standard deduction

How Will The Trump Tax Plan Affect You?

How will incoming President Donald Trump’s tax plan affect individual and corporate taxpayers alike? Trump has promised on several occasions that his new tax scheme will help most individual, business and corporate taxpayers save taxes. Some of the plan’s provisions will lower the business tax rate from 35 percent to 15 percent. He says that he will reduce the seven individual tax brackets that are currently used to only three. His plan adapts the current rates for qualified capital gains and dividends to these three new brackets. Also of significance is that the new tax plan will eliminate the net investment income tax and the individual and corporate alternative minimum taxes.

Trump’s Tax Plan Then And Now, Part 1

What specific tax plan will Donald Trump implement as President of the United States? Trump’s initial plan released in September 2015, set forth four tax brackets of 0%, 10%, 20% and 25%. In October, just prior to the election, he released a new plan that adopted the House Republicans’ approach using three tax brackets, 12%, 25% and 33%. Either plan seems to adopt aspects of the tax reform pursued by House Republicans, as the president-elect moves closer to the Republicans’ tax agenda. Here’s a look at Trump’s tax plan then and now.

The Effects Of Trump’s Tax Plan On Individuals And Businesses

Donald Trump’s most current tax plan promises to save taxes for most individual taxpayers. One way is the elimination of the alternative minimum tax. What are some other ways? Trump’s tax plan:

  • Adapts the current rates for qualified capital gains and dividends to the new brackets.
  • Eliminates the head of household filing status.
  • Eliminates the Net Investment Income Tax.
  • Increases the standard deduction from $6,300 to $15,000 for singles and from $12,600 to $30,000 for married couples filing jointly.

Answers to FAQs for Individuals of the Same Sex Who Are Married Under State Law

Here are some answers to frequently asked questions relating to the tax consequences for individuals participating in a same-sex marriage.

*When are individuals of the same sex lawfully married for federal tax purposes?

For federal tax purposes, state or foreign law determines whether individuals are married.

*Can same-sex spouses file federal tax returns using a married filing jointly or married filing separately status? Yes.

  • For tax year 2013 and going forward, same-sex spouses generally must file using a married filing separately or jointly filing status.

A Discussion Of New York State Income Tax Deductions

Income tax deductions are expenses that may be deducted from pre-tax gross income. Of course, deductions reduce New York income tax and maximize a refund. One of the experienced tax professionals at the Thorgood Law Firm can assist any New Yorker in determining the deductions for which they qualify under New York law.

New York has a standard state income tax deduction. For 2015, they are as follows:

Filing Status Amount  of Standard Deduction
Single (and can be claimed as a dependent on another taxpayer’s federal return) $3,100

Tax Benefits For Disabled Taxpayers

The tax professionals at the Thorgood Law Firm can help any taxpayer pinpoint all of the tax benefits that are applicable to his or her situation or status. The following are some of the tax benefits that may assist disabled taxpayers.

  1. Credit for the Elderly or Disabled: This credit is generally available to certain taxpayers who are sixty-five (65) and older as well as to certain disabled taxpayers who are younger than sixty-five (65) but are on permanent and total disability.

Top Tax Deductions for Seniors and Retirees

Here are some of the most important tax deductions for seniors and retirees. 

  1. Higher standard deduction.

Any taxpayer that is 65 and older by December 31 of the tax year is entitled to a higher standard deduction. Taxpayers may take the higher standard deduction if a spouse is age 65 or older and together they file a joint return. Also, the higher standard deduction may be taken if the taxpayer files a separate return and can claim an exemption for a spouse because the spouse had no gross income and can’t be claimed as a dependent by another taxpayer. 

Taxes And Medical Expenses

Taxpayers that itemize​ personal deductions instead of claiming the standard deduction may deduct qualifying medical expenses to the extent that such expenses exceed 10 percent of adjusted gross income (“AGI”). Taxpayers that are 65 years or older, or turned 65 during the tax year, may deduct unreimbursed medical care expenses that exceed 7.5% of AGI. This threshold amount remains at 7.5% of adjusted gross income for these taxpayers until Dec. 31, 2016. I.R.C. §213(f).

Unsure if you should go with standard or itemize deductions?

Unsure of whether you should use the standard deduction amount, or take the time to itemize deductions? The answer is fairly straightforward; you should itemize deductions if your total deductions are more than the standard deduction amount. Also, you should itemize if you don’t qualify for the standard deduction. Taxpayers should initially calculate itemized deductions and then compare that amount to their standard deduction to determine which provides the greater benefit. A taxpayer may be subject to a limit on some itemized deductions if he or she exceeds the adjusted gross income limits.

Who Claims The Kids On Their Taxes, And Other Ways Divorce May Affect Your Taxes

Divorcing couples often wonder who claims the children on their taxes, and in what other ways divorce will affect their taxes. Questions may include which filing status to use after the divorce, and how payments for spousal maintenance and child support to an ex-spouse are treated for tax purposes. Also, inquiries about what happens to assets like the family residence are obviously frequently common.

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