What you should know about tax reform’s impacts on the local level

WILMINGTON NC (WWAY) – Historic federal tax reform passed today along party lines in the U.S. Congress. How does that impact you?

The key now after the tax reform becomes law is to know what deductions or credits are out the door.  Movers, students, and divorcees need to be in the know come tax filing.

Who really are the winners and losers as tax reform becomes law?

“the big winners from tax reform are corporations seeing their corporate tax rate drop from 35% to 21% is huge,” said Caylan McKay a local staff accountant at Earney and Company.

McKay says the doubling of the child tax credit can benefit some households. It will go from $1,000 per child under 17 to $2,000. That will end though in 2025.

The big help on the local level will be the simplicity for filing.

“It’s going to be simpler for someone with a W2 and a modest house, mortgage,” McKay says.

Small businesses need to tread carefully. The main part of the tax bill for small businesses will be to allow deductions on fixed expenses. McKay says it’s up in the air though what that will all entail until the IRS does their full review. Variable costs small businesses go through could be out of the question to score deductions.

“If you have a partnership or anything like that you’re consult with a tax professional,” said McKay.

That’s because a major reasoning behind reform was to take out how many costs or expenses you can use to deduct from the taxes you payout.

There a lot of things that have been taken out. The individual mandate being repealed is a big win for the GOP and honestly one for many CPA’s according to McKay.

“We’re not going to have to be the insurance police in which it feels like a lot of times we are policing people on whether or not they have insurance,” McKay said.

Being able to put moving expenses as a deduction to student loan interest and alimony  are just a few more items taken out on what you can use to save on taxes.

That puts folks like divorce attorney Ryan Shultz on the losing end.

“For years that was the thing,” said Schultz who is practicing at the Lea/Schultz law form for family and civil law.”You always include those in every negotiation you can’t anymore and like myself I started my career with alimonies deductible.”

He sees it hurting divorcees at specific income levels as well.

“If you are anywhere near an alimony game this is going to change the game for you,” Schultz said. “Particularly if you are in that middle to upper middle bracket.”

Seeing who all really wins and loses though will not happen as quick as you might think. As always its a good mood to pay your state taxes and property taxes as soon as possible according to McKay.

“You’re not going to see the affects of this until you file your taxes in 2019 for 2018,” McKay said.

North Carolina senators Richard Burr and Thom Tillis voted in favor of the reform plan. Congressman David Rouzer voted in favor, but Congressman Walter Jones voted no. He was one of twelve Republicans that did not support the reform.