Tax Policy Center, the top 1 percent of earners in the United States paid 42.4 percent of all federal income taxes in 2018, up from 38 percent in 2017. The top 0.1 percent paid 21.9 percent, up from 18.9 percent in 2017.


All winners of more than $5,000 in a lottery are subject to a 25 percent federal withholding tax, but state withholding taxes vary. In some states, such as California and Delaware, the withholding rate is zero. In Maryland, the withholding rate is 8.75 percent for residents and 7.5 percent for non-residents. And that’s just what the states take immediately; the winner may be required to pay additional taxes when filing a return.


Today, the highest marginal income tax bracket is 37 percent, but it has been much higher. The Individual Income Tax Act of 1944 raised tax rates to the point where the highest bracket was 94 percent.


A few months after the attack on Pearl Harbor, President Franklin D. Roosevelt proposed a 100 percent income tax. In a letter to Congress, he wrote that in this time of “grave national danger … no American citizen ought to have a net income, after he has paid his taxes, of more than $25,000 a year” (equivalent to about $419,370 today).


Astronaut Jack Swigert, the command module pilot for Apollo 13, got the assignment at the last minute because of health concerns surrounding another astronaut. In the rush, Swigert neglected to file his taxes. According to the transcript of the moment he realized his mistake, the crew on the ground thought he was joking, but Swigert was seriously asking how to file an extension.


While some people claim unintentional mishap when the IRS audits them, others have made it a point not to pay taxes. Common arguments or tactics include claiming that the 16th Amendment was not properly ratified, that filing violates Fifth Amendment rights, or that the taxpayer has taken a religious vow of poverty. Others believe they can form a trust to hide taxable income. The IRS says it will help taxpayers who were misled to believe such myths.


Even celebrities and business tycoons run into problems when they don’t pay their taxes. Pamela Anderson once had a $1.7 million lien against her for unpaid taxes. Duane Chapman, also known as Dog the Bounty Hunter, has owed up to $2 million in unpaid taxes at a time. Perhaps the best-known celebrity tax dodger is Wesley Snipes, who spent three years in prison and continued to battle the IRS afterward.


The IRS pays people to provide information on someone who did not pay taxes. The whistleblower can get up to 30 percent of what the IRS collects in back taxes, penalties, and interest.


Even money earned illegally is subject to tax. Some states require drug dealers to pay taxes on the drugs they sell. The tax may be due as soon as the drug is in their possession, meaning someone caught with drugs may have to pay a fine for unpaid taxes on top of punishment for their other crimes. To pay the tax anonymously, dealers can buy tax stamps and affix them to containers of controlled substances.


Violent Chicago mobster Al Capone famously got caught on tax evasion charges. Other mobsters, including Al’s brother Ralph “Bottles” Capone, Frank Nitti, and Jake “Greasy Thumb” Guzik, were also charged. Among his debts to society, Al Capone had to pay $215,000 plus interest in back taxes.


An IRS rule change in 1987 required taxpayers to list dependents’ Social Security numbers for the first time. As a result, about 7 million children — a tenth of all dependent children in the country at the time — “disappeared.”


Delaware has a low 8.7 percent flat tax on corporations, likely the reason about half of all publicly traded companies in the country consider it home. A single address in Wilmington, 1209 North Orange St., is the legal address of more than 300,000 companies.


The top marginal corporate tax rate in the United States (38.92 percent) was previously the fourth-highest in the world, exceeded by Puerto Rico (39 percent), Comoros (50 percent), and the United Arab Emirates (55 percent). But that has changed. The recent Tax Cuts and Jobs Act slashed the corporate tax rate to 21 percent, a little below the worldwide average of nearly 23 percent.


In spite of their size and the corporate tax rate, some large corporations have an effective federal income tax rate of zero, or even negative. In the past several years, non-payers have included General Motors, telecom provider Level 3 Communications, and the airline United Continental.


Observations and complaints about unfair tax payments go back to at least the ancient Greeks. Plato once said, “Where there is an income tax, the just man will pay more and the unjust less on the same amount of income.”


Madison Square Garden, the iconic New York sports, music, and entertainment venue, has not had to pay property taxes since 1982. The arrangement was supposed to end after 10 years, according to then-mayor Edward Koch, but due to the disputed wording of the agreement, it remains in perpetuity. The break cost New York City over $48 million in 2016 alone.


