By Eva Rosenberg, author of Small Business Taxes Made Easy.
This week, our new president is being sworn into office. While Trump has a lot of things on his agenda to accomplish in the first week, we are concerned about the tax law changes that are apt to take place.
Good news, folks. Tax changes won’t happen overnight. So don’t worry about this filing season. All the laws that were in place as of December 31, 2016 are still going to be in effect when you face filing your own tax return.
A president doesn’t have the authority to make changes to the Internal Revenue Code all by himself. The House Ways and Means Committee must present a bill to be voted on by the full House of Representatives. If the bill passes, with a majority, it goes to the Senate. The Senate Finance Committee studies the House Bill. Before putting the bill to vote in the Senate, the Finance Committee often makes changes. If they do, and the Senate passes the bill – then it goes to a Joint Committee of House and Senate members to sort out the differences.
Historically, the two houses of Congress never agree absolutely. There are practically always differences between the two sets of legislation. Even if they work quickly, no Trump-based tax laws will get passed within the first 60 days.
EXCEPT! They keep saying that they are ready to scrap the Affordable Care Act (ACA) – also known as Obamacare. They don’t really have anything solid to put into its place. So beware, if they do succeed in scrapping it.
If ACA goes, here is the potential effect for tax purposes – in 2017.
- You may find yourself able to avoid penalties in 2017 for not getting insurance coverage.
- They just might, retroactively, waive the penalties in 2016 for not having insurance coverage.
- You might lose the premium tax credits that existed to help you pay reduced premiums.
However, the biggest impact to you will be the kind of health insurance coverage you will be able to afford.
- People with pre-existing conditions won’t be protected – they may have to get their insurance from a state pool –
- They will pay substantially higher premiums.
- They will have much higher deductibles.
- Coverage will be capped – so folks needing costly care, like for cancer, heart ailments, kidney/dialysis issues – may have to scramble to find money to pay for treatments.
- Medicare premiums will increase as subsidies for care costs decline.
The good news is – they expect to leave the feature requiring insurance companies to cover adult dependents under age 26.
Sit back and wait to see what develops. In the meantime, keep working on getting your 2016 tax return organized.