Taxes were the topic at the January Chamber of Commerce meeting which took place on Wednesday, January 17, at Carrie Cerino’s Ristorante. Several representatives from the firm Walthall Rea discussed the current tax cuts and some of their effects. Tax Cuts and Jobs Act of 2017 was signed into law on December 22, 2017, by President Donald Trump.
Dan Holben, CPA and North Royalton Chamber Treasurer, began the presentation and then introduced Susan Kornatowski, CPA, JD and Cynthia Kula, CPA/PFS, CFP®. The three addressed some of the changes in the 2017 Tax Cuts and Jobs Act, which will generally be effective for the 2018 tax year and are due to expires after December 31, 2025. They do point out, however, that dependent upon future changes in Washington’s administration, senate and house, these things can change before that time. Here are some of the changes:
• Lowers most individual tax rates from 10, 15, 25, 28, 33, 35, 39.6 to 10, 12, 22, 24, 32, 35, 37 percent.
• Children’s unearned income will taxed at rates for trusts and earned income taxed at rates for single individuals, not under parent’s rate.
• Increases the standard deduction to $12,000 for single filers, $18,000 for heads of household, and $24,000 for joint filers in 2018, compared to $6,500, $9,550, and $13,000.
• For the 2017 and 2018 tax year only, medical expenses are deductible for those over 7.5% of adjusted gross income, rather than 10%.
• Effective for new qualified residence interest incurred after 12/15/17 the deduction for interest is limited to the first $750,000 of mortgage debt. For prior debt the limitation is $1 million. Further clarification is needed on home equity loans used to substantially improve your home. As written, interest on home equity loans are no longer deductible in 2018.
• Combined state, local, real estate and personal property tax deduction limited to $10,000 for all filers other than married filing separately which is $5,000.
• Withdrawals from 529 Savings plans can now be used for elementary and high school tuition up to $10,000 per year.
• Unreimbursed business expenses will no longer be deductible. Moving expenses are no longer deductible.
• Casualty losses can only be deductible only if they occurred during an event that the President has declared a disaster.
• Those receiving alimony do not have to claim it as income, and those paying alimony can no longer deduct it effective for all new/modified agreements after 12/31/18.
• Tax preparation expenses, such as a preparer or software, are no longer deductible.
• Personal exemptions have been eliminated.
• Expands the child tax credit from $1,000 to $2,000 and allows for a $500 credit for non-qualifying child dependents.
• Repeals the individual mandate penalty of the Affordable Care Act, by lowering the penalty amount to $0, effective January 1, 2019.
• Federal estate tax exemption has been increased to $11,180,000.
• New 20% deduction of qualified business income (pass through income) from sole proprietorships, partnerships, LLCs, rental properties and S corporations, subject to phase out and other limitations.
It was pointed out that there are still many details in the reform that need clarification and examples.

By GLORIA PLEVA KACIK
Contributing Writer