Several states, primarily in the southeastern part of the country, have annual sales tax holidays. Depending on the state and date, clothing, footwear, guns, school supplies, energy-efficient appliances, and other select items are exempt from sales tax for two to three days a year.


Fortunetellers, astrologers, and witches were added to Romania’s labor code in 2011, meaning they have to pay income tax and contribute to the country’s social programs. Some witches cast curses on the government in response — although others felt it legitimized their work.


Ireland exempts up to 50,000 euros in profits from the sale of qualified artistic work from income taxes. Grants, awards, and prizes may also be tax exempt if they are related to the artist’s work.


Some states offer residents very odd or specific tax credits or deductions. In Alaska, eligible whaling captains can deduct up to $10,000 for whaling-related expenses. In Hawaii, property owners may be able to deduct up to $3,000 in expenses related to maintaining a tree with historic or cultural value.


What is the real difference between a Kit Kat and a 3 Musketeers? The former contains flour in its wafers, an ingredient that leads some states to label the Kit Kat a grocery item rather than candy. As a result, retailers may have to charge different taxes on the bars.


Some states apply sales tax to children’s diapers because they are considered clothing. The same tax does not apply to adult diapers.


Feminine hygiene products are a necessity for many women, yet most states impose a sales tax on their sale while exempting other necessities, including groceries and medication. There are growing international and domestic movements to end the tax.


In New York, cutting a bagel turns it into prepared food, which means the store must add an 8.875 percent sales tax to the price.


Taxes on products or services that are considered harmful are referred to as sin taxes. Some examples include taxes on alcohol, tobacco, gambling, and even fast food. One example of a sin tax is Utah’s 10 percent tax on businesses that have nude or partially nude workers — in other words, strip clubs. The extra tax extends to drinks and food sold on the premises.


Beards are back in vogue, but there were times when having a beard was costly. During the 16th century, King Henry VIII imposed a tax on beards that increased with the wearer’s social status. Eventually the tax was dropped, but his daughter, Queen Elizabeth I, reintroduced a beard tax on anyone with more than two weeks’ worth of growth. In Russia, Peter the Great wanted to Westernize the country and required every man, except peasants and clergy, to buy a “beard token” to prove they had paid up. The tax lasted from 1698 to 1772.


Talk about taxes’ ability to darken a day — in 1696, a window tax was introduced in England and Wales. It was assessed as a flat property tax plus a tax based on the number of windows a home had. As a result, some people bricked up their windows and new buildings sometimes were designed with fewer windows. Scotland and France imposed similar taxes in the 1700s.


In Roman times, urine and the ammonia within it were collected for uses such as tanning and laundering. Emperor Vespasian imposed a tax on the buyers of urine from public urinals. Today words for “urinal” in French, Italian, and Romanian are derived from the emperor’s name.


From 1784 to 1811, the British government taxed hats based on price. A stamp was pasted inside the hat, and anyone caught with a stamp-less hat had to pay a fine. At least one stamp forger was sentenced to the harshest penalty: death.


In England, residents must pay a license (or, ahem, licence) fee for each TV in their homes. The money from this annual fee goes toward funding the BBC. The cost is 150.50 pounds for a color TV and 50.50 pounds for a black-and-white TV. The blind pay half as much.


U.S. car buyers pay sales tax, and there are fees for registering a vehicle, but they don’t come close to what Danish car buyers pay. Depending on the price of the car, the registration tax has been as high as 150 percent of the sale price.


As Benjamin Franklin said, “In this world nothing can be said to be certain, except death and taxes.” Although he’s often credited with the idea, that line comes from a 1789 letter, and similar quotes date to 1716 and 1724. participates in affiliate marketing programs, which means we may earn a commission if you choose to purchase a product through a link on our site. This helps support our work and does not influence editorial content.

Acumen Wealth Advisors believes educating our clients is a priority.  Our team works together with our clients’ CPAs to implement tax efficiencies and deploy unified financial plans.  We recently met with CPAs Kyle Butler and Matt Hisey of Mauldin & Jenkins and a few of our clients to walk through the new changes to the tax code – and we have made this information available to you as well.  Some of the many changes affect individual taxes, rates, and the health care mandate; personal deductions, exclusions and credits; estates and gifts and trust rates; and provisions for pass-through entities. To learn more about recent changes to the tax code watch our highlights video HERE and read our highlights brochure HERE.




