CAPE GIRARDEAU COUNTY, MO (KFVS) - Following the passing of the new GOP tax bill, many might be wondering what this means for them. Here are a few of the big things Certified Financial Planner Derieck Hodges suggests.
First off, the changes mostly don't take effect until 2018.
But people should be paying attention this year to better be able to make their decision in the future.
This is because of the following:
Standard donation changes
- 2017 - $6,350
- 2018 - $12,000
- 2017 – 12,700
- 2018 - $24,000
Here are a few other things that Hodges suggest people pay attention to:
Child Tax Credit
- Increases from $1,000 per child to $2,000 per qualifying child.
- The income limits to qualify for the credit are dramatically increased meaning more people will qualify.
Roth IRA conversions
- The ability to “recharacterize”, or undo, a conversion of Traditional IRA funds to a Roth IRA is being eliminated.
- It is estimated that 30 percent of the tax filers actually itemize their deductions (e.g. mortgage interest, charitable donations, etc.).
- The assumption is that fewer people will itemize with the new law.
- If so, it makes sense to “accelerate” deductions into 2017. For example, you could make your 2018 charitable donations before the end of the year and claim them in 2017 when you will itemize.
- State and local property and income taxes will now be limited to $10,000, combined. For some people in our viewing area, that will negatively impact them.
- Mortgage interest is still deductible, but only on the first $750,000 of debt principal. This applies to new mortgages taken out after December 15, 2017. Existing mortgages retain their current status.
If there are things you are still concerned or confused about, Hodges suggests talking to a financial planner or tax specialist to better ask questions.