Brian Millar, Partner at Millar Grossbard Advisors, talks taxes and what the recent tax changes mean to you and your business.
Please excuse any typos in this hasty transcript.
Jay Curry: Hello Texas. Welcome to Texas Business Radio. We’re going to start off right off with a very interesting and informative section on the new tax laws, so you’re going to want to stay for that. Before we get started, let me let you know that Matt Register didn’t make this first segment, but he’s going to be back for the next one.
Also, that I’m Jay Curry, your host. We’re going to have Miller Grossbard partner for taxation, Brian Miller in, but before we get started, I’d like to ask you to sit back and relax, put your pencils down, you don’t need any of that, you can go to Texas Business Radio afterwards. You can see the whole program again, you can slow it down, you can see all of our guests. Everything is out at Texas Business Radio, that’s where you want to go.
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Also, if you like to Twitter, we monitor #TBR as in Texas Business Radio. #TBR. All right, we got a great segment coming up. This is all about the new tax law. Unless you’ve been vacationing on Mars, you know that we’ve got a new tax law. Unfortunately, most of us don’t know what it says, so we’ve asked Brian Miller, partner at Miller Grossbard, whose specialty is taxation, and he’s going to tell us a little bit about it. Thanks for joining us, Brian.
Brian Miller: Thanks Jay, thanks for having me.
Jay Curry: Let’s start off a little bit. Give us a little background of Miller Grossbard, and then we’ll get into the taxes. What are you guys all about?
Brian Miller: So Miller Grossbard is a business advisory CPA firm. We specialize in helping entrepreneurs and privately held businesses, high net worth individuals, maximize what they keep versus what they’re paying, and we help in all aspects of their business. We handle the tax side, the insurance side, and we have a consulting group as well. If you’re a business owner and you need help, Miller Grossbard ought to be your first call.
Jay Curry: It’s kind of a one-stop-shop, right?
Brian Miller: We try to be like that for our clients, because our clients want a quarterback to handle everything they need, and they give Miller Grossbard a call and we can help them with their needs.
Jay Curry: Got to also bring up that it’s not just a regular CPA accounting firm. A couple years, I think in 2016, you won the 2016 … what? Inside Public Accounting …
Brian Miller: Inside Public Accounting ranks Miller Grossbard as Best of the Best. Number one managed firm out of 500 non-national firms. It was a big award. We’re happy to do it. We keep making Best of the Best each year, which puts us in the top 50, but we’re always striving to be number one.
Jay Curry: Wow, and you made it. Congratulations on that. Now, let’s get to the tax law. Everybody’s dying to find out what the heck. I’d like to focus this segment if we could, on the individual tax implications, and we’ll bring in someone else to talk about the corporate. So Brian, tell us what we can expect from the individual change, what’s going on?
Brian Miller: I think most people will find a benefit in this new tax law. It came in right before Christmas, so I think Congress thought they were giving everybody a big Christmas present this year with the tax bill. It’s going to help a lot. It’s going to hurt a couple.
We’re lucky we live here in Texas, so we’re not impacted as negatively as our friends in California and New York are by this, but I think most people will benefit from this new bill with reduced tax rates and some other benefits that they put in there.
Jay Curry: So the reason they’re not going to is simply because their state taxes are no longer deductible. Other than that, everything’s the same.
Brian Miller: That’s correct.
Jay Curry: The issue there is, actually the states may learn how to manage their money, which wouldn’t be a bad thing.
Brian Miller: It wouldn’t be a bad thing, but I’m not counting on that. We’ll have to see how that works.
Jay Curry: We’re here in Texas, we get the big bang because we don’t have that. What can we expect? How about itemized deductions, what’s going on there?
Brian Miller: Itemized deductions, what they’ve tried to do is try to simplify the tax bill. Itemized deductions got a lot of changes for people that itemized. One of the new things is mortgage interest. Prior to 12/15/17, if you had a mortgage that was a million dollars, you could deduct the full interest on that million. If you get a new mortgage after that date, you’re not limited to only $750,000 of debt that you can pay interest on.
