Tax Reform Webinar: Your Guide to the New Tax Bill

On Wednesday, December 20, 2017, Congress passed an 1,100-page tax bill. This bill will mean the most sweeping tax reform that Americans have seen in decades. It will affect every American at every income level: whether you’re a wage worker, a small business owner, or a large corporation, tax reform is going to impact your tax filing.

Whether you’re a CPA, EA, tax attorney, or certified tax preparer, you can be sure of one thing: understanding the changes to the tax code that come as a result of this bill will be important for your clients. They’ll be looking to you to answer their questions, explain the details and nuances to them, and walk them through the process of preparing and filing their taxes under the Tax Cuts and Jobs Act legislation.

Considering the sheer volume of new information related to this reform, Basics & Beyond™ will be offering live one-hour webinars dedicated specifically to these changes in the tax code. Offered at multiple convenient times, we’ll be offering two types of tax reform webinar sessions:

  • One session will discuss the new tax bill’s impact on businesses, both large and small.
  • The other session will examine how changes to the tax code will impact individual filers.

Webinar Details

These courses will focus on a number of topics, including: changes to marginal tax rates; calculating deductions according to new restrictions and allowances; pass-through taxation of sole proprietorships, partnerships, and corporations; new rules related to the estate tax; and more.

What’s in the new tax bill?

The Tax Cuts and Jobs Act is a lengthy piece of legislation. With over a thousand pages of content, summarizing every aspect of it here would be impossible: that’s why we’re offering comprehensive, dedicated tax reform webinars beginning in January.

In the meantime, though, let’s take a look at some of the most important aspects of the new bill.

Cost of the Bill

According to the Tax Policy Center, a nonpartisan organization, the new tax bill will likely cost $1.5 trillion dollars over the next 10 years, and possibly as much as $2 trillion depending on the permanency (or lack thereof) of the tax cuts included in the legislation. This cost comes as a result of the cuts that are included in the bill.

Personal Income Tax Rate

As per the bill, the tax code’s income bracket structure will shift. Specifically, while the 10% and 35% brackets will stay as they are, the other percentiles will change. The 15% percentile will drop to 12%; 25% to 22%; 28% to 24%; 33% to 32%; and 39.6% to 37%. These changes are to take effect from 2018-2025, at which point they must be approved again by Congress.

Mandate for Health Coverage

While much of the bill goes into effect in 2018, the provision related to the Affordable Care Act’s health care mandate is set to become law in 2019. The new tax bill will put an end to the mandate, meaning that Americans will no longer be penalized if they fail to obtain health coverage.

Personal Exemptions

As of now, individual taxpayers may take a personal exemption in order to deduct $4,150 from their taxable income. The Tax Cuts and Jobs Act will eliminate the personal exemption from 2018 until 2025.

Standard Deduction

Currently, the standard deduction is $6,500 for single individuals, $9,550 for heads of households, and $13,000 for married couples. Under the new law, the standard deduction will increase for each of these groups. Single individuals will be granted a standard deduction of $12,000; heads of household can deduct $18,000; and married couples will be allowed a standard deduction of $24,000.

Gauging Inflation

Up until now, the IRS has determined increases in brackets, changes in standard deduction and personal exemption amounts, and so on by using the Consumer Price Index for All Urban Consumers (CPI-U). Following the new tax reform law, CPI-U will be replaced with something called chain-weighted CPI-U. This new approach to gauging inflation is intended to account for how consumer spending habits shift with changing prices. Because of the fact that chain-weighted CPI-U increases at a slower rate than the standard CPI-U, it’s expected to result in bracket creep over time. This means that, eventually, the relative value of the standard deduction will decrease.

Head of Household

Although there was talk of removing head of household as a viable filing status when Trump first introduced his tax reform plan in 2016, the current version of the legislation has left head of household filing status intact.

Family-Related Credits and Deductions

The tax reform bill calls for an increase in the child tax credit to $2,000. Of the total amount, only $1,400 is refundable. There will also be a $500 non-refundable credit for dependents that are not children. Until now, this credit began to phase out once income surpassed $110,000. Under the new law, that phase out will not begin until after the $400,000 income mark.

Itemized Deductions

A number of itemized deductions will be impacted by the new tax bill. One of the most significant changes is to deductions for taxes paid at the local and state level: these are now capped at $10,000 per year until 2025. Mortgage interest deduction is now limited to $750,000 in total debt for married couples: this represents a reduction from the current amount of $1,000,000. However, this cap only applies to mortgages after December 15, 2017.

Additionally, medical expenses will now be deductible up to 7.5% of adjusted gross income. This number will remain in effect until 2018, after which it will increase to 10%. Several itemized deductions will be eliminated from 2018 until 2025, including: bad business debts; payments to unions; regulatory fees; home office expenses; the cost of moving; and a number of others as well.

Tuition and Student Loans

An earlier version of the bill called for the elimination of any deductions related to student loan interest payments, and would have also forced students to claim any reduction to tuition as earned income. However, these provisions were removed from the conference version of the bill, and will not go into effect.

