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Donald Trump is the President-Elect of the United States of America. So, with that in mind, what changes can individuals expect in our tax lives? Don’t worry. This won’t affect your 2016 tax returns. And, unless Congress passes these provisions intact, they might not even affect your 2017 tax returns. But some of these provisions will be passing.

  • Eliminate all those annoying tax brackets and knock them down to just three – 12%, 25%, 33%, (instead of the  7 tax brackets, ranging from 10% to 39.6%, that we have now) while expanding the earnings within those brackets.
    • 12% to $37,500 – S ; $75,000 – Married Filing Jointly (was 0% – 15%)
    • 25% 37,501 – $112,500 – S; $75,001 – $225,000 – Married Filing Jointly (was 25% – 28%)
    • 33% $112,501 and above –S; $225,001 and above Married Filing Jointly (was 28% – 39.6%)
  • Raise the Standard Deduction to $15,000 (presently $6.300) for singles and $30,000 (presently $12,600) for joint returns – these standard deductions replace the amounts you would normally use on Schedule A (the form where you report Itemized Deductions). That means you won’t have to report your mortgage interest, property taxes, sales taxes, charitable contributions or medical expenses – among other things. For some people, eliminating this record-keeping will be a blessing.
    • That should eliminate the need for most people to use any deductions at all, making life a bit easier. Bye, bye Schedule A.
  • Eliminate personal exemptions altogether
    • That means, families with lots of children won’t get the extra per-person tax break – in 2016, it’s worth $4,050 per person – or $28,350 for a married couple with 5 children. So this isn’t really helpful for large families
  • Eliminate the Head of Household filing status altogether (worth a standard deduction of $9,300 – and lower tax rates than single folks pay).
    • So, that would mean a single mom with one child would file as single and have no personal exemption for herself or her child.  (Note: A personal exemption is the tax deduction you get for each person reported on the tax return – 1 for each parent or spouse, and one for each dependent.)
      • Current value – Head of Household – $9,300 + 2 exemptions – $8,100 = $17,400. Replaced with the Single Standard Deduction of $15,000
    • Eliminate the 3.8% Net Investment Income Tax – which affects individuals with incomes in excess of $200,000 or couples in excess of $250,000. That was kind of a marriage penalty for couples, anyway.
    • Repeal the Alternative Minimum Tax (AMT). Hooray!
      • It currently affects singles at $53,900 and couples at $83,800. That level of income doesn’t go very far in urban areas, especially if you have children.
      • The AMT was originally designed to prevent rich people from getting out of paying taxes. Instead, it hits the middle-income taxpayer quite heavily.
    • Eliminate the estate tax altogether (in 2017, $5,490,000 worth of assets per person are exempt from estate taxes).
      • But along with it, eliminate the step-up in basis at date of death – which brings the tax value of assets up the market value when the person dies. This eliminates all capital gains taxes for the heirs.
      • Exclusion from capital gains taxes for up to $10 million worth of assets.

There are lots more provisions. The plan is a mixed bag of goodies and sillies. As yet, the cuts are in the trillions of dollars with no offsets to make up the differences. Congress will need to review the concepts and hash out a whole new tax plan in the coming years. Just know there will be changes. Hopefully, some of them will simplify your lives.

Eva Rosenberg EA, MBA, known as the Internet’s TaxMama, is author of the new book by McGraw-Hill, Small Business Taxes Made Easy and an enrolled agent with more than 25 years of experience. A MarketWatch Columnist, she runs TaxMama.com where individuals and small business owners can get free answers to their tax questions. You can find also her on Twitter @Taxmama.