The tax reform plan released by the White House yesterday might look pretty good to Californians.
It's supposed to cut taxes for almost everybody. But, some provisions of the plan may mean some of us, or most of us, will end up paying MORE taxes.
It's times like this when we all need a financial advisor. And we've got one. Our regular Take Two contributor, Delia Fernandez. She broke down the big takeaways from the White House's plan to overhaul the tax code and how it will affect folks in the Golden state.
Doing away with the deduction for state and local taxes
"Well, this means that right now in our federal income tax return we can deduct the income taxes we pay to the state or if we have local taxes. You know, we're a high tax state and in California, a lot of people are going to be sorry to see that deduction go away so we're not going to like that.
...It means we can be lowering our taxable income by thousands of dollars and they're taking that away from us. We'll pay more taxes."
Doubling the standard deduction: Good news for married couples filing jointly
"Married couples filing jointly right now have a standard deduction of about $12,500 this year and it would double to $25,000. You know, for some people who are thinking about buying a house only for the tax deduction, this could be really easy. They can stay renting, they don't have to itemize taxes, it could make tax preparation easier for everybody."
Getting rid of the estate tax
"The estate tax affects how much money we can give away either at our death or during our lifetime. This affects people who have $5.5 million or more to giveaway as an individual...
Frankly, it's just not a lot my clients...it's more narrow. The big winners are obviously those people with a lot of money and somebody who wants to give it to them."
There's still a lot we don't know
"We just don't have enough detail. The information that they handed out yesterday was one sheet of paper with bullet points on it. We know some of the things that they've said in the past, so we have to listen very carefully to what it means for us.
...here's what we should feel good about, our elected officials are going to hear from us if these tax breaks are going to hurt us. And we have a midterm election coming in 2018. So, those election officials know what we care about but we need to tell them and we need to be firm with that and I think that all of this is going to work out.
Obviously, the real estate industry is going to be concerned, people who own homes who get a big property tax deduction are going to be concerned and we're kind of suspecting that this plan is going to be better for the very wealthy than it is for the rest of us and the rest of us need to be sure to vote and tell our elected officials how we feel."
To listen to the full segment, click the blue play button above.