Wealth is a mindset that combines the material and spiritual — rooted in knowledge, wisdom and trust
by John Tetzloff
Advanced Case Specialist
From the perspective of personal finances, 2017 had some notable developments. One thing I’ve had a lot of questions about is the new tax reform Congress passed for 2018, which will bring some of the most significant tax changes in three decades. There are a lot of changes in the new act. Below are some key changes for individuals in the new tax reform act:
Reduction in the Number of Tax Brackets: The act retains seven brackets, but at reduced rates, with the highest tax bracket dropping to 37 percent from 39.6 percent. The individual income tax brackets are also expanded to expose more income to lower rates.
Doubles the standard deduction: The standard deduction nearly doubles to $12,000 for single filers and $24,000 for married couples filing jointly. To help cover the cost, personal exemptions and most additional standard deductions are suspended. This could be detrimental to taxpayers who may have been claiming more than 2 personal exemptions.
Limits itemized deductions: Many itemized deductions are no longer available, or are now limited. Here are some of the major examples:
If you’re used to itemizing your return, that may change in coming years as the doubled standard deduction and reduced deductions make itemizing less attractive. For those who are charitable, this may have a significant impact on the deductibility of charitable gifts.
Doubles Estate Tax Exemption: Estate taxes will apply to even fewer people, with the Federal exemption doubled to $11.2 million ($22.4 million for married couples).
Gift Tax Deduction: Remains in effect and increases from $14,000 per person to $15,000 per person.
While the new tax laws don’t really affect retirement and/or estate planning, they can make a difference when considering your charitable planning options.
Your Sales Rep, along with the Catholic United Financial Foundation and your tax advisor can assist with various gifting options and strategies with pertinent information based on your plans and wishes. Also, don’t forget for your current and future IRA needs, we can assist in explaining the various benefits of a Catholic United Financial IRA plan.
As the new year begins, it’s easy to start asking ourselves questions about the previous year’s financial decisions. Did we do all the right things in preparing for the future? Did we do anything to improve our retirement position? Did we make sure our estate plan is up to date and relevant? Are we taking advantage of all the tax benefits that are available?
As with all these concerns, the best advice is to work with your Catholic United Sales Rep, tax advisor and attorney to review and discuss options available. Make 2018 your year to answer these and other questions and remove them from your “to-do” list.
May God bless you and your families.
Catholic United Financial and John Tetzloff are not permitted to give tax or legal advice. The information given is based on our understanding and interpretation of laws and regulations currently in effect. You may wish to consult your personal tax or legal advisor with questions about your specific situation.