This is for general information only and is not intended to provide specific investment advice or recommendations for any individual. It is suggested that you consult your financial professional, attorney, or tax advisor with regard to your individual situation. This information has been prepared from sources believed reliable but the accuracy and completeness of the information cannot be guaranteed.

This original post was written by Martha C. White for Time.

Are you taking all the tax breaks you’re entitled to? Experts say you might be able to reduce your tax bill by taking advantage of the many exemptions, deductions, and credits built into the tax code.

Tax exemptions, deductions, and credits are all mechanisms that can reduce how much you ultimately pay in taxes.

This is the last year you can claim many of these breaks. The tax changes passed into law late last year won’t affect your filing this year. So you’ll definitely want to take this one last chance to claim all the tax relief for which you’re eligible.

Tax exemptions

“Exemptions are above-the-line deductions that allow you to reduce your overall income,” said Mark Jaeger, director of tax development at TaxAct. The most common of these, he said, are personal tax exemptions that let you write off a certain amount per eligible person in your household.

Currently, taxpayers are allowed to claim a personal tax exemption of $4,050 apiece for themselves, their spouse (if married filing jointly), and dependent kids. While the standard deduction is being doubled for tax year 2018, personal exemptions are being eliminated.

Tax deductions: Above- vs. below-the-Line

Tax exemptions and deductions both reduce your amount of taxable income, said Gil Charney, director at The Tax Institute at H&R Block. “It’s not a reduction of your tax liability, but it does reduce your taxable income,” he said.

If the amount of your tax deductions is high enough, you could lower your income enough to drop into a lower tax bracket, said Lisa Greene-Lewis, tax expert at TurboTax.

Tax deductions are referred to as either above- or below-the-line. “Above-the-line versus below-the-line refers to deductions claimed before calculation of adjusted gross income and deductions claimed after calculation of adjusted gross income,” Jaeger said. Some examples of above-the-line deductions include IRA contributions and moving expenses.

If you itemize your taxes rather than taking the standard deduction (which about 30% of taxpayers do), you can take additional below-the-line deductions against expenses like your state and local income tax, mortgage interest, and charitable donations. They are all below-the-line deductions, Jaeger said.

Tax credits: Nonrefundable vs. refundable

Unlike exemptions and deductions, tax credits work a little differently. “A credit reduces the taxes you owe, dollar for dollar,” Greene-Lewis said. You can be eligible for credits even if you don’t itemize and just take the standard deduction.

Tax pros say people miss deductions and credits often because they don’t realize all of the tax breaks available to them. Greene-Lewis said that the Earned Income Tax Credit, for instance, often goes unclaimed. “There are people that don’t file taxes that are definitely eligible for the EITC because it’s for lower to middle income, a lot of people may think they’re under the income filing threshold, but they could be be eligible for that credit and eligible for a refund for federal taxes taken out of their paycheck.”

That’s because the EITC is what’s known as a refundable credit. Nonrefundable credits can knock your tax bill all the way down to zero, but refundable credits, as the name implies, can essentially have the government paying you.

The deadline when taxes are due in 2018 is Tuesday, April 17.

House and Senate Republicans have released a final plan to resolve the differences between their tax overhaul bills. The legislation would cut taxes for corporations. American taxpayers, in large part, would also get cuts, though most of the changes affecting taxpayers would expire after 2025.

Income taxes Current Law G.O.P. Bill
The bill would lower individual tax rates overall. But to comply with Senate budget rules, the individual tax cuts would expire after 2025.
Tax brackets Seven Seven, lower overall
Top rate 39.6% 37%
starts at: $426,700 / $480,050
$500,000 / $600,000 (singles/couples)
Alternative Minimum Tax Alternative income tax calculation for high-income taxpayers Keeps, but increases exemption so fewer will pay it
Standard deduction and exemptions
The standard deduction would nearly double, so many more people would end up taking it.
Standard deduction $6,500 / $13,000
$12,000 / $24,000 (singles/couples)
Personal exemptions $4,150 per taxpayer and dependent Eliminates
Family tax credits
The child tax credit would double, and it has a larger refundable portion that would allow more lower-income families to benefit.
Child tax credit $1,000 $2,000
Refundable portion: 15% of earnings over $3,000 Up to $1,400
Credit for other dependents None $500
Family tax credits phase out starting at: $75,000 / $110,000
$200,000 / $400,000
The biggest long-term change for taxpayers in the bill, it would result in a tax increase over the long run, long after the tax cuts expire.
Inflation measure used for certain income thresholds Consumer Price Index (CPI) Chained CPI (C-CPI), a less generous measure


