Tax Changes for 2018

 

As you may be aware, there will be some drastic tax changes that will go into effect in 2018.  Many clients want to know how this will affect them. Please consider the following changes:

  • There will still be 7 income tax brackets for individuals, but the rates are all slightly lower for the most part.  The standard deduction will double, and the personal exemption will be eliminated.
  • Many itemized deductions will be eliminated.
    • Alimony will no longer be deductible to the person paying it but will be deductible for the person receiving it for divorces signed in 2018.
    • Deductions for charitable donations, student loan interest, and retirement contributions will remain.
    • Mortgage interest deductions will be limited to the first $750,000 amount of the loan, but this does not include current mortgage holders.
  • The Obamacare tax will be repealed for those without insurance effective in 2019.
  • The estate tax exemption will be doubled.
  • The child tax credit will be increased from $1,000 to $2,000.
  • The corporate tax rate will be lowered from 35% to 21%.  The standard deduction is increased to 20% for pass-through businesses.  This is phased out for professional service businesses at certain individual income levels.  Small businesses may want to delay income to the extent permissible by law until 2018 to take advantage of this.

Contact Mendes Weed, LLP

This is only a summary of a select few of the changes that will go into effect in 2018.  For more information about other changes to the tax laws, you should reach out to and meet with a tax lawyer.

Mendes Weed, LLP has offices in Walnut Creek, Sacramento, and San Francisco.  If you would like to know how the tax changes will affect you, contact us.

 

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[Video] Estate Planning for the Blended Family

It is very common for clients to come to me regarding their estate plans when they have blended family issues.  Blended families are not only the result of divorce.  Many individuals live longer now and may want to remarry if they outlive their spouses.

If you are a member of a blended family, you will want to make sure your estate plan is well-suited to your specific needs.  A well-drafted estate plan can help minimize the risk of accidentally disinheriting children from a prior marriage, of a former spouse inheriting certain accounts even though the deceased spouse willed them to her children, or countless other scenarios that you may not wish to occur.

A revocable living trust can be helpful in instructing the successor trustee about whom should receive which of your assets when you die.  A trust may also provide the successor trustee to make distributions according to certain guidelines, such as for health care, education, or others.

A QTIP trust, or qualified terminable interest property trust, may also be helpful if a client wants to provide for the surviving spouse during her lifetime if she predeceases her spouse, while also preserving assets for the decedent spouse’s children or other designated beneficiaries.

A prenuptial agreement may also be a good way for individuals who are remarrying to emphasize which assets are separate property and, more specifically, which assets should go to their children.  In addition, it is important to remember that following any divorce, former spouses should review their estate plan, ownership of bank and financial accounts, including brokerage accounts, and the title on real estate, insurance, vehicles, and other assets.

Estate planning documents are living, breathing documents that should be changed and updated to suit your needs.  Mendes Weed, LLP helps to advise clients who are undergoing major life events as it pertains to their estate plans.  We hope you will reach out to us if you have questions.

SuperLawyers-RisingStars
Best of the East Bay Attorneys
Lisa Janine MendesReviewsout of 5 reviews
Walnut Creek Chanber of Commerce logo
Christina Weed - Taxation Law Specialist
lawyers of distinction badge 2020