(BPT) - With the Tax Cuts and Jobs Act of 2017 having been signed into law, here are some of the things you should be thinking about as tax season approaches, according to Robert Fishbein, vice president and corporate counsel, Prudential Financial Inc.
2017 tax returns
The new tax law is generally effective starting in 2018, which means that your 2017 income tax return is largely unaffected. However, there may be actions you can take now to benefit from the change. For example, assuming you are eligible, you could fund a traditional IRA before the due date of your tax return; the income exclusion may be more valuable under higher 2017 tax rates.
Lower tax rates and new withholding
The hallmark of the new tax law is lower marginal tax rates for individuals. The IRS has issued withholding tables employers started using in February to reflect these lower rates. While this could mean lower tax withholding and more take-home pay, you should evaluate your personal income tax position to determine if you will pay more or less under the new law and adjust your withholding accordingly.
If you make estimated tax payments, you should also estimate your tax liability under the new tax law and make necessary adjustments to your quarterly tax payments.
Assuming your withholding or estimated tax payments need no adjustment may create an unpleasant surprise if you are under-withheld and owe penalty tax and interest when you file your 2018 income tax return.
Higher standard deduction
The new higher standard deduction of $12,000 for individuals and $24,000 for married couples will greatly reduce the number of taxpayers that itemize deductions. If you did not itemize in 2016, and your tax position is similar now, you will probably not itemize in 2017. The increased standard deduction, combined with lower marginal rates, may mean your tax liability will go down.
If you itemized in 2016, compare your total itemized amount to the new standard deduction. If less, and assuming a similar tax position in 2017, you will likely no longer need to itemize.
For many, this provision will turn out to be the greatest simplification aspect of the new tax law, since they no longer must track itemized deductions or complete multiple associated forms.
No personal exemptions
Some taxpayers will need to look more closely to determine if they will pay less or even more. The new law eliminates personal exemptions and reduces deductible items, such as limiting the total deduction for state and local income taxes to $10,000, reducing the amount of deductible mortgage interest and eliminating the deduction for interest paid on a home equity line of credit. Therefore, if you itemized deductions in 2017 and your deductions were greater than the applicable standard deduction, you will have to consider what deductions are available in 2018 and estimate your tax liability.
In states with higher income taxes and property taxes, it is possible that the loss of itemized deductions will be greater than the benefit of lower rates and your tax liability could increase.
Increased child and dependent credits
The new law increases the child tax credit for children under 17 to $2,000. The income limits to phase out the credit are also significantly increased so more taxpayers will be eligible. In addition, there is a $500 credit for other qualifying dependents. Depending on your tax bracket, this could be better or worse than getting an exemption for each dependent.
Increased AMT exemption
Adding one more layer of complexity to your 2018 planning is the new tax law’s modification of the Alternative Minimum Tax or AMT. The AMT is a parallel tax system that requires you to calculate your income tax under the normal rules and then again under AMT rules, paying the higher of the two. The new tax law increases the AMT exemption, or the amount you can earn and not be subject to this alternative tax. If you have been subject to AMT in the past, you should review the new increased exemption and whether that will change.
The bottom line
The bottom line for most is whether they will pay more or less income tax in 2018 than in 2017. While it is likely many will pay less, you need to consider all the above before you know how you will be impacted by the new tax law.
Please consult your legal or tax advisor concerning your particular circumstances. The Prudential Insurance Company of America, Newark NJ and its affiliates.
(BPT) - The bright lights. The energy and laughter that fills the room. Casinos are fun and exciting to the vast majority of people but for some, they can be problematic.
Casinos are a form of entertainment, so how do you ensure what’s meant to be a fun and leisurely activity continues to be a positive experience? Time spent at a casino should be a planned and budgeted entertainment option — like you would approach an evening out for dinner or a sporting event. There are preventative measures that can be taken to help ensure that an experience at a casino remains a fun one.
