Ten questions to ask your CPA about the new tax law

Bill Cass

Bill Cass, 09/04/18


The Tax Cuts and Jobs Act (TCJA) introduced many changes to the tax code this year, including limits on some popular tax deductions. As a result, the new law could have a significant impact on how individuals and small businesses file income taxes and make tax planning decisions.

It is not too early to think about the impact of the tax code on an individual’s financial situation. In fact, many taxpayers are responsible for making estimated tax payments throughout the year. Further, as the law affects tax rates and limits the use of certain deductions, it may be important to review your current financial plan now with a financial advisor to determine whether you need to make changes.

Consider these 10 key questions to ask your certified public accountant or tax preparer:

1. Based on preliminary analysis, if my 2018 income is similar to that of 2017 with no major changes beyond the new tax law, should I expect to pay more, the same, or less tax? If I’m likely to owe more, are there strategies I might consider to mitigate the impact of the new tax law? If I owe less, should I decrease my estimated tax payments?

2. What’s my likely marginal tax rate for 2018 following passage of the new tax law?

3. How has the tax law affected my tax deductions? Do you think it will be advantageous to itemize this year or take the standard deduction?

4. Specifically, what are the main deductions I’ve claimed in the past and what has changed due to the tax law? For example, will I still be able to deduct interest paid on a home equity line of credit (HELOC)? What about deducting my state income tax and local property tax? Are there strategies to consider in light of losing certain deductions?

5. Am I usually subject to the alternative minimum tax (AMT)? If so, should I expect to pay AMT in 2018?

6. Now that the personal exemption has been eliminated, will I benefit from the Child Tax Credit (CTC)?

7. Are there any strategies I should consider to optimize gifts to charities, such as “lumping” charitable contributions or making gifts directly from my individual retirement account (if age 70½ or older)?

8. As a small-business owner, am I able to benefit from the new 20% deduction on business income? Are there certain strategies I should consider to maximize this deduction? Do I need to review how my business is structured from a tax perspective?

9. With changes to the kiddie tax and increased flexibility in using 529 plans, what tax-related factors should I consider when funding college education?

10. Based on my personal circumstances, what are the considerations around either using strategies to lower my taxable income (such as contributing more to a retirement plan) or to increase my taxable income (through a Roth IRA conversion for example)?

Time for a plan review

These considerations could get the conversation started with a CPA or financial advisor. Depending on your individual financial situation and goals, there may be many more questions about how the TCJA affects charitable gifting, estate planning, and real estate or business ownership. Some of the enhanced tax credits may offset those that were repealed or limited. Getting expert advice in advance may help mitigate your tax liability later and allow you to take advantage of strategies that can enhance your plan’s efficiency.

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