Donald Trump Tax Change Proposals

2

Contents

Details .......................................................................................................................................................................... 3

Tax Rates ........................................................................................................................................................................................... 3

Deductions ........................................................................................................................................................................................ 3

Repeal .................................................................................................................................................................................................. 3

About Us ..................................................................................................................................................................... 4

6 Strategies To Reduce Tax Before Trump Takes Office............................................................................... 5

Be Careful About Deferring Income! ..................................................................................................................................... 5

Accelerate Capital Gains ............................................................................................................................................................ 6

Consider Changing Your Worker Classification ............................................................................................................... 6

Consider Making Those Charitable Gifts Before The Law Changes. ..................................................................... 6

Say Goodbye To Depreciation! ............................................................................................................................................... 6

Avoid The Estate Tax By Deferring Death To 2017 Or Later. ................................................................................ 7

Donald Trump Tax Change Proposals

3

Details

Tax Rates Individual tax brackets will go from 6 brackets to just 3 including 12%, 25%, and 33%.

Corporate tax rates will be at a fixed flat rate of just 15% and feature a 10% repatriation tax on accumulated earnings in foreign subsidiaries.

Deductions New dedctions for health premiums, child care costs and dependent care savings accounts. Itemized deductions will be limited to just mortgage interest and charitable gifts and all will be limited by a cap of $100,000 for individuals and $200,000 for joint filers

Repeal Affordable Care Act, Alternative Minimum Tax, Gift & Estate Tax, Stepped-up basis on gains over $10 million, most business tax incentives.

Donald Trump Tax Change Proposals

4

About Us

The American Institute of Certified Tax Coaches is an independent, not-for-profit corporation which trains and certifies tax professionals in the expertise of proactive tax planning.

To ensure that you are using every available deduction, credit, loophole and break, make sure you are working with a specialist who can tell you which opportunities are available to you no matter which tax changes go into affect.

8885 Rio San Diego Dr Ste 237 San Diego, CA 92108

Phone: (877) 692-4282

Email: admin@certifiedtaxcoach.com

Donald Trump Tax Change Proposals

5

Preparing for Change….

6 Strategies to Reduce Tax Before Trump Takes Office

President-elect Trump’s camp has shared tax reform is a priority for his first 100 days in office. While it’s always recommended to do Proactive Tax Planning prior to the end of the year, as 2016 comes to an end, it’s essential to not only plan for 2017 changes but also to prepare for anticipated reform after the inauguration.

Be careful about deferring income! Generally it’s preferred to defer taxable income as long as possible. The idea is, you have more money to use in the interim, and you never know what the future holds, your tax rate just might be lower when it’s time to pay Uncle Sam. This year, we can’t afford to defer without strategic planning. While tax rates are proposed to decrease (our current highest tax bracket is 39.6%, Trump’s proposal would lower this to 33%), don’t defer that income just yet! While delaying receipt of your year-end bonus by a week or two might represent a 7% decrease in tax for those in the highest tax bracket, some taxpayers might see a tax increase from this same tactic! Individuals, for example, who earn between $127,500 and $200,500 will see their taxes increase by 5% as the brackets change under the proposed law from 28%-33%.

Examining the tax brackets is one thing, but what is less certain, is the impact of eliminating some long time popular deduction items. Under the current proposal, all deductions save mortgage interest and charitable contributions would be eliminated; and all deductions will be limited to just $100,000 for individuals and $200,000 for joint filers. Without the usual reductions, taxpayers may find themselves in a higher tax bracket than usual, resulting in higher tax. Meanwhile, even if it appears that lower rates are guaranteed for those subject to the highest tax rates, without valuable write-offs, taxpayers may find more of their income is actually subject to tax, resulting in higher effective rates even if marginal rates have decreased.

Donald Trump Tax Change Proposals

6

Accelerate Capital Gains While Trump does not propose a rate change to capital gains taxes (the current proposal includes keeping the 0%, 15%, and 20% long term capital gains rates), the threshold at which you reach the top rate of 20% is much lower! In 2016 while individuals won’t see a 20% long term capital gains tax rate of 20% until their taxable income reaches $425,400 ($487,650 married filing joint) under the new plan, individuals reach the top rate when income is just $127,500 ($255,000 married filing joint). Given this possibility, it may be advantageous to sell those appreciated capital assets before New Year ’s Day and pay an even more preferential rate; saving 5% if your income is less than $425,400 ($487,650 single).

Consider Changing Your Worker Classification Employees beware! While current tax law allows an individual to earn up to $425,400* ($487,650 joint) before the highest tax bracket kicks in, under the proposed plan, the top tax rate of 33% is assessed on taxable incomes of just $127,500 ($255,000 joint).

Alternatively, Trump has proposed that all business income will be taxed at just 15%, creating a strong reason to consider freelancing! Using the independent contractor status and abiding by the criteria the IRS uses to determine whether workers are employees or contractors, taxpayers can cut tax by more than half for those paying 33% when they swap their earnings from a W-2 to a form 1099.

Consider making those charitable gifts before the law changes. While the proposed changes provide for charitable deductions, overall deductions are limited to just $100,000 for individuals($200,000 joint). If your total deductions exceed these limits now, your gifts can become more valuable just by making them this year before a cap is enforced.

Say Goodbye to Depreciation! The long time practice of deducting the cost of business assets over a period of years known as its useful life may be nearing the end of its own useful life! Even with bonus deduction amounts under Code Sections 168 and 179, Trump is suggesting allowing any asset purchases to be deducted in full the year of purchase. If you aren’t able to deduct all your asset purchases in 2016, you may be better off waiting until January 1, where you just might be able to write it all off next year.

Donald Trump Tax Change Proposals

7

avoid the estate tax by deferring death to 2017 or later. Trump has also proposed eliminating the estate tax altogether, so for those who pass away December 31, 2016 as opposed to waiting til midnight January 1st, the difference in estate tax could be up to 35%! They say nothing is certain except for death and taxes, but with the new changes, hopefully you won’t keep paying once you are 6-feet under!

*taxable income