Tax talk for the rest of us. Shawn Denecker, financial advisor

The new tax plan recently rolled out by Congress is meant to simplify taxes. We brought a financial advisor in to explain what these simplifications are.

Shawn Denecker works with Atlantic Wealth Planning Group, a private practice of Ameriprise Financial Services. He talked with us about the implications that the new tax codes can have for real Mainers. He outlined his answers to the questions and they are included here. It's a lot to understand.

1. What are the major changes in the new tax bill and how will it impact the average Mainer for their taxes in the coming years?
   1. Made temporary changes for personal taxes (tax years 2018 through 2025), corporate tax changes are permanent (no expiration built in)
   2. Still 7 tax brackets, but reduced tax rates and adjusted income brackets for all taxpayers
   3. Increases standard deduction (MFJ from 12,700 to $24,000) and increases the child tax credit and increased the phase out thresholds, which means more people will be able to take advantage of that credit
   4. Makes changes to itemized deductions including changing how folks can deduct mortgage interest (including home equity loans), state and local taxes, charitable donations, medical expenses……many miscellaneous itemized deductions go away like home office deduction, unreimbursed employee expenses, travel expenses and tax prep fees
   5. Allows for 529 plan distributions per child (not per account) of up to $10,000 for elementary or secondary school tuition
2. Are there some things that Mainers can or should do in order to reduce their taxes as a result of the bill?
   1. I’d recommend that folks enlist the help of a tax professional. The IRS just released the 2018 tax tables last week, and payroll changes may not be implemented until February or March. It would be a good idea for people, perhaps as they are speaking with their tax professional around filing their 2017 taxes, make sure that the tax withholding in their paychecks for 2018 is appropriate. The tax bill is complicated, so people should make sure they understand how the changes will matter in their particular situation—especially those who have traditionally gone the ‘itemized deductions’ route
3. What should people think about doing if the changes result in either a bigger refund or increased dollars in their paychecks?
   1. Of course, that depends on a given person’s particular financial goals, but assuming that many Mainers may see an increase in their take home pay, and as it stands the changes are set to expire at the end of 2025, things like increasing cash reserve, increasing systematic contributions to 401k plans or IRAs, accelerating paydown of debts and increasing 529 plan savings would be great places to start.
4. How do the changes impact the small biz owner and the sole proprietor in Maine, and perhaps landlords?
   1. Under section 199A, there is a provision for entities like partnerships, S-Corps and sole proprietors to deduct 20% of qualifying business income on their taxes. This could also apply to owners of real estate, like landlords. This deduction is subject to limitations based on things like business type (service or non-service) and total income and wages.

Financial Advisor

Atlantic Wealth Planning Group

A Private Wealth Advisory practice of Ameriprise Financial Services, Inc.

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Ameriprise Financial Services, Inc.

10 Plaza Drive, Suite 102

Scarborough, ME 04074

O: 207.289.1003 | F: 207.874.2111

https://www.ameripriseadvisors.com/shawn.t.denecker/myteam/