[HOT] – How Could a Tax Change Affect You? This Is What the Senate and House Propose

On Thursday, Senate Republicans unveiled their tax bill. It differs from last week's version in the House of Representatives on a number of important issues. For example, the Senate plan would completely eliminate the possibility of deducting national and local taxes; there is no exception for property taxes of up to $ 10,000 each year, as there is in the House bill.

It is too early to predict what will happen to all of this. In the coming days and weeks, we will see what proposals survive as the Congress moves toward possible full votes on these bills or on amended bills. In the meantime, here is a guide to some of the problems that consumers face:

Tax Agreements

What's in Place Now:

Seven in parentheses, with a maximum rate of 39.6%. 100, that people pay on the income that they earn beyond $ 480,050 for couples who file their tax return.

hooks, with a higher rate of 39.6%. But this maximum rate does not begin until a couple gets $ 1 million in annual income

What the Senate Proposed:

Seven Parentheses , with a maximum rate of 38.5 percent that you pay on income in excess of $ 1 million a year if you are married or $ 500,000 if you are single. The lowest tax bracket of the Senate bill is 10% for individuals, while the House bill has increased it to 12%.

Exemptions, credits, deductions

If you are single, the current standard deduction is $ 6,350. Add exemptions and you're up to $ 10,400

Married without children? That's $ 17,700 for the deduction and $ 20,700 with exemptions.

If you are married and have two children, the amount of the deduction plus the exemptions can be as high as $ 28,700. There is also a tax credit of $ 1,000 per child

What the House Proposed:

The Bill Calls for Simplification: If you are single with no children, the standard deduction would be $ 12,000. If you are married, it would be $ 24,000, no matter how many children you have. However, the child tax credit would reach $ 1,600 per child. There is also an additional credit of $ 300 for each parent and non-child, although this expires after 2022.

What the Senate Proposed:

The same standard $ 12,000 / $ 24,000 deductions as the House. Single parents would see their deductions increase from $ 9,300 to $ 18,000. The child tax credit would increase to 1,650.

National and local tax deductions and mortgage interest

What is in place now :

You can generally deduct the amount you pay for state and local tax revenues, including property taxes, on your tax return. Federal. You can also deduct the interest you pay each year on mortgage debt up to $ 1 million, a cap that can cover multiple homes. In addition, you can usually deduct up to $ 100,000 of interest that you pay on a mortgage loan or line of credit.

What the House Proposed:

More state and local tax deductions, although you can continue to deduct up to $ 10,000 every year in interest you pay for your mortgage. For people who buy in the future (which the bill defines as being November 2, 2017, or later), mortgage interest deductions would only be granted for loans from a homeowner. maximum amount of $ 500,000. In addition, only principal residence debt would count for this limit, and you could not include any interest from home equity loans or lines of credit that you purchased for this new home.

:

No more state and local tax deductions and no exceptions for property taxes, either. The mortgage interest deduction, however, would survive in its current form.

Medical Expenses

What is in Place Now:

For the moment, you can deduct personal medical expenses that exceed 10% of your adjusted gross income (but not the top 10 percent). This is especially helpful for seniors and low-income people who need regular help and care.

What the House Proposed:

The House wants to abolish the deduction in 2018.

What the Senate Proposed: ]

The Senate would retain the deduction

Interest on Student Loan

What is in Place Now:

At the Currently, people whose income is below certain thresholds can deduct up to $ 2,500 in student loan interest each year.

The House Wants to End the Deduction of Interest on Student Loans

What the Senate Proposed: ]

The Senate would keep things as they are now.

Estate Tax

Now on Sale:

Generally, you pay taxes on inherited property at a rate of 40%, but current rules do not apply to estates up to $ 5,490,000.

The House seeks to almost double that exemption and to repeal it completely after 2024 – a year after the first House motion.

What the Senate Proposed:

The Senate wishes to double the exemption but has not proposed any complete repeal.

Adoption Credits

What's in Place Now:

In 2017, when a l & # If an employer pays up to $ 13,570 in qualifying adoption expenses for an employee, the employee pays no tax on that assistance. There is also a separate adoption credit, which generally grants taxpayers a credit of up to $ 13,570 per eligible child. Under the current rules, credit ceases gradually for taxpayers whose adjusted gross income is between $ 203,540 and $ 243,540

What the House Proposed:

] adoption credit altogether, but on Thursday afternoon, Republican leaders changed their minds and left it untouched.

What the Senate Proposed:

The Senate would keep things as they are now.

Coverdells and 529 Plans

Now on Sale:

Your money grows tax-free (you can add $ 2,000 per year with certain income limits), then you can withdraw it tax free to pay the private school from kindergarten to grade 12 (in addition to the university). Potential changes to this maneuver were last reviewed in 2012.

What the House Proposed:

The House wants to neutralize Coverdells but allow people to withdraw up to $ 10,000 out of 529 non-taxable plans to use for private school. (You could still use this same 529 plan to save for the university in the same way that you always have it.) Rich families can benefit from a tax break of $ 30,000 and up.

What the Senate Proposed: ]

The Senate Proposed No Change

Losses for Fires and Floods

What is in place now:

If you are a victim of a fire, a flood, or a fire, a burglary or similar event, you can deduct these losses.

What the House Proposed:

The House disappeared with these deductions so-called "accident". That means you would not be lucky unless lawmakers enact a single bill providing relief to victims of particular weather or other events that affected many people.

]

As of 2018, you could only claim a deduction if the loss occurred during an event that the president later declared to be a disaster .

Alimony

What is in Place Now:

Alimony is a deductible expense for the people who pay it, and those who pay it receive must pay income taxes.

The divorce would become a little heavier for the former spouse who pays child support because it would no longer be a deductible expense. But the party receiving the payments will no longer have to pay tax on the income they receive. The change would take effect for the Divorce and Separation Agreements (and any changes to existing agreements) implemented after 2017.

What the Senate Proposed:

The Project of Senate Law Would

Removal Expenses

What is in Place Now:

At the Right now, taxpayers can deduct moving expenses – even if they do not detail their tax returns – as long as the new workplace is at least 50 miles farther from the old house than the # 39, former workplace was from the old house. (If you do not have a workplace, the new job must be at least 50 miles from your old home.)

What the House Proposed:

Moving to a new job? Moving costs would no longer be a deductible expense in 2018.

What the Senate Proposed:

The Senate Bill Is Similar to That of the House although it allows certain exceptions.

Preparation of the tax

What is in place now:

You can usually deduct the amount charged by your specialist in tax preparation. similar tax expenditures, such as the software you buy and the fees you pay to produce your forms electronically.

The House's Proposals:

Taxpayers could no longer afford to take this deduction. Since the bill aims to reduce the number of taxpayers who detail (and all the complexity that results), in theory fewer people should need professional tax assistance (with the exception of the richest who can afford to lose this break).

The Senate Proposals:

The Senate Proposal Is Similar to That of the House

Electric Cars

] What is in place now:

Buyers of eligible rechargeable electric vehicles, such as the Chevrolet Bolt or Volt and Tesla cars, can sometimes obtain a tax credit of up to $ 25,000. at $ 7,500

What the House Proposed:

The House Abolishes Credit

What the Senate Proposed:

The Senate did not propose any change

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