How the Tax Cuts and Jobs Act will impact Hawaii residents
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How the Tax Cuts and Jobs Act will impact Hawaii residents

August 14, 2019


♪ Kelly: WELCOME BACK. TAX SEASON WILL BE WRAPPING UP SOON. A FEW MONTHS AGO A NEW LAW WAS PASSED. WHAT DOES THIS? WE HAVE TOM YAMACHIKA, PRESIDENT OF TAX FOUNDATION OF HAWAI’I. SO HAPPY TO HAVE YOU. THANK YOU FOR JOINING US. GLAD TO BY HERE. Kelly: TAX CUTS AND JOBS ACT, THIS IS THE FIRST I’VE HEARD OF IT. WHAT DOES IT MEAN? WHAT IS IT? IT’S A BIG CHANGE TO THE TAX LAW THAT HAPPENED AT THE END OF LAST YEAR. IT’S ONE OF THE BIG PIECES OF LEGISLATION THAT PRESIDENT TRUMP AND THE REPUBLICANS IN CONGRESS PUT THREW. IT MADE MASSIVE CHANGES IN HOW OUR TAX ARE CHAL CRATE — CAT — CALCULATED. Kelly: I HEARD ABOUT THE BIG CHANGES THAT TRUMP WAS BRINGING BUT I DIDN’T REALIZES WHAT IT WAS CUT. HOW IS IT GOING TO BE IMPACTING INDIVIDUALS? FOR MOST INDIVIDUALS, THEY’LL HAVE FEWER WRITEOFFS BECAUSE THAT’S PART OF WHAT THE TAX — IT MADE THE CODE SIMPLER BY LIMITING THE THINGS THAT PEOPLE HAD TO KEEP RECORDS FOR. AND CLAIMING UNDER TAX RETURN. BUT IN RETURN, THEY LOWED THE PERCENTAGE RATE. SO THE TAX THAT YOU PAY IS TAXABLE INCOME. AND THE PERCENTAGE WENT DOWN. THOSE TWO CHANGES, MOST PEOPLE ARE GOING TO BE A LITTLE BETTER OFF. ONE OF THE TAX FOUNDATION, THE NATIONAL ONE, THEY CALCULATED THAT AN AVERAGE MIDDLE CLASS PERSON IN HAWAI’I WILL GET EIGHT HUNDRED DOLLARS MORE BACK. Kelly:S. Kelly: THAT’S A POSITIVE THING. OKAY. SO WHAT ABOUT FOR NORMAL WORKING PEOPLE? FOR NORMAL WORKING PEOPLE, THE GOOD NEWS IS THAT THE STANDARD DEDUCTION IS DOUBLE. WHICH MEANS THAT YOU CAN WRITE OFF 12,000 INSTEAD OF 16,000 WITHOUT HAVING TO KEEP RECORDS AND RECEIPTS IN SHOE BOXES. Kelly: AND IS THAT GENERALLY THE ONE THAT MOST PEOPLE DO? THE STANDARD DEDUCTION? MOST WORKING PEOPLE COULD TAKE ADVANTAGE OF THAT. Kelly: THERE ARE DEFINITELY SOME BENEFITS, DEPENDING ON HOW YOU FEEL. WHAT ABOUT BUSINESS OWNERS? IS IT GOING TO BENEFIT THEM? A LOT OF BENEFITS ARE FOR BUSINESSES. CORPORATION TAX RATE, FOR EXAMPLE, WENT FROM 35% TO 21%, WHICH IS A BIG DROP. THERE IS A SIMILAR BENEFIT FOR PEOPLE WHO OWN BUSINESSES BUT ARE NOT IN A CORPORATION. SO THE WAY THAT WORKS IS PEOPLE WHO PAY INDIVIDUAL TAX RETURNS, THE TAX FOR BUSINESS OR PART OF THE TAXING BUSINESS, THEY GET A DEDUCTION. THE DEFAULT AMOUNT IS 20% OF THAT BUSINESS INCOME. Kelly: GOOD TO KNOW. IS THE STATE OF HAWAI’I, IS OUR INCOME TAX GOING TO CONFORM TO THE FEDERAL CHANGES? THERE ARE FEDERAL CHANGES. THERE ARE LOTS OF FEDERAL CHANGES. AND THAT’S WHAT THE LEGISLATURE IS CONSIDERING NOW.. THE LEGISLATURE IS IN SESSION. THIS TAX REFORM BILL IS ONE OF THE BILLS TO CONSIDER. THE LATEST DRAFT SAYS IT WILL PICK UP MOST OF THE CHANGES FOR BUSINESS. EXCEPT FOR THE RATE. THEY’RE GOING TO LEAVE THE RATE THE SAME. THEY ARE NOT GOING TO PICK UP A LOT OF CHANGES FOR INDIVIDUALS. FOR EXAMPLE, IF YOU WANT TO WRITE OFF MORE THAN $10,000 IN STATE TAXES OR WRITE OFF YOUR MORTGAGE INTEREST WHAT WE CALL THE 20% ITEMIZED DEDUCTIONS, YOU CAN DO THAT BUT ONLY ON YOUR STATE RETURN. WE CAN’T AFFECT WHAT CONGRESS DOES. Kelly: THAT MAKES SENSE. GOOD TO KNOW. IT WILL BE IMPACTING FOR SURE YOUR FEDERAL RETURNS BUT STATE ONLY PARTIALLY. AWESOME. AND FOR MORE, IF PEOPLE WANT TO GET MORE INFORMATION? WE HAVE OUR WEBSITE WITH ALL KINDS OF INFORMATION. TH HAWAI’I.ORG.

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