Estate and gift tax exemption:
The Tax Cuts and Jobs Act (the “Act”) increased exemptions (nice) for estates and gifts to $11.2 million ($22.4 million for married couples). Before tax reform, few estates were subject to the estate tax, which applies to the transfer of property after someone dies. Now, even fewer people have to deal with it (nicer). The amount of money exempt from the tax has been doubled.
Alternative Minimum Tax (AMT) exemption:
AMT is a second set of tax rates that was initially designed to ensure that wealthy individuals with tax shelters pay their fair share of taxes. That was then. This reviled provision now snares ordinary folks like you and me. We are now required to calculate our taxes under AMT rules alongside the rules for regular income tax. President Trump wanted to abolish these onerous provisions but Congress prevailed to retain them. On a positive note, the exemption was increased to $109,400 for joint filers ($54,700 for married taxpayers filing separately), and $70,300 for unmarried taxpayers. The exemption is phased out for taxpayers with alternative minimum taxable income over $1 million for joint filers, and over $500,000 for all others.
New deduction for qualified business income:
You are now allowed a deduction equal to 20 percent of “qualified business income,” otherwise known as “pass-through” income from partnerships, S corporations, LLCs, and sole proprietorships. The income must be from a trade or business within the U.S. Investment income does not qualify, nor do amounts received from an S corporation as reasonable compensation or from a partnership as a guaranteed payment for services provided to the trade or business.
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Victor Santos Sy graduated Cum Laude from UE with a BBA and from Indiana State University with an MBA. Vic worked with SyCip, Gorres, Velayo (SGV – Andersen Consulting) and Ernst & Young before establishing Sy Accountancy Corporation in Pasadena, California.
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He has 50 years of experience in defending taxpayers audited by the IRS, FTB, EDD, BOE and other governmental agencies. He is publishing a book on his expertise – “HOW TO AVOID OR SURVIVE IRS AUDITS.” Our readers may inquire about the book or email tax questions at [email protected].