Leading experts in the field of gambling research maintain that it starts with being an informed consumer who understands the realities of gaming. “Being informed means understanding your thoughts about the next big win, beating the odds, and finding the hot machine or deck of cards,” said Dr. James Whelan of the University of Memphis. “Misunderstanding these thoughts about chance can lead to harmful mistakes and excessive losses of money. Informed consumers know that setting limits on how much you spend and how long you play is the best way to not let these thoughts result in you losing more than you can afford.”
Here’s what everyone should keep in mind before their next casino visit.
Betting on a winning streak
It’s always exciting to hit a jackpot, but winning streaks are highly uncommon and beyond anyone’s control. Each spin of the wheel or roll of the dice is an independent event, which means that the chances of a specific outcome aren’t influenced by previous outcomes. So rolling snake eyes once makes you no more (or less) likely to roll snake eyes again.
The chances of beating the odds
Casino games are designed with a house advantage. Mathematically, the house advantage is a measure of how much the house expects to win, expressed as a percentage of the player’s wager. For example, in a wager with a house advantage of 5 percent, the player will lose, on average over time, $5 for every $100 wagered. Because the odds always favor the house, the longer or faster a person plays a casino game, the more the person should expect to lose even in skill-based or hybrid games. In the same way, the more a person wagers, the more the person should expect to lose.
Believing in superstitions
It might be fun to imagine that rubbing a rabbit’s foot improves a player’s chances of hitting a jackpot, but the reality is that this “magical thinking” has no impact whatsoever. Cheating aside, there’s nothing a player can do — no ritual or lucky charm — to influence the outcome of any casino game. Superstitions can’t determine whether a player wins or loses because every casino game — whether it’s blackjack, craps or a slot machine — is based on randomness, or on chance.
Lisa Arroyo has worked at Harrah’s Joliet Casino in Illinois for the past 25 years. Like everyone who works at a Caesars Entertainment property, Arroyo thinks about gambling as a fun activity you pay for, like going to the movies or to a theater performance.
Arroyo has heard customers laughing and having fun playing blackjack — and she has also heard customers make troubling statements that have caused her concern. “We definitely don’t want people to come in and spend more than what they have budgeted. We want our guests to simply have fun and gamble responsibly. If someone makes a statement or series of statements that concern us, we will have a discussion with the patron and inform them of responsible gaming options and alternatives if needed.”
Is responsible gaming an oxymoron? Not at all. Arroyo wants gambling to be a choice made for the right reasons. She is one of the advocates of Caesars Entertainment’s Responsible Gaming program, the first hospitality gambling program of its kind to formally train employees on the importance of Responsible Gaming.
The premise of the program involves Arroyo and her colleagues across Caesars' global network of properties, called Responsible Gaming (RG) Ambassadors, who are celebrating their 15th year of assisting casino guests who may not be gambling responsibly. If comments or statements are made that are concerning to any employee, that concern is brought to the attention of the RG Ambassador who will sit down with the guest to address the reported concern, offer problem gambling program assistance and help resources, and answer questions. “We just let them know that if they feel like they might have a problem, we’re here to answer questions and help,” said Arroyo.
She informs people who express they might have a gambling problem to ask themselves some of the following questions.
* Do I lose time from work due to gambling?
* Is gambling making my home life unhappy?
* Have I ever felt remorse after gambling?
* Do I ever gamble to get money to help pay debts or to otherwise solve financial difficulties?
* Does gambling cause a decrease in my ambition or efficiency?
* Do I ever gamble longer than I had planned?
Caesars Entertainment wants everyone who plays at its casinos to be there for the right reason — to simply have fun. For the past 25 years, Caesars has been committed to promoting responsible gaming and has provided assistance to guests who may not be gambling responsibly. This year, Caesars’ Responsible Gaming Ambassador Program is celebrating its 15th anniversary with 815 Responsible Gaming Ambassadors that may assist guests with problem gambling help resources.
Interested in Publishing on The Money Idea?
Send your query to the Publisher today!
Get this money content for your website with our RSS Feed below!