What Does the New Tax LawMean for Me?

James Bogart, CFP®, ChFCPrincipal

Portfolio Manager DirectorFinancial Advisor

Brian Bogart, CFP®

PrincipalPortfolio Manager Director

Financial Advisor

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Our Team

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Brian BogartPrincipal

James BogartPrincipal

Peter KnoerVP Financial Advisor

Jonathan FreehillFinancial Advisor

Hal FrankelPortfolio Analyst

Michael DuffyVP Financial Advisor

Aleksandr SpencerPortfolio Manager

Angie HooksClient Service Advisor

Michelle DubayDirector of Operations

Richard McMahonClient Service Advisor

Trey FraimClient Service Advisor

Grant StuckiVP Financial Advisor

George MusselmanFinancial Advisor

Our mission is to help clients achieve financial peace of mind by preserving and maximizing intergenerational wealth.

Our Mission

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Disclaimer: We are Not Tax Advisors• We are Certified Financial Planners, and are familiar with many of

the changes of the new tax law.

• This presentation is designed to provide a helpful insight into a number of the more significant changes relevant to most of our clients

• Please consult your tax advisor on the specifics of your situation

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Disclaimer: We are Not Tax Advisors• Information contained herein is current as of 1/1/18. It is subject to

legislative changes and is not intended to be legal or tax advice.

• Consult a qualified tax advisor regarding specific circumstances. This material is furnished “as is” without warranty of any kind. Its accuracy and completeness is not guaranteed and all warranties expressed or implied are hereby excluded.

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Disclaimer: We are Not Tax Advisors• Bogart Wealth is neither a law firm nor accounting firm, and no

portion of its services (or the content fo this presentation) should be construed as legal or accounting advice.

• Moreover, you should not assume that any discussion or information contained in this presentation serves as the receipt of, or as a substitute for, personalized advice from the tax advisor fo your choosing.

• A copy of our current written disclosure Brochure discussing our advisory services and fees is available upon request.”

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2018 Tax Reform

• On December 22, 2017, Tax Reform H.R.1 was signed into law.

• Also known as The Tax Cuts and Jobs Act of 2017.

• The Joint Committee on Taxation (JCT) estimate cost of $1.456 Trillion over 10 years.

• Approximately $1 Trillion comes from business tax cuts, such as reducing the Corporate Tax Rate from 35% to 21%.

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Changes to Your 1040

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What’s Not Changed…

• Individuals• IRA Contribution Limits• Rollover Rules• Net Unrealized Appreciation (NUA) Rules• Cost Basis Rules• Stepped-Up Basis Rules• FICA and Medicare Tax

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Traditional IRA Accounts

Limit Catch-up (50+) Income Limit

Traditional,Non-Deductible $5,500 $1,000 None

Traditional,Deductible $5,500 $1,000

If covered by a plan,Single: $63k - $73k

Joint: $101k - $121k

If one spouse is covered by a plan,

Joint: $189k - $199k

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Roth IRA Accounts

Limit Catch-up (50+) Income Limit

Roth IRA $5,500 $1,000 Single: $120k - $135kJoint: $189k - $199k

Roth Conversion No Income Limit

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Retirement Plan Contribution Limits

401k, 403b, Roth 401k $18,500

Catch-up for Individuals 50+ $6,000

Defined-Contribution Plan Limit $55,000

401k Maximum Contribution (50+) $61,000

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Sale of Primary Residence

• Still can exclude $250,000 ($500,000 joint) of gain

• Still must reside in property for 2 of last 5 years

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Cost Basis Rules

• Can still select specific tax lots

• Must be identified at sale (within 2-day settlement period)

• Otherwise custodian can not change

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FICA Tax

Income Up to $128,400

Employer 6.20%

Employee 6.20%

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Medicare Tax

Income Up to $200k ($250k for Joint)

Employer 1.45%

Employee 1.45%

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Income in Excess of $200k ($250k for Joint)

Employer 0.90%

Employee 0.90%

Net Investment Income Tax“Obamacare Tax”

Net Investment Income or Excess of Modified Adjusted Gross Income (MAGI)…

Single Over $200,000 3.80%

Joint Over $250,000 3.80%

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What’s Changed…• Corporate Taxes

• Max rate now 21% vs 35%

• Pass Through entities get 20% tax deduction

• Equipment 100% vs 50% depreciation

• Max Repatriation Tax 15.5% vs 35%

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What’s Changed…• Individuals

• Marginal Tax Rates

• Itemized Deductions

• Personal Exemption

• Capital Gains Thresholds

• Annual Gift Exclusion

• Child Tax Credit

• Estate Exclusion Level

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Pass Through Entities

• LLCs, Partnerships, Sub S Corps

• Except Service Entities like lawyers, doctors, accountants

• Can deduct 20% of net income

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Rate Schedule – SingleTaxable Income Marginal Rate Average Rate*

