INDIANAPOLIS (WISH) — How could tax reform have an impact on Hoosiers getting ready for tax season?
The U.S. House of Representatives passed its version of tax reform — a $1.5 trillion overhaul of business and personal income taxes — and now it will be up to the Senate to make a move on its own version.
People want to know, once everything is all said and done, will they end up paying more or less taxes?
Leslie Boyd, a tax expert in Indianapolis, said the answer depends on several different factors.
“I think this tax reform is very important for the average Hoosier here,” Boyd said.
Boyd has more than 10 years of experience working for an accounting firm in Indianapolis and she’s been following both the House and Senate versions of tax reform.
“Tax is a very specific situation, so you have to go through and model out the process and exactly what the situation is and what the impact is going to be to you,” she said.
She walked us through different scenarios and said the current House version of the bill would get rid of state and local income tax deduction.
“If the tax and local tax deductions is going to go away in 2018, then maybe I need to take advantage of that and pay that amount that I know that will be due with my 2017 tax return here in December,” she said.
The House version is also looking to get rid of certain itemized deductions. If that’s the case, she said, you may want to ask yourself: Are there ways that I can accelerate some of those itemized deductions in 2017 and take advantage of them while they’re no longer available in 2018?
Boyd said, in addition to how much you make, you also have to factor in whether you’re paying charitable donations, real estate taxes. Do you have a mortgage, and are you paying home mortgage interest deductions? You have to look at all of those factors before you can compare your situation to the new tax plan.
What if you’re a business owner? The House version is looking to lower tax rate for businesses in hopes to spur economic growth and jobs.
“If you have a business, looking at how you can accelerate deductions and defer income is a great strategy, looking at how you can accelerate depreciation of your equipment and capital expenditures,” she explained.