Current Law

G.O.P. Bill

Education credits American Opportunity Tax Credit, Lifetime Learning Credit and Hope Scholarship Credit No change
Student loan interest deduction Can deduct up to $2,500 No change
Graduate student tuition waivers Tuition waivers are not treated as taxable income No change
A big victory for families that send their children to private school.
Education savings plans None Expands use of 529 college savings accounts to include K-12 private school tuition
Deduction for classroom expenses $250 deduction No change
Itemized deductions
Some Republican representatives in high-tax districts have said they will vote “no” because of the scaling back of the “SALT” deduction.
State and local tax deduction Income or sales and property taxes are deductible All state and local tax deductions limited to $10,000
Mortgage interest deduction Can deduct interest payments on up to $1 million of debt Limited to payments on $750,000 of debt
Moving expenses Can deduct personal expenses Eliminates, except for members of the military
Employer-provided expense reimbursements are excluded Eliminates, except for members of the military
This deduction, which would have been eliminated by the House bill, is most important to low-income taxpayers with high out-of-pocket health care costs.
Medical expenses deduction Can deduct out-of-pocket expenses in excess of 10% of adjusted gross income Expands by reducing threshold to 7.5% of income Applies to 2017 and 2018
Overall limit on itemized deductions Phase out beginning at $266,700 / $320,000
Other individual taxes
This provision, estimated to save over $300 billion, would severely weaken the Affordable Care Act.
Individual mandate Penalty for not having health insurance Eliminates Starts in 2019
Estate tax Top rate of 40% on estates above $5.6 million Increases threshold to estates above $11.2 million
Pass-through income Taxed at individual rates 20% deduction, phasing out starting at $315,000 of income for couples
Capital gains Top rate of 23.8% (including net investment income tax) No change
Corporate taxes Current Law G.O.P. Bill
The largest tax cut in the bill would be permanent, as would other corporate tax changes.
Top corporate tax rate 35% 21%
Business interest deduction Generally fully deductible Caps deduction at 30% of income (excluding depreciation)
The Senate’s decision to keep the corporate A.M.T. was reversed after blowback from several industries.
Alternative Minimum Tax Alternative income tax calculation for businesses Eliminates
New investment purchases Complex rules for deducting over many years Five years of full expensing, then phased out over five more years
Section 179 expensing Small business expensing limited to $500,000 Increases limit to $1 million
The bill raised money by speeding up the effective dates for these last two provisions, which were included in the Senate bill.
Net operating losses Can deduct net operating losses from income in other years Limits the deduction to 80% of taxable income
Research and development expenditures Can be immediately deducted Would need to be written off gradually
Business credits and other
Orphan drug tax credit Credit for 50% of qualifed testing expenses Reduces credit rate to 25%
Renewable electricity tax credit Credit for wind power production, phasing out by 2020 No change
Private activity bonds Tax-exempt bonds used to fund low-income housing and other projects No change
The bill would move from the current worldwide tax system, in which income earned abroad is taxed in the United States, to a territorial system in which only domestic profits would be taxed.
Taxation of multinational companies Worldwide system with deferral and credit for taxes paid abroad Modified territorial system with new anti-abuse tax
One-time repatriation tax 8% (15.5% for cash)


This original article appeared in the New York Times and was written by

On December 20, the House passed the reconciled tax reform bill, commonly called the “Tax Cuts and Jobs Act of 2017” (TCJA), which the Senate had passed the previous day. It’s the most sweeping tax legislation since the Tax Reform Act of 1986.

The bill makes small reductions to income tax rates for most individual tax brackets, significantly reduces the income tax rate for corporations and eliminates the corporate alternative minimum tax (AMT). It also provides a large new tax deduction for owners of pass-through entities and significantly increases individual AMT and estate tax exemptions. And it makes major changes related to the taxation of foreign income.

