A Brief Summary Of Current Tax Issues – 22nd March 2023

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A Brief Summary Of Current Tax Issues – 22nd March 2023

A lot of the changes that the Tax Cuts and Jobs Act (TCJA) makes for individuals are only temporary and are supposed to end after 2025. However, some are tax code provisions that remain in effect.

The Tax Cuts and Jobs Act (TCJA) will expire after 2025, and it contains several temporary changes for individuals. However, some are tax code provisions that remain in effect.

For kids, use the 529 plan. In most cases, you can set up a Section 529 plan to help a beneficiary, like your child, pay for qualified educational expenses while they attend college or graduate school. The withdrawals are not subject to taxation. However, the account need not exclusively serve higher education. The TCJA allows the plan to cover up to $10,000 in tuition for a child attending a private or religious school in grades K-12.

Keep track of alimony. Before the TCJA, the payor of support was permitted to deduct the installments under a division or separation order, while the beneficiary needed to report the installments as available pay. Payors no longer have access to the deduction, and recipients of alimony no longer have to pay taxes on it. Payments under pre-2019 arrangements remain deductible for payors and accessible to recipients.

You cannot reverse a conversion. When converting a traditional IRA to a Roth IRA, the individual must pay tax on the value of the assets transferred on the conversion date. However, in the past, you could “recharacterize” the Roth back into a traditional IRA at the time of your tax return if the assets’ value decreased following the conversion or if you otherwise changed your mind. It seemed as though the conversion had never taken place. Unfortunately, after 2017, this option will no longer be available.

The tax laws are very complex. Our short blog articles can only partially cover all the rules and nuances. Your specific facts may hold various opportunities and possible risks that only trained, and highly qualified tax specialists can spot. We encourage you to find such help, rather than trying to figure it all out alone. Consider trying the IfindTaxPro marketplace by posting your project and signing up here. 

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[…] A lot of the changes that the Tax Cuts and Jobs Act (TCJA) makes for individuals are only temporary and are supposed to end after 2025.  […]

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