1. Looking Forward To TY2018 Anticipating New Legislation Impact
CA-2 Instructor Workshop, December 2017

2. Two Perspectives Preparing clients for what to expect in TY18
Actions that can be taken before the end of 2017

3. Disclaimer Legislation Is Incomplete
But close agreement on many issues
Focusing on Tax-Aide clientele impact
Many other changes affecting higher incomes
My impression is that on average our clients will be relatively unaffected
One analysis predicts 10% lower tax for those earning under $50k
Individually there will be bigger impacts

4. Key Elements for our Clientele
Standard Deduction Doubled
Single - $12,000
MFJ $24,000
Complete elimination of some Itemized Deductions
Other factors that impact taxpayers selectively

5. Higher Standard Deduction means many will no longer itemize
West Berkeley Library (Average AGI $27k)
26 taxpayers (11%) itemized in 2016
3 would itemize in 2018 under new rules
Even if still itemizing, the value of deductions is reduced due to higher threshold

6. How can we prepare clients? 1
Dependent under age 17 must have SSN to be eligible for ~$1,600 Child Tax Credit
Children with ITINS not eligible
Dependents over age 16 won’t be as valuable
$300 tax credit rather than $4,050 income exemption
Elimination of some Adjustments to Income
Educators Expense
Student Loan Interest
Tuition and Fees
Alimony Paid (Alimony received no longer taxable)

7. How can we prepare clients? 2
Elimination of Some Itemized Deductions
Medical Expenses
Including Nursing Home care
State and Local Taxes
Income, Sales, Personal Property
Property Tax deduction is up in the air
Employee Expenses
IRS/FTB considers these as greatly abused
Older clients tend to have low property tax and mortgage interest
Therefore even less likely to itemize

8. How can we prepare clients? 3
Elimination of Credits
Lifetime Learning Credit
Students attending college less than half time will get no tax benefit
AOTC extended one year, but with reduced benefit and only if at least half-time student
Can still take as business expense
Elderly and Disabled Credit

9. How can we prepare clients? 4
Newly taxable income
Qualified Tuition Reduction
Great concern to graduate students who often get these for $20k-$40k
US Savings Bond Interest when used for education expenses

10. How can we prepare clients? 5
Miscellaneous Items
Exclusion on sale of principal residence
Must own and live in 5 of 8 prior years
Can utilize only once every five years
IRA rollover period extended from 60 days to the tax filing deadline (April 15)
IRA/Roth IRA recharacterization no longer permissible
Conversions still permitted

11. The Wild Cards - House and Senate Differences
Deductibility of Property Taxes
None? Some? All?
Eliminating the Health Coverage Mandate
No SRP!
NTTC – Dallas 2014

12. How can we prepare ourselves? Assumes not subject to AMT
Before the end of 2017…
Move itemized deductions into TY17 if possible
Higher Standard Deduction threshold will reduce value of itemized deductions
Some will disappear completely next year
If not eligible for AOTC, pay college tuition/fees
Cash Savings Bonds to be used for Education

13. QUESTIONS or COMMENTS?