It’s not all good news for taxpayers, however. The TCJA also eliminates or limits many tax breaks, and much of the tax relief is only temporary.

Here is a quick rundown of some of the key changes affecting individual and business taxpayers. Except where noted, these changes are effective for tax years beginning after December 31, 2017.

Key changes affecting individuals

Key changes affecting businesses

Year-end planning opportunities still available

We’ve only briefly covered some of the most significant TCJA provisions here. There are additional rules and limits that apply, and the law includes many additional provisions.

Also keep in mind that, as a result of the TCJA, you may have some last-minute year-end 2017 tax planning opportunities — but quick action (before January 1, 2018) will be needed. If you have questions about what you can do before year end to maximize your savings, or you’d like to learn more about how these and other tax law changes will affect you in 2018 and beyond, please contact us.


This original article can be found here:

While Congress bickers over a tax reform package, the rest of us are left to make sense of end-of-year tax planning.

Since we don’t know the outcome and reforms would most likely not take effect until 2018, focus on the things within your control today.

Maximize contributions to a 401(k) or 403(b) plan. These payroll deductions will immediately lower your taxes and put money away in a tax-deferred manner.

Contributions may be met by matching contributions from an employer. A match is free money. However, since they must run through your paycheck, contact your payroll department now.

Convert a traditional IRA to a Roth IRA. By converting to a Roth, you are moving money from a tax-deferred account to one that is tax-exempt. The younger you start, the easier it is to get started and benefit from the tax exemption.

Many investors worry they make too much money to contribute directly to a Roth IRA. However, wise investors know there are no income limits on Roth conversions. As such, analyze how much income tax you are willing to pay now to receive tax-exempt growth going forward.

Furthermore, a Roth IRA does not impose “Required Minimum Distributions” on investors who are 701/2

Although not a tax benefit, qualified retirement plans can also provide creditor protection and can be left to heirs in a tax-advantaged manner.

A Health Savings Account also delivers an immediate income tax deduction. An HSA allows you to invest money in a tax-deferred manner, allowing for long-term growth. If earnings are used for qualified health expenses, they can be withdrawn in a tax-exempt manner.

Although you must have a high-deductible health insurance policy to use an HSA, the long-term compounding of this alternate investment plan can really pay off in lowering current taxes as well as future medical expenses.

Harvest investment losses. If you sell a negative position, you realize a tax loss that can offset up to $3,000 of income for joint tax filers. However, losses can offset an unlimited amount of capital gains. Unused losses can be carried forward indefinitely.

When using tax losses, make sure not to violate the “wash-sale” rule.

Contribute to an education fund such as a 529 college savings plan or Education Savings Account. A 529 plan can receive up to $70,000 per beneficiary from one person this year. An ESA can receive up to $2,000 per year, and the earnings are tax-exempt if used for qualified education expenses.

Supercharge your charitable donations. Obviously, charities are happy to take your cash, but they will gladly accept appreciated securities also. If you gift appreciated securities, you don’t pay taxes on the deferred gain but receive the full benefit of the market value as a donation.

Those who are at least 701/2

Charitably inclined people can also transfer appreciated stock to someone in a lower income tax bracket, such as a grandchild. When the grandchild sells the stock, they will pay capital gains tax but most likely at a much lower tax rate.

Lastly, you can accelerate deductible expenses that are not due until next year. By doing so, you “bunch” deductible expenses such as property tax, mortgage interest, medical expenses or charitable expenses. Effectively, you will have large deductible expenses in one year followed by very little the next year. This allows you to better use itemized deductions one year followed by the standard deduction in the next year.

With less than one month left in the year, a little bit of planning and strategy can go a long way toward lowering your 2017 tax bill. Finally, what you earn this year does not matter. What does matter is what you earn net of taxes.



Dave Sather is a Victoria certified financial planner and owner of Sather Financial Group. His column, Money Matters, publishes every other week.

This original article was written by 

House Republicans released a bill on Thursday that would make major changes to the tax code. Some key elements of the proposal:

Lower Rates for Households

The bill would reduce the current marginal income tax brackets to four from seven — 12, 25, 35 and 39.6 percent — and lower taxes by increasing the income ranges affected by each rate.

