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Substantial Tax Reform Under Trump Plan

Wednesday, November 30, 2016

All of these proposed changes bring a combination of challenge and opportunity. The CPAs at Frost Dana Newman are well versed in the highly specialized area of tax planning for medical professionals, including locum tenens nationwide. Since these changes would impact more than your tax planning, but also your financial and estate planning, we can help you with that, too, with our trusted advisors. Please contact us at 702.878.4809 so we can be your resource. Your initial consultation with one of our CPAs is complimentary. Starting in January, then-President Trump will urge Congress to pass a number of changes to the U.S. Tax Code. In all, 12 plan provisions have been proposed, affecting individual income taxes, business income taxes and estate taxes.
Taxable Income (Single) Taxable Income (Married) Ordinary Income Tax Rate Capital Gain/Dividend Rate
$0-$37,500 $0-$75,000 12% 0%
$37,500-$112,500 $75,000-$225,000 25% 15%
Over $112,500 Over $225,000 33% 20%
  • Simplification by reducing the number of tax brackets from 7 to 3.
  • No changes to the existing tax rates for capital gains and dividends.
  • Increase in the standard deduction for single filers from $6,300 to $15,000 and from $12,600 to $30,000 for married couples. NOTE: Personal exemptions and head of household filing status would be eliminated.
  • Itemized deductions such as property taxes, state and local taxes, sales taxes, charitable contributions and home mortgage interest, will be capped at $100,000 for single filers and $200,000 for married couples.
  • Repeal of the 3.8% Obamacare tax on doctors’ personal investment income, whether from capital gains, rent, interest or dividends.
  • Repeal of the Alternative Minimum Tax (AMT).
  • Elimination of the corporate Alternative Minimum Tax (AMT).
  • Expansion of business tax breaks for manufacturing and payment of child care expenses for employees, including onsite daycare.
  • Lowering of the business tax rate from its top rate of 35% to 15%, though multiple corporate tax breaks would be eliminated. Retained profits would be taxed at a 15% rate for many businesses, including practices operating as LLCs, partnerships and Subchapter S corporations.
  • Untaxed corporate profits currently held offshore could be repatriated to the U.S. at a one-time tax rate of 10%.
  • Federal estate and gift taxes would be repealed.
  • Unrealized capital gains would be taxed at death for assets over $10,000,000.

What to do NOW, in 2016?

With a large number of the above provisions likely to be enacted, doctors have a genuine opportunity to save literally tens of thousands of dollars by acting before the end of 2016. Some examples:
  • Delay billing and collection efforts to defer practice income into 2017.
  • Defer some practice income into 2017 by closing your practice earlier in December to shift activity, and income, into 2017, wherein you should experience a lower tax rate.
  • Accelerate personal tax deductions into 2016 by altering the timing of your income tax, property tax and mortgage payments, as well as adjusting your mortgage payments.
  • Maximize your practice deductions in 2016.
Sources: and

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