Benjamin Franklin said that two things are inevitable in life: death and taxes. And the nice thing about death is that it’s the end of campaigning.
2016. The year started with the Republicans complaining about rigged elections and ended with the Democrats complaining about rigged elections.
50% of the people had a fight over the elections. One wonders what was wrong with the other 50%.
As I write this, there seems to be a possibility of a recount. If Hillary ends up winning, switch the jokes around. They will still work.
A recent study showed that in many affluent Democratic homes, it was discovered that people voted absentee through Siri. Siri turned out to be a Trump supporter.
Oscar Wilde once said that we should have two lives to live. One that we make mistakes in, and one that we learned from them.
We may have a chance to do this. We have discovered that there is a planet Proxima B that is orbiting around our next nearest star Proxima Centauri. It has an atmosphere, liquid water and no electoral college and it is approximately an election cycle away 4.2 light years.
In discussing new tax laws in the future. A poll shows that everyone wants the new President’s tax rate Zero. There is some discussion in the Trump administration to allow this. However, taxpayers won’t get this rate if they see the play Hamilton.
Songs have been rewritten for the coming inauguration. Buffalo Springfield’s hit… “Something’s happening here. What it is isn’t exactly clear. There’s a man with a gun over there. Don’t worry. He’s protected by the Second Amendment.”
Ironically Beyonce’s endorsement turned out to be less valuable than Scott Baio’s.
In 2016, conscientious objector Muhammad Ali died and was proclaimed the most popular sports figure in history. At the same time football player Colin Kaepernick became the most hated football player because he took a knee during the Star-Spangled Banner.
After the election San Francisco bars proclaimed an “unhappy” hour that proved to be very popular.
It appears President-Elect Donald Trump will be living in Washington DC during the week and then returning on weekends to New York City. To save money, the White House was just listed on AIRBNB.
A Trump supporter has proclaimed that Donald Trump will be the best president since P.T. Barnum.
As Voltaire once said: “God is a comedian playing for an audience that’s afraid to laugh. “
Hillary Clinton was offered a job on Celebrity Apprentice, now starring Arnold Swarzenegger.
New Tax Laws. There are few changes from last year. Cost of living changes in standard deduction. Head of household $9300 plus $1550 more once you reach 65. Married can take $12,600 plus $1250 for each spouse 65 or older. Singles $6350 plus $1850 for over 65. There is not a lot of reason for getting older. So stop it. If like Merlin, you are growing younger each year, I would suggest a new accountant.
Personal exemptions are $4050.
Obamacare past, present and future. The individual mandate has risen. The mandate translates to penalties. The basic fine is rising to $695 per adult and $347.50 per child with a family ceiling of $2085. This is up from $325 and $975 in 2015 and then there is an income-based levy that gets added to the mix. Better to be insured while you still have the chance.
Those of you thinking at last you don’t have to deal with it in 2017, there are mixed messages from Washington. Trump said he would end it the first day in office. Then he said after the election that people like much of it. Rumor had it that it might stay for three more years. Then he nominated Health Secretary Dr. Tom Price who has been against Obamacare before it was conceived. So stay tuned.
No hike in 2016 Social Security wage base. It will stay remain at $118.500.
Those of you who is contemplating leaving the country because of the election; the foreign income exclusion is now $101,300. If you’re a business, you might ask for tax credits before you leave.
Death taxes. Estate taxes. The estate and gift tax exemption for 2016 rises to $5,450,000. If that’s not enough incentive, both Trump and the Republican House are for eliminating this tax.
There is less incentive for retirement plans. The 401 (k) contributions will remain at $18,000. $6,000 more if you’re 65 or over. IRAs and ROTHs will remain at $5500. $6500 if you’re over 65. Roth income ceilings start to phase out between $184,000 and $194,000. Single is between $117,000 and $132,000. Steven Hawking said we still have a thousand years left on this planet. Plenty of time to retire.
Those of you who have been driven crazy by the election your tax deduction is going down. The standard for business driving is 54 cents a mile, 19 cents a mile for medical and 14 cents for charity.
Want to avoid taxes? Become an Olympic athlete. President Obama signed into law a bill which provides that gross income shall not include the value of any medal awarded in, or any price money received from the United States Olympic Committee on account of competition in the Olympic Games or Paralympics Games.
Student Loan Interest: a taxpayer may deduct up to $2500 of interest of debt incurred to pay qualified higher education expenses. Trump University does not count. There is a phase out regarding this: between $65,000 and $80,000 for single people and $130,000 and $160,000 for joint returns.
Nanny Threshold. If you pay your nanny or anyone else working for you including gardeners, maids, drivers etc. over $2,000 then you need to have them be W-2 employees.
Individual taxes are due Tuesday April 18, 2017 because Emancipation Day is celebrated on April 17th in Washington, D.C. I guess the other states are not emancipated.
Crowd Funding. It appears that most campaigns that are raising money for medical treatment or college funds are not taxable. To raise money for a film or a business venture is usually taxable, unless you have to give the money back.
Transfer of IRA funds directly to charity. This is a great deduction for people over the age of 70 ½ and do not itemize.
Medical marijuana is legal in California but not a medical deduction. Recreational marijuana is now legal but not a recreational deduction.
What’s in the future for taxes? Since the Democratic Party is still in a state of shock, future tax law changes will be some combination of the Ryan House plan and the plan that Donald Trump offered. The Trump plan is to lower the brackets to 12%, 25% and 33%. The highest is currently 39.6%. Get rid of minimum tax. Change the standard deduction to $15,000 for Single people and $30,000 for couples. No personal exemptions. Limit itemized deductions to $100,000 for Single people and $200,000 for married.
The “Republican” plan would collapse the current seven tax rate system to two rates. The highest rate is being 25%. This would also eliminate estate taxes, the minimum taxes, extra investment tax rates. Eliminate all tax deductions except for charity and mortgage interest. According to a nonpartisan group, by 2025, 99.6% of the tax cuts would go the wealthiest 1 %.
No one knows what the tax bill will eventually look like. No one knows if it will be enacted for 2017. If you think that it will effect you next year then you should try to move income to next year and bundle up as many business deductions for this year as possible.
L.A. Tax Service will not be moving to Proxima B in the near future. Though supposedly there will be better parking there. We are very happy with our staff here. They do seem to be ready for space flight.
Grace Saenz, our receptionist, seems to move as fast as the speed of light but still takes great messages.
Nataliya Shur is fast, too. Quickbooks fast. She’s also our expert in all things technical. She said that she discovered the Unified Field Theory but thinks that it won’t help our business.
Viky Zelaya has a smile that guides our spaceship.
Patty Alvarez is the one who beams all the tax returns into outer space and somehow they still get filed on our planet. One thing that has been said about Patty is that she can make a Romulan laugh.
Dom Gelband, our office manager, makes sure that L.A. Tax Service is all systems go. She is the balance to our universe.