That means everyone is wondering what Congress will do with taxes. In the past we’ve wondered whether the estate and gift tax credits will increase or decrease, whether the estate and gift tax will stay or go, and what to do.
This year has even more uncertainty because the House and Senate has both passed versions of a massive tax overhaul. Among the changes proposed are the elimination of many tried and true deductions, such as the medical deduction and the charitable donation deduction. Tax rates are to be lowered and the standard deductions increased. It’s all part of President Trump’s plan to simplify the tax code. By making the standard deduction greater and by eliminating many of the itemized deductions, there will be less incentive to itemize, which means the tax returns will be shorter. No Schedule A that lists all of the deductions. Less risk of audit because there is no question that a persona is entitled to a standard deduction.
The House and Senate versions have to be reconciled into one bill that passes both houses and then goes to the President. There’s a lot of work to do. In the meantime, people are wondering what they should do. My advice is, plan based on existing law. Doing anything else is a shot in the dark that could end up costing you thousands of dollars.