$0 – $9,525 10% 10.0%

$9,526 - $38,700 12% 11.5%

$38,701 - $82,500 22% 17.1%

$82,501 - $157,500 24% 20.4%

$157,501 - $200,000 32% 22.8%

$200,001 - $500,000 35% 30.1%

$500,000+ 37%

25*Assumes taxable income equals top of the taxable income range

Rate Schedule - JointTaxable Income Marginal Rate Average Rate*

$0 – $19,050 10% 10.0%

$19,051 - $77,400 12% 11.5%

$77,401 - $165,000 22% 17.1%

$165,001 - $315,000 24% 20.4%

$315,001 - $400,000 32% 22.8%

$400,001 - $600,000 35% 26.9%

$600,000+ 37%

26*Assumes taxable income equals top of the taxable income range

Estates and Trusts

Taxable Income Marginal Rate Average Rate*

$0 – $2,550 10% 10.0%

$2,551 - $9,150 24% 20.1%

$9,151 - $12,500 35% 24.1%

$12,501+ 37%

27*Assumes taxable income equals top of the taxable income range

Children under 18 (“Kiddie Tax”)

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Taxable Income Marginal Rate Average Rate*

$0 – $2,550 10% 10.0%

$2,551 - $9,150 24% 20.1%

$9,151 - $12,500 35% 24.1%

$12,501+ 37%

*Assumes taxable income equals top of the taxable income range

Long-Term Capital Gains & Qualified Dividends

Single Joint Rate %

Up to $38,600 Up to $77,200 0%

$38,601 – 425,800 $77,201 – 479,400 15%

Over $425,800 Over $479,000 20%

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Medicare Premiums

2016 MAGI (Single) 2016 MAGI (Joint) Part B Part D

< $85,000 < $170,000 $134.00 $0

$85,001 - 107,000 $170,001 – 214,000 $187.50 $13.00

$107,001 – 133,500 $214,001 – 267,000 $267.90 $33.60

$133,501 – 160,000 $267,001 – 320,000 $348.30 $54.20

> $160,000 > $320,000 $428.60 $74.80

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Changes to Tax Deductions…

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• Medical

• Interest

• Taxes

• Charity

• Other Itemized

Standard Deduction

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2017

Single: $6,350

Joint: $12,700

2018

Single: $12,000

Joint: $24,000

Personal Exemption

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2017

$4,050 per person

2018

None

Itemized Deductions - Medical

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2017

10% of AGI

2018

7.5% of AGI

Unreimbursed Medical Expenses

Itemized Deductions - Interest

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Home Mortgage

Limit $750,000

Home Mortgage (Held prior to 12/31/17)

Limit $1,000,000

Home Equity Line of Credit (HELOC)

Not Deductible

Itemized Deductions - Taxes

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2017

No Limit

2018

$10,000 Maximum

State and Local Taxes (SALT)*

*Includes state and local, sales, real estate, and property taxes

Itemized Deductions - Charitable

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2017

50% of AGI

2018

60% of AGI

Cash and Stock Donations

Itemized Deductions - Other

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• Miscellaneous Deductions subject to the 2% AGI Limit will be eliminated for tax years 2018 through 2025.

• Examples:• Tax Preparation Expenses• Unreimbursed Employee Expenses• Investment Fees• Casualty and Theft Losses

Itemized Deductions - Phaseouts

• Phaseouts for itemized deductions have been eliminated for tax years 2018 through 2025.

• 2017 Phaseouts began at…

• Single - $261,500

• Joint - $313,800

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Presidential Disaster Losses

• For years 2016 and 2017

• Up to $100,000 total

• Can withdraw from 401k, 403b, or IRA with 10% penalty if under 50

• Can pay tax over 3 years

• Can recontribute funds within 3 years

• Can deduct losses in addition to standard deduction

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Child Tax Credit

Maximum AGI for Full Credit

AGI Where Credit Disappears

Single $200k $240k

Joint $400k $440k

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2017$1,000 per child

2018$2,000 per child

Alternative Minimum Tax (AMT) – Exemption*

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2017

Single - $54,300

Joint - $84,500

2018

Single - $70,300

Joint - $109,400

*Exemption is still subject to income phase outs.

529 Plans

Now, you can use up to $10,000/year for…

Elementary Schools

Secondary Schools

Private and Religious Schools

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Annual Gift Exclusion

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2017

Individual - $14,000

Joint - $28,000

2018

Individual - $15,000

Joint - $30,000

Estate Tax Exemption

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2017

Individual - $5.49M

Joint - $10.98M

2018

Individual - $11.20M

Joint - $22.40M

*Portable

Tax Strategies to Consider

• Contribute to Roth IRA via Traditional IRA

• Convert Traditional IRA funds to Roth IRA

• Net Unrealized Appreciation (NUA) transfers from 401(k)s

• Sell stock at 0% Long-Term Capital Gains rate• Single – Taxable Income < $38,600• Joint – Taxable Income < $77,200

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