On the campaign trail, Donald Trump promised to reform the complex Tax Code, and now that he’s in office, some taxpayers are turning to their tax professionals for insight and advice about what to expect.
“Some [clients] asked on Nov. 9,” said Morris Armstrong, an Enrolled Agent and registered investment advisor at Armstrong Financial Strategies in Cheshire, Conn. “My clients are really wondering when [Trump] will put forth his plan, but then I have to explain to them that he first needs to get the key people to agree and then draft legislation, and then have the Senate come up with a similar version and then come up with something that all can agree on and that he feels will be best for the country.”
“I try to explain that their guess is as good as mine,” said preparer Andrew Piernock, of Piernock Accounting and Tax Services, in Philadelphia. “If anything happens, I’ll contact my clients by a newsletter explaining how any reforms may or may not affect them.”
Others aren’t hearing much: “No one, to be honest, is asking,” said Jeffrey Schneider, an EA in Port St. Lucie, Fla. “My clients are used to the talk of tax reform with nothing happening. We’re all just waiting – not unlike what happened after 2010.”
Of those who are hearing from clients, here’s what’s uppermost on their minds.
“A. ‘Are refundable tax credits going to be repealed?’ B. ‘Is head-of-household filing status going to be repealed?’” said John Dundon, an EA atTaxpayer Advocacy Services in Englewood, Colo. “C. ‘Will Obamacare be replaced after it is repealed?’ and D., ‘Should I consider incorporating?’ ”
Said Sharron Cirillo, an EA and principal accountant at SC Associates in Middletown, Del., “The concerns are more focused on health care and related costs and changes for our business clients. We have some questions coming in about how Trump’s plan, if implemented, would impact S corp income and other types of income. Personal clients haven’t started showing up yet, but I expect they will have similar questions. We’re doing our best to defer predictions at this point.”
Misconceptions abound. Said EA Andrew Stadler, of Terre Haute, Ind., “One [client] wanted to know if they could wait to file their 2016 tax return until after the new Trump tax law is passed, thinking they could use the new law on their 2016 return.”
“Although I haven’t met with many in-person yet, the perception is that change will happen fast,” said EA Laurie Ziegler at Sass Accounting, in Saukville, Wis. “I’d be surprised if tax law will change drastically for 2017.”
“Taxpayers need to realize that those extenders that were not made permanent as a result of the PATH Act technically went away as of Dec. 31 and will need to be extended or made permanent if they are to be in place for 2017,” she added. “Once again, we find ourselves at a place where it is very likely that the tax laws for 2017 won’t be known until the end of the year.”
“Unfortunately,” Connecticut’s Armstrong said, “many people think that the president creates laws from the get-go.”
In the pocket
“Clients are optimistic that the Donald Trump Republican Congress will be making vast tax law changes for the better,” said EA Terri Ryman of Southwest Tax & Accounting in Elkhart, Kan. “The overall opinion is that things are looking up and that life will be better with a businessman at the helm.”
“They’re expecting tax rates to go down and more money in their pockets,” Ryman added.