Taxes talk at Chamber lunch

Catie Clark

Accountants Krissy Fitzgerald and Chris Cannon from the Blackfoot firm of VanOrden, Lund, and Cannon addressed the Greater Blackfoot Area Chamber of Commerce at its luncheon on April 11. The event was held at Premier Technologies.
The topic of Fitzgerald's and Cannon's talk was the change to the 2018 tax code brought about by President Trump's tax legislation that passed in December, 2017.
"The first big change for tax payers are the income brackets," Cannon started off. He traded off with Fitzgerald on each new tax category. "Not only will the new tax rates fall by three percent per bracket, the brackets themselves were adjusted for inflation. For example, people making about $18 thousand to $76 thousand will fall into the 15 percent tax bracket for this year's federal taxes. In comparison, for the 2018 tex years, people making about $19 thousand to $77 thousand will now be in a 12 percent tax bracket.
Fitzgerald discussed the change in deductions on personal returns: "In comparison to the 2017 taxes you will file before April 16, the standard deduction will double for next year."
Cannon added: "Though the standard deduction will be going up, there will be no more miscellaneous deductions — so no more hobby income losses."
Fitzgerald described that the 2017 returns will be the last where people can take exemptions for dependents. To make up for the lack of these tax breaks for having a lot of kids in a family, the child tax credit will double for the 2018 tax year.
"The 2018 child tax credit will be $2,000 per child next year. For children 17 and up, that credit will be $500 and will go down as the dependent gets older."
Cannon outlined the changes to the alternative minimum tax, something that most people never dealt with when it was created.
"There was an episode of '60 Minutes' with Frank Sinatra," Cannon explained. "Sinatra showed off his home with the marble floors and the expensive furniture, and then bragged near the end of the show that he paid no taxes. Well, it turned out to be true: he had some really smart accountants who managed Sinatra's finances such that he paid no taxes."
Cannon continued: "Congress took a rather dim view of this and the TV show created a lot of unhappiness with loopholes. So the alternative minimum tax was created for people like Sinatra. So for people exploiting loopholes, you either paid your usually tax bill under the tax code or you paid the alternative minimum tax —which ever was more. The problem with this is that it was never indexed for inflation."
"Back in the 70s, this wan't a problem but 40 to 50 years later, people making less than $200,000 were now getting bitten by this tax. That was never the intent," Cannon added. "Now the alternative minimum tax has been fixed. It now applies around $500,000 and has been indexed to inflation."
Fitzgerald and Cannon also reviewed changes in business tax rates and deductions. They pointed out that the tax law changes don't apply until next year's tax return. They also encouraged anyone with questions about how the tax code changes will affect them to consult with an accountant.