News & Blog

December 27, 2017

2017 Tax Reform Summary Affecting Individuals

This Act will significantly affect corporations and individuals. As with any legislation, this may affect some industries and individuals positively or negatively while others will remain unchanged. Please contact us to review your specific situation.

Individual Tax Rates for 2018

  
Rate    Single      Married
10% 0-$9,525      0-$19,050
12% $9,526-$38,700      $19,051-$77,400
22% $38,701-$82,500      $77,401-$165,000
24% $82,501-$157,500      $165,001-$315,000
32% $157,501-$200,000      $315,001-$400,000
35% $200,001-$500,000      $400,001-$600,000
37% Over $500,000      Over $600,000

Previous Maximum rate through 2017 was 39.6%

Alternative Minimum Tax (AMT)

Exemption amounts have increased for both single and married filers.

Itemized Deductions – Some Highlighted Changes

  • Individual deduction for state and local income, sales, and property taxes is limited in the aggregate to $10,000 (married and single filers) and $5,000 (married and filing separately).
  • Phaseout of deductions due to income limitations is repealed.
  • Most miscellaneous itemized deductions subject to the 2% of AGI floor will no longer be allowed (i.e. tax preparation and investment expenses).
  • New limitations may apply to mortgage interest deductions including interest paid on home equity loans.

Pass-Through Deductions

There is a new 20% deduction for qualified business income from a partnership, S corporation, or sole proprietorship subject to certain limitations.

Changes Related to Businesses

Changes Include:
Corporate income tax rates
Inventory reporting methods
Depreciation allowances
Cash vs accrual reporting
Entertainment allowances
Taxes on foreign income

Prepayment of 2018 Real Estate Taxes

Town and School District Real Estate Taxes will vary by locality as to whether and how they are accepting prepayments of the 2018 real estate taxes. There may be separate rules for submitting prepayments for other counties in our area as well as the real estate taxes for your municipality and school district.

As of today, many localities are scheduling special meetings to discuss interpretations of the latest tax reform implications. There may be referendums set forth by the IRS next year to clarify the law. But in any event, the chances of receiving a deduction in 2017 for 2018 Real estate tax prepayments will be higher if you do so by the end of 2017.

Below is an example of Tax Payments for Allegheny County and City of Pittsburgh Residents.

EXAMPLE:  How to Prepay 2018 Real Estate Taxes for Allegheny County
The deadline to prepay the Allegheny Real Estate tax is December 28 – (the envelope must be postmarked by 12/28/17)
How to prepay Allegheny County Real Estate taxes:
– Pay the discounted amount of your 2017 taxes (the tax less 2% which most residents take advantage of) – so most likely the same amount of your last year payment
– On check write your parcel # and “2018”
– Mail to – Allegheny County Treasurer Office, Room 108 Courthouse, 436 Grant St, Pittsburgh PA 15219,
– On lower right corner of envelope write – Attention: Marilee
City of Pittsburgh Residents
Can prepay IF they pay by Friday, December 29th before HIGH NOON, IN PERSON – no mailing allowed!

If you would like to learn more, and to read about more changes click here.

 

 

 

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