With the tax reform bill possibly becoming effective in January 2018, there are several important points to note for taxpayers.
A Boston-based Kenyan tax expert Accountax has explained in simple terms what the new tax code means and who benefits the most.
Accountax CEO Mr. Nganga said in a statement that with the new tax code, the W4 (one of the forms the employer gives you when starting employment) is based on exemptions that will no longer apply.
Depending on how IRS will interpret the code, the marriage penalty will be less punitive since the standard deduction somehow doubled for couples.
Standard deduction: The bill would increase the standard deduction through 2025 for individual taxpayers to $24,000 for married taxpayers filing jointly, $18,000 for heads of households, and $12,000 for all other individuals. The additional standard deduction for elderly and blind taxpayers is not changed by the bill.
Personal exemptions: The bill would repeal all personal exemptions through 2025. The withholding rules will be modified to reflect the fact that individuals can no longer claim personal exemptions.
Is the bill beneficial for taxpayers such as nurses?
When Nganga was asked by nurses to elaborate further on the bill’s benefit to them, he said that although the bill will benefit everyone, it will be more beneficial to the business owners who are perceived to be ”wealthy”.
”Putting politics aside, it is beneficial to everyone but not as much for individuals as promised earlier on. Those in business (believed to be rich) benefit the most. But the trickle-down effect should spur the economy” he said.
And would it be better to file as a couple or individual? Mr. Nganga said that ”Married filing separately is a less favorable option”.
Assuming the bill makes it to the desk of the President and he signs it before year-end as he has promised, most of the provisions would kick in on Jan. 1, 2018, which means the changes wouldn’t have any impact on 2017 tax filings, due by April 15, 2018.