Health Savings Accounts

The House version of the bill would have eliminated Health Savings Accounts. In the version of the bill that was passed in conference, HSAs will not be eliminated.

Retirement Plans

While contribution limits for 401(k) and IRA accounts have not been changed, the new bill will make it impossible for taxpayers to retroactively change the status of a contribution from one account type to another.

Alternative Minimum Tax

From 2018 until 2025, the exemption amount and phase out threshold will both increase for the Alternative Minimum Tax. Specifically, the exemption will increase to $109,400 for married couples, and phase out will rise to $1,000,000.

Estate Tax

According to the new bill, the estate tax exemption will increase from $5.6 million to $11.2 million for single individuals. Beyond 2025, this change will no longer be in effect.

Corporate Tax

As of 2018, the corporate Alternative Minimum Tax is repealed and a new corporate tax rate of 21% will go into effect. The current rate is variable and capped at 35%. The Tax Foundation puts the statutory rate at around 26.5% when both local and state taxes are accounted for.

Pass-Through Income

As of now, sole proprietorships, partnerships, and S-corporations pay tax on pass-through income according to personal income tax bracket rates. As a result of the tax reform bill, these businesses will be allowed a 20% deduction for all pass-through income. This deduction is limited to 50% of company wage income which ultimately puts limitations in effect for solo practitioners.

Net Operating Loss

Beginning in 2018, the ability to carry back net operating losses will be eliminated from the tax code. Carrying these losses forward will be capped at 90%. This amount will decrease to 80% as of 2022.

Foreign Earnings

Unlike most developed countries, the U.S. doesn’t currently use a territorial tax system. Under the new bill, two significant changes related to foreign earnings will go into effect. First, a territorial tax system will be put into place. Under this system, foreign earnings are not subject to tax. If a company has more than $500 million in gross income in a given tax year, it will have to comply with the Base Erosion Anti-Abuse Tax (BEAT). The BEAT tax is determined by taking a business’s standard corporate tax total and subtracting that amount from 10% of the company’s total income subject to tax.

Additionally, the bill will put into place deemed repatriation for any profits earned overseas at a rate of 15.5%. Currently, any company with foreign holdings bringing those profits back into the United States will be subject to standard corporate tax rates, up to 35%.

Basics & Beyond: The #1 Choice for Tax Reform Webinars

As you can see, there are a lot of changes to the tax code included in the new tax reform bill–and we’ve only scratched the surface. In order to be ready to serve your clients effectively in 2018, you need to familiarize yourself with these changes in all of their detail and complexity.

With over 25 years of experience offering engaging, informative CPE courses, Basics & Beyond is ready to provide you with the highest quality tax reform webinars available anywhere. Here’s what makes Basics & Beyond the best:

Experienced Instructors

Unfortunately, tax webinars aren’t always taught by instructors who are properly qualified. At Basics & Beyond, we’ve hand selected leading industry figures to ensure that you get the best education possible.

Affordability

Quality is important, but so is affordability. You shouldn’t have to pay an arm and a leg to attend a webinar. We’ve put a lot of effort into crafting quality content for accounting professionals. At the same time, though, we’ve kept things affordable. You can be sure that Basics & Beyond offers the best combination of value and affordability in the industry.

Engaging Content

A lot of tax webinars out there will put you to sleep, but not ours. We make our content engaging, which helps keep you focused throughout the webinar. By engaging you as an accounting professional, you’ll retain more of the information that’s been presented.

Easy-to-use Interface

Some webinars are almost painful for the end user. They’re slow, the audio clips, the video stalls, and half the time the platform crashes. At Basics & Beyond, we’ve created a user experience that’s smooth and stable. Our user interface is easy to understand, and you can even access our webinars on your mobile phone or tablet.

The Latest Information

Your time is valuable. The last thing you need to do is attend a webinar where outdated information is being presented. With all of our webinars, we ensure that our instructors present the most up-to-date info available. In the case of our tax bill training, you’ll be taught everything you need to know about the most important changes to the tax code.

Certificate and IRS Reporting Included

When you pay to attend a webinar, it should be easy for you to demonstrate that you’ve completed the accompanying CPE hours. However, a lot of CPE providers fail to report your hours to the IRS, leaving it up to you to take care of. Here at Basics & Beyond, we make things easy for you. After you’ve completed a webinar, we send you a certificate of completion. Plus, if you’ve got a Paid Preparer Tax Identification Number (PTIN), we’ll gladly report your CPE hours directly to the IRS.

NASBA-Approved Webinars

The National Association of State Boards of Accountancy (NASBA) recognizes Basics & Beyond as a member of the National Registry of CPE Sponsors. You can rest assured that our Tax Cuts and Jobs Act (tax reform) webinars will be honored by your local licensing board, so long as they accept NASBA-approved CPE hours.

Our first tax bill webinars begin January 4th, 2018. Space is limited: click here to sign up today.

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