Tax Updates Phase 2 – March Release

tax reform update 2018

On February 8, we released the first of our planned tax updates to account for the Tax Cuts and Jobs Act. This update coded a significant portion of the new tax laws into the tax rules that eMoney handles.

Next month, we will release the remaining tax law updates and new features to help advisors align their financial plans with the new laws.

To learn more about what was included in phase 1 of our tax release, watch our recorded eMoney Tax Update webinar.

Watch the Recording

We’re currently targeting March 15 for the next part of this release which will include updates to the following tax rules:

Mortgage Deduction Limit

The cap will decrease from $1,000,000 to $750,000. Mortgages in effect before 12/15/2017 are still subject to the $1,000,000 cap. The sunset date of 12/31/2025 will be applied.

Alimony Deduction Update

There will be an additional update to the Alimony Deduction to account for grandfathered agreements and the 2019 effective date.

Designated Tax Assumptions

As part of the March 15 release, we will create a new area in the Advanced Fact Finder designated specifically for Tax Assumptions.

New Tax-Related Features

For the 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, we are targeting a March 20 release date. New tax-related features will include:

Tax Framework Configuration

To demonstrate the effect of the new tax laws on a client’s financial plan, advisors will have the ability to toggle between the new Tax Cuts & Jobs Act and the previous 2017 tax laws.

Sunset Configuration

If advisors believe that the new tax laws will be extended past their current sunset provision dates, they will be able to toggle the Sunset Provisions on or off.

Estate Tax Exemption User-Specified Cap

Advisors will be able to set custom estate tax exemption limits. Any custom limit will not grow over time, and eMoney will use the lesser of the custom limit and actual tax law limit. This can be used if an Advisor is anticipating any future tax law changes to this rule that differ from the Tax Cuts & Jobs Act.

March Release Update

The following tax rules have been moved to a targeted late March release as they are new tax rules eMoney did not previously handle and additional time is needed to finalize the changes.

Child Tax Credit

The per child tax credit will increase from $1,000 to $2,000, and the credit amount will be reduced for AGIs above the threshold. Thresholds are changing from $75,000 to $200,000 for single filers and from $110,000 to $400,000 for joint filers. The sunset date of 12/31/2025 will be applied.

Business Pass-Through Income

A 20 percent deduction of qualified business income (QBI) will be added. The deduction will be limited when QBI is generated by a professional services business. In this case, the deduction is phased out for owners above a certain adjusted gross income (AGI) namely $157,500 for single filers and $315,000 for joint. The sunset date of 12/31/2025 will be applied.

Stay tuned for more details as we approach the next Tax Cut and Jobs Act release. Questions? Call us at 888-362-8482 or send us an email.

Joseph Pearson

Written By

Joseph Pearson is a Client Communications Strategist with eMoney Advisor, LLC. A three-time eMoney Wingbowl Champion, one-time Chili Cook-off Runner-up and Gold Stevie® Award-winning Front-Line Customer Service Professional of the year for 2016 - Joe is a proud father, devoted husband, and he always tries turning it off and back on again before calling IT.