On December 22, 2017, the Tax Cuts and Jobs Act was put into law, implementing major changes to existing tax brackets, deductions, and exemptions.
The first of our planned tax updates released today and includes the most significant portions of the new tax laws into the tax rules that eMoney handles.
To learn more about how this release impacts your client’s financial plans, watch our recorded eMoney Tax Update webinar.
This release includes updates to the following tax rules:
Implemented Handling of Sunset Provisions
Your eMoney tax simulation will now account for the sunset provisions applied by the Tax Cuts and Jobs Act. When a tax change reaches its sunset date eMoney will automatically revert the value to the pre-change value while accounting for inflation over the time period, when applicable.
Updated Tax Brackets and Tax Rates
All tax brackets and tax rates for Single, Joint, and Trust filing statuses have been updated to account for the new law. A comparison of the new and previous law tax brackets is available in this release guide.
Adjusted the Standard Deduction
The standard deduction for Single filers has been increased from $6,500 to $12,000 and for Joint filers, it has been increased from $13,000 to $24,000 under the new law. The sunset date of 12/31/2025 has been applied.
Repealed Personal Exemption
Under the new tax law, the Personal Exemption has been repealed. The sunset date of 12/31/2025 has been applied.
Adjusted Estate Tax Exemption Amount
The estate tax exemption has been increased to 11.18 million per individual. This amount is indexed for inflation and the sunset date of 12/31/2025 has been applied.
Removed Itemized Deduction Phase-out
This phase-out has been removed entirely and the sunset date of 12/31/2025 has been applied.
Updated Alternative Minimum Tax Exemption
Alternative Minimum Tax (AMT) exemption and phase-out’s amounts have been updated for single and joint filers. Single filers now have an AMT exemption of $70,300 and AMT phase-out of $500,000 and joint filers have been updated to an AMT exemption of $109,400 and AMT phase-out of $1,000,000. The sunset date of 12/31/2025 has been applied.
Adjusted Medical Expense Deduction Threshold
The new AGI threshold for allowing medical expense deductions is 7.5%. The sunset date of 12/31/2018 has been applied and the threshold will revert to 10% post-sunset.
Increased Charitable Contributions Deduction
The cash gifts limit of AGI to public charities has been increased to 60%. The sunset date of 12/31/2025 has been applied.
Modified Alimony Deduction
Alimony is no longer deductible for the payer. Our March release will account for grandfathered agreements and the 2019 effective date.
Removed Miscellaneous Itemized Deduction Subject to 2% AGI
These deductions have been completely removed. In addition, advisor fees are no longer deductible. The sunset date of 12/31/2025 has been applied.
Our next planned release is scheduled for March and will include new tax-related features that will provide advisors with even more control over how they apply the Tax Cuts and Jobs Act to their client’s financial plans.
Questions about this release? Call us at 888-362-8482 or send us an email.