That kind of hurts the home buyers that are buying the large homes and putting a million dollars on it. They’re going to lose a little bit of that interest that they used to get to deduct.
Jay Curry: Did I hear that right? If you have a mortgage now it’s one right, but if you get a new one it’s going to be …
Brian Miller: That’s correct. If you have a mortgage at a million dollars before December 15th, you’re able to deduct the full interest on that million.
Jay Curry: For as long as you own the house?
Brian Miller: For as long as you own that house.
Jay Curry: Or they change the tax laws?
Brian Miller: For as long as you own that house.
Jay Curry: Okay.
Brian Miller: Once you get a new mortgage, any mortgages created after 12/15, you can only deduct the interest on $750,000 of debt. So for example, if you bought a new home, you had a million and a half mortgage, and you paid $50,000 of interest, you’d only get to deduct $25,000. You’d only get to deduct half, because 750 is half of a million and a half.
Jay Curry: Got you. What else?
Brian Miller: Property tax and sales tax, that’s something that’s actually going to hurt people this year. It used to be that you could deduct your property taxes and your sales taxes up to an unlimited number, depending on what your sales and property taxes were.
However, one of the big changes was that’s now limited to $10,000. For clients and individual tax payers that are used to paying $25,000, $30,000 a year on property and sales taxes, they’re not limited to that $10,000 number.
Jay Curry: That could be pretty significant, even here in Texas. We are pretty heavy on property taxes here.
Brian Miller: That is, and that’s one of the things I think most people got caught in the deal, and like you said, people in New York and California, and people that have big income taxes in other states, they used to include their state income tax in that number, so now they’re limited to $10,000 also.
Jay Curry: So those states are going to get a double whamo again, right?
Brian Miller: Exactly.
Jay Curry: Wow. All right, how about medical? What’s going on in the medical? Any changes there?
Brian Miller: Medical, there was a change. That was something that some of the congressmen fought a little bit harder for. Currently, you can deduct 7.5% … excuse me, you can deduct medical that’s in excess of 7.5% of your income. It changes to in excess of 10%.
A couple of senators and congressmen said, “Hey, we really need to protect the people that have high medical bills, so we’re going to keep it at 7.5% for ’18. We’ll let people know that it’s coming and in ’19, you only get to deduct in excess of 10%.”
I know you’re thinking, “Brian, you said this was a tax bill that was going to help people, and all we’re talking about is the negatives on these things.” One of the issues though, is people are losing some of these itemized deductions, but how I think they tried to help and simply this tax bill for a lot of people is they took the standard deduction, and they doubled it.
For people that were losing their property taxes, or losing some of their mortgage interest, they may have just been over the old number, which was $12,000, so that’s why they itemized. Now they’re saying, “Hey, we’re going to bump that all the way up to 24,000.” I think for a lot of people around the country, that increase in that deduction is really going to be a benefit to them.
Jay Curry: Okay, so in the past, you could deduct if you were I assume married, so two of you is 12,000.
Brian Miller: Correct.
Jay Curry: They’ve doubled that to 24,000. Basically, your first $24,000 of income is tax free. Is that right?
Brian Miller: Well, not exactly, but-
Jay Curry: No? Of course it couldn’t be the government bill, right?
Brian Miller: It’s not that simple, but that’s a very simplistic way of kind of looking at it. Everybody now that’s married filing joint will get 24,000. For the tax payers that had … they might have had a mortgage, they might have had some interest, they might have had some charitable, and maybe they were over 12, maybe they had $15,000 of deductions, they used to get 15. Now those tax payers are going to be helped, because they can ignore all the itemized and just go straight to the standard, and they get that increase of 24,000. I do think that’s where there is going to be some help for a lot of people.
Jay Curry: Okay. You said in the break that in general, the rights went down about … there’s different brackets, but generally they went down 2%. If you were paying 38, you would pay 36. If you were paying 15, you’re now paying 13, right?
Brian Miller: That’s correct