The top rate would be the same as it is now, except the income level at which it would apply would increase to $1 million for married couples from $480,050 under the current law.

Income thresholds are for married couples filing jointly. | Sources: Internal Revenue Service; House Ways and Means Committee

While the lowest income rate would increase, typical families in the existing 10 percent bracket would most likely be better off because of a larger child tax credit and an increase in the standard deduction. The full effects of the plan on different groups has not yet been analyzed by experts.

The bill would repeal the individual Alternative Minimum Tax — which primarily affects households with incomes from $200,000 to $1 million — and would maintain preferential rates for investment income. It would also repeal the estate tax after six years, in the meantime doubling the amount of inherited wealth that is exempt from the tax to $11 million from $5.5 million.

Increase the Standard
Deduction and Child Tax Credit

The plan would nearly double the amount of the standard deduction and eliminate the personal exemption, a deduction based on the number of taxpayers and the dependents claimed on a return.

The new, single deduction would be higher for many filers, except those who claim multiple children. An increase in the child tax credit to $1,600 from $1,000 and a new $300 credit for each parent and nonchild dependent could make up the difference.

Filing status Current deduction Current deduction & exemptions Deduction under G.O.P. bill
Single, no children $6,350 $10,400 $12,000
Married, no children $12,700 $20,800 $24,000
Married, two children $12,700 $28,900 $24,000
Sources: I.R.S.; House Ways and Means Committee | Proposed deduction amounts are comparable to the current 2017 levels and would increase with inflation in 2018.

Filers can choose the standard deduction or itemized deductions, but not both. Most filers — 70 percent — currently choose the standard deduction because it is higher than what they qualify for in itemized deductions.

According to an analysis of an earlier House Republican tax plan by the Tax Policy Center, 84 percent of filers who currently itemize their deductions would take the standard deduction if it were doubled.

To help pay for the increase, the plan would eliminate other deductions, with the exception of deductions for mortgage interest, charitable contributions and state and local property taxes. The mortgage interest deduction would be capped for newly purchased homes up to $500,000, and the property tax deduction would be capped at $10,000.

Eliminate the State and Local Tax Deduction

The biggest deduction that would be eliminated is the one for state and local taxes. That deduction primarily helps people in blue states where taxes are higher.

Republicans made a last-minute change to the bill that would retain some of the property tax portion of the deduction, but many upper-middle class taxpayers in these places could still end up paying more under the bill.

But the political divide is not so straight-forward. A Tax Policy Center analysis in September found that of the 20 congressional districts with the highest percentage of returns claiming the deduction in 2014, eight had Republican representatives.

Create a New Tax Rate For ‘Pass-Through’ Businesses

The plan would create a new 25 percent tax rate for “pass-through” businesses — sole proprietorships, partnerships and S corporations that currently pay taxes at the individual rate of their owners. Pass-throughs now make up about 95 percent of businesses in the country and the bulk of corporate tax revenue for the government.

Most pass-throughs are small sole proprietorships currently paying less than a 25 percent marginal rate. But a few are quite large — 1.7 percent of pass-through businesses generate more than 40 percent of all pass-through income and are taxed at the top 39.6 percent rate.

Source: *Alternative Minimum Tax | Tax Policy Center model, 2016

The bill includes a rule to help prevent wealthy individuals from incorporating as pass-through companies to pay a lower tax rate on their income. As a result, certain personal service businesses like law, accounting and consulting would not be eligible for the rate.

Lower the Corporate Rate While
Eliminating Some Tax Breaks

The plan would lower the corporate tax rate to 20 percent from 35 percent and eliminate most business deductions and credits, with the exception of those for research and development and low-income housing. Cutting this tax rate is the most expensive change in the bill. 

A recent analysis by the Tax Foundation found that eliminating these corporate tax expenditures that do not change the structure of the tax code would only pay to lower the rate to 28.5 percent from 35 percent, far short of the 20 percent rate called for in the bill. Because the bill calls for retaining some expenditures, even more savings will have to be found elsewhere to pay for the corporate tax cut.

Source: Tax Foundation

The plan also makes several other major changes to the corporate tax code, including allowing temporary immediate expensing of assets, scaling back deductibility for corporate interest expenses, moving to a territorial system and implementing a one-time repatriation tax on profits overseas.