If you are a neighborhood accountant, your clients need tax advice in simple English concerning how the new tax laws help them and how the changes hurt them.
Before we start, tax brackets are generally a story. If your client is in the middle income brackets, they make out slightly better. If they are in the top bracket, it’s a better story.
However, tax reform often involves giving money with one hand while taking money away with the other. The net result isn’t immediately obvious, but you should consider having a conversation about what they should be doing differently in 2018.
Let’s assume they are a salaried or wage earning individual. They own property, have a mortgage and a couple of children at home.
How the New Tax Laws Help Them
Plenty of articles have been written on the effects of the new tax act. All told, the average person or couple should benefit in several ways:
1. Increased standard deduction. Previously a single filer might have had a $ 6,500 standard deduction and $ 4,150 in personal exemptions. Now they have a $ 12,000 standard deduction, double for married couples.
In Simple English: Itemizing isn’t as important as it was previously.