Congratulations to incoming President Trump. Yet many have questioned what happens to income tax planning?
First, 2016 tax rates are at 39.6% for individuals and 39% for Federal Corporate rates. State taxation has not changed and has a top rate of 13.3% in California. The additional Medicare taxes are still the law, but will hopefully be eliminated in coming years.
What has changed today? NOTHING, ABSOLUTLEY NOTHING. The tax law is still the law.
Going forward, Trump proposed a sketchy tax plan, that even he said was a work in progress. It offered lower top tax rates, but also a limit on itemized deductions, so that charitable, mortgage interest, state income tax deductions and real estate would be limited. In fact, combined itemized deductions above $200,000 for couples and $100,000 for individuals would not be allowed. This platform will of course be modified by the Political Process, committees and special interest groups. Will charitable deductions really be limited?
Reality Check, is that the President cannot and does not write laws, only the House and Congress can pass laws, the President can veto or execute the legislation. Until next year we will not even have a proposal on the table, and we have no idea what the proposal will be. One thing I can guarantee is that it will NOT be the sketchy details that were provided, as too much is unknown and political wrangling will come to fruition. There will be change, but not as drastic as proposed when one reviews the net effect of the proposals
The only constant is to plan your taxes today, under today’s laws with a company that can structure a flexible plan that will be modified year to year as the law changes, which it always does. TLS includes an initial annual monitoring to maximize your tax plan after it is structured. That is the proactive, positive way to save taxes today and to save taxes each and every year.
Richard M. Colombik, JD, CPA, is an award-winning attorney and CPA with a doctorate in jurisprudence with distinction and was formerly on the tax staff of one of the world’s wealthiest families.
Mr. Colombik has also been a tax manager at a Big Four accounting firm, the State Bar’s liaison to the Internal Revenue Service (IRS), vice president of the American Association of Attorney-CPAs, and vice chairman of the American Bar Association’s Tax Section of the General Practice Council, as well as the past chair of the Illinois State Bar Association’s Federal Tax Committee. Mr. Colombik has also served on the liaison committee to the Washington, DC, National Office of the IRS. Mr. Colombik is also a member of the Asset Protection Committee, American Bar Association, and a member of its captive insurance subcommittee.
Mr. Colombik has appeared on numerous television shows, hosted a weekly radio show on tax and business planning, and authored more than 100 articles on income taxation, asset protection planning, IRS defense, and estate planning. He has also instructed more than 100 seminars to professional groups, business groups, bar associations, CPA societies, and insurance groups. This is in addition to authoring a published work on business entity structures offered by the Illinois Institute of Continuing Legal Education, as well as writing a chapter for The Estate Planning Short Course and Asset Protection Planning.