With every new presidential administration, there will be changes to tax policy. While President-elect Donald Trump proposed that tax cuts will take place, it's still unclear what the tax consequences of any cuts will be.
It's likely that any actual tax cut will reduce the value of deductions and exemptions. The most likely proposals Trump will implement would reduce or eliminate certain itemized deductions. Also, many tax advisers suggest that taxpayers make charitable deductions now as such deductions could soon go away.
While negatively impacting itemized deductions, these proposals would increase the standard deduction that taxpayers already use. Donald Trump's proposal would increase the standard deduction from $6,300 to $15,000 for most single tax-filers, and from $12,600 to $30,000 for married couples.
Currently, only about 30 percent of tax filers actually itemize their deductions. Unsurprisingly, those that itemize deductions the most and take advantage of the highest deductions are individuals with higher incomes. This does not necessarily apply to all high-income earners, however. Some high earners pay for homes in one lump sum or make charitable contributions in a different manner. This may make them ineligible for certain deductions.
Under changing circumstances, it may be a good idea for taxpayers to seek the guidance of experienced tax attorneys. This is especially true whenever questions regarding the taking of certain tax exemptions arise. Mistakes made will only draw attention upon yourself and lead to a possible tax audit. Of course, it is also always good to have an advocate on your side if an actual audit takes place.