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Redrick Terry:
It is now time 4 Your Money. We’re joined by David Nelson, CEO of NelsonCorp Wealth Management. David, welcome back.
David Nelson:
Thank you, thank you, appreciate it.
Redrick Terry:
Of course. We’re talking about Treasury Department recently clarifying some rules as they relate to the new tax rules. Tell us some of those details.
David Nelson:
It’s exciting stuff. Hate to say it, but we got to go through it. It’s important stuff. People talk about SALT. They don’t know what it has to do with … We got a great slide here to try to hopefully make some sense out of this. We’re looking at it. It primarily focuses on state income tax and real estate taxes. We’ve used a couple examples here. Said somebody 15,000 in state income tax, real estate. They paid 8,500 there, so we’ve got SALT total of 23,500. Well, with the SALT reduction, 13,000 goes away. That’s going to be tossed out. That individual, the max is 10,000 as far as in that area.
David Nelson:
Then we look at mortgage interest, and we look at itemized deductions. Again, what we find is that it’s going to exceed as far as the standard deduction. The standard deduction really when it’s said and done, this stuff comes into play, impacts people in a pretty significant way that are in Iowa, Illinois. The bottom line is the 24,000 standard deduction is probably going to be the ticket for most individuals.
Redrick Terry:
Yeah, you mentioned people specifically in those high tax states. How do we especially in Iowa and Illinois fair in this?
David Nelson:
Yeah, it’s what we care about locally here. Don’t we? Clearly Iowa and Illinois are in the top 20. Illinois finds itself in the top 10, so it’s a big, big item. What Illinois has been trying to do and Iowa’s kind of had something already in place as far as to help individuals as far as get some tax benefits. Many states were actually looking at setting this stuff up as far as almost as a charitable deduction as far as to try to circumvent as far as the real estate tax issue. It’s not going to fly now as far as what we just clarified so we’re pretty much back to the drawing board as far as individuals trying to come up with some answers as far as to make this less impactful as far as in their particular situation.
Redrick Terry:
Certainly. Talking about tax planning, what does this mean moving forward?
David Nelson:
That’s a good point. Primarily it’s three areas that really come into focus, and that’s Social Security. Social Security is treated favorably as far as with this. Retirement income coming from retirement plans, IRAs, things of that nature is going to be very favorable as far as going forward. The last one is Ross. We talk about Ross all the time as far as here. I’ve been a big of him. I continually tell people as far as, and I got to get my disclaimers in here. It isn’t appropriate for everybody, but they’re really, really good, and they’ll really, really shine as far as with this new tax. A lot of clarification that we have here. People should focus on the Roth.
Redrick Terry:
Certainly. You mentioned it earlier. Important, important stuff.
David Nelson:
Yes. It really is.
Redrick Terry:
Yeah, we’re glad you’re here for us.
David Nelson:
Thanks, Redrick.
Redrick Terry:
David, thanks so much. If you missed any of our conversation, we’ll make it available for you on our website, that is ourquadcities.com.
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