Welcome to Kean, Wiggins, & company!

Kean, Wiggins, & Company, LLC is a professional company specializing in taxation and accounting. We have an educated and professional staff that includes Certified Public Accountants, an Enrolled Agent, and experienced Staff Accountants to assist you with your financial needs to keep you organized, legal, and secure. 


We offer a wide range of services for individuals, business, and non-profit organizations. Our services include auditing, tax planning and preparation, bookkeeping, payroll, and QuickBooks consulting. 


Be sure to read our newsletter below so we can keep you up to date with tax law changes and other important accounting information that could have an impact on you and or your business.


KEAN, WIGGINS & COMPANY, LLC

2018 TAX LAW CHANGES FROM THE TAX CUTS AND JOB ACT

 

Individual Taxes


Standard deductions nearly double to $24,000 for couples, $12,000 for singles and $18,000 for household heads. People age 65 or up and blind people get $1250 more per person ($1550 if unmarried). Given these much higher amounts, far fewer people will itemize.


The new law reduces or eliminates many deductions claimed by individuals. Personal exemptions for individual filers and their dependents are repealed. Home mortgage interest is limited. Interest can be deducted on up to $750,000 of new acquisition debt on a primary or second residence, down from $1 million. The new limit generally applies to mortgage debt incurred after Dec. 14, 2017. Older loans and refinancing’s up to the old loan amount get the $1-million cap.


The popular deduction for state and local taxes is being limited. You can deduct any combination of residential property taxes and income or sales taxes up to a $10,000 cap. Property taxes remain fully deductible for taxpayers in a business or for-profit activity, so taxes paid on rental realty can be taken in full on Schedule E.

           

Several other write-offs are eliminated: Deductions for job-related moves, except for the military. All miscellaneous write-offs subject to the 2%-of-AGI threshold, including employee business expenses, brokerage and IRA fees, hobby expenses and tax return preparation costs. Alimony for post-2018 divorce decrees will not be taxed to the recipient or deductible for the payor. Personal casualty losses are not deductible except for presidentially declared disaster areas.

            

The charitable contribution write-off is preserved, with some changes. The Adjusted Gross Income (AGI) limitation on cash donations to qualified charities is increased from 50% to 60%.

            

The medical expense deduction is enhanced. Not only have lawmakers opted to keep this popular write-off, but they’ve also temporarily lowered the AGI threshold for deducting 2017 and 2018 medical expenses on Schedule A from 10% to 7.5%.

            

The write-off for personal gambling losses to the extent of winnings is still in effect.


Upper-income individuals can finally say good-bye to the phaseout of itemized deductions which is scrapped under the new law.

            

The law keeps seven tax brackets, but with different rates and break points. For example, not only is the top individual rate lowered from 39.6% to 37%, but that rate kicks in at a higher income level. And, note that whatever new bracket you fall into, more of your taxable income will be hit with lower rates than before.

            

Tax rates on long-term capital gains and qualified dividends do not change. Currently, your capital gains and dividends rate depends on your tax bracket. But with the bracket changes, Congress decided to set income thresholds instead. The 0% rate will continue to apply for taxpayers with taxable income under $38,600 on single-filed returns and $77,200 on joint returns. The 20% rate starts at $425,800 for singles and $479,000 for joint filers. The 15% rate applies for filers with incomes between those break points. The 3.8% surtax on net investment income remains, kicking in for single people with modified AGI over $200,000 and $250,000 for marrieds.

            

The law keeps the individual alternative minimum tax with higher exemptions: $109,400 for joint return filers and $70,300 for singles and household heads. Additionally, the exemption phaseout zones start at much higher income levels…above $1 million for couples and $500,000 for single people and heads of household.

            

The Affordable Act individual mandate is on the way out. The requirement that folks have health insurance, qualify for an exemption, or pay a fine is repealed for post-2018 years. Keep in mind the mandate continues to apply for 2018.

            

The child tax credit is doubled to $2,000 for each dependent under age 17, with up to $1,400 of the credit refundable to lower-income taxpayers. The income phaseout thresholds are much higher…AGIs over $400,000 for couples and $200,000 for all other filers.

            

There’s a new $500 credit for each dependent who is not a qualifying child, including, for example, an elderly parent you take care of or a disabled adult child. It’s nonrefundable and phases out under the same thresholds as the child tax credit.

            

Far fewer estates will be subject to the estate tax, now that Congress has doubled the lifetime estate and gift tax exemption to about $11 million. The rate remains 40%. The annual gift tax exclusion for 2018 is $15,000 per donee. There’s no change in the asset basis step-up for heirs of estates of any size.

           

The kiddie tax is significantly revamped, so that unearned income of children under 18 is taxed at the ordinary income and capital gains rates applicable to trusts and estates, and not at their parents’ marginal tax rate, as before.

            

Generally, tax benefits for retirement savings haven’t been curtailed. There is an important change involving Roth IRA conversions, however. The new law bars IRA owners who convert their traditional IRAs to Roth IRAs from later undoing the conversion and recovering the income tax paid on the switch.


Business Taxes


The new tax law dramatically reforms the taxation of businesses of all sizes. Regular corporations (“C corporations”) will pay tax at a flat 21% rate, down from the 35% top rate now. This lower rate begins in 2018 and is permanent. Unlike the individual Alternative Minimum Tax (AMT), lawmakers eliminated the corporate AMT altogether.


Many individual owners of pass-throughs will get a new 20% deduction. The rules cover sole proprietors and owners of S corporations, partnerships and LLCs. REIT shareholders and partners in publicly traded partnerships also get the break. They can generally deduct 20% of so-called qualified business income. These provisions are, however, some of the most complex in the new law. The break phases out for high earners in professional service fields, such as law, consulting, accounting, health or financial services, with taxable incomes in excess of $315,000 for joint returns and $157,500 for all other taxpayers.


The deduction for business losses on individual returns is capped. The amount of trade or business losses that exceed a $500,000 threshold for couples and $250,000 for other filers is nondeductible, but any excess can be carried forward. Note this limitation applies after application of the current passive-activity loss rules.


There are enhanced write-offs for business asset purchases in the law. 100% bonus depreciation is available for many assets put into use during the year. The break applies to assets put in service after Sept. 27, 2017 for new and used assets, and is temporary…generally lasting until 2022 and then phasing out 20% each year thereafter. There is a higher cap on expensing assets. It doubles to $1 million. Depreciation limitations on passenger automobiles are increased.


The deduction that firms claim for interest on business debt is limited. Their net interest write-offs will be capped at 30% of adjusted taxable income, with disallowed interest carried forward. Firms with $25 million or less of gross receipts, real estate companies and certain regulated public utilities will be exempt.


Among the many other business breaks that are eliminated or pared back: Business entertainment, the 9% domestic production deduction, net operating losses can offset only 80% of taxable income, and NOL carrybacks are generally prohibited. Tax-deferred like-kind exchanges are limited to real property not held primarily for sale. Attorneys can’t deduct litigation costs paid in contingency fee cases until the contingency ends.


Firms that provide paid family or medical leave to workers get a new credit generally equal to 12.5% of the amount of wages paid during the period leave. The credit is increased for employers that pay workers over half their normal wages while on leave and there are lots of other rules and limitations to comply with. The credit is temporary, applying only for 2018 and 2019.

Kean, Wiggins, & Company, LLC

PO Box 876, 704 West 2nd Street

Rolla, MO 65402


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