Last week marked the infamous “First 100 Days” of President Trump’s term in the White House. Whichever side of the aisle you lean, I believe all of us agree that it has been interesting: executive orders, an attempt at dismantling the Affordable Care Act, travel bans, border security, and there is always time for stirring up controversy via tweets as well. Finally, attention has turned to something near and dear to the hearts of your friends at Kruggel Lawton CPAs: income taxes!
The current Internal Revenue Code is considered to be as of 1986. In fact, you might hear on the media that it is largely unchanged since 1986. While the Code was adopted in 1986, it has been amended and revised many times since then and literally thousands of pages have been added when you consider both the Code and the Regulations that support it. The Trump Administration and the House are now touting a potential income tax return that can be filed on a postcard. While that may be true for someone currently eligible to file a Form 1040-EZ, I have major doubts that it can be accomplished for most of us at the individual level and certainly not for business income tax returns. My 8th-grade daughter is following these current events in her social studies class and asked me just this week if I would be out of a job once Trump’s tax plan passes. I assured her that we will still have work to do!
Below are some details of Trump's plan for individual and business tax reform. These are the most sweeping and major proposed changes I have seen in my career. They include:
We have heard from some of you already asking what you should do. We, like most tax professionals, are watching this unfold. We can’t predict what will ultimately pass through Congress and become law. What we can assure you is that many details are left to be determined and that the final tax bill that President Trump signs will likely be much different than the current proposal. In the meantime, tax planning should be centered around current tax law. Presumably as we get closer to an actual vote in Congress, we will know more on those details that are missing and what compromises will be made. Will you be able to file on a postcard? Maybe, maybe not. Perhaps you will be able to file your tax return directly to the IRS from your Twitter account in 140 characters or less! #tweetyourtaxreturn
If you would like a deeper look and further insights on the Trump tax plan topic, read the Federal Tax Alert published by BDO USA. As an independent member of the BDO Alliance USA, we are happy to be able to share the resources offered by a global firm.
Written by: Mike Varner, CPA, CGMA - Partner
Phone: 574.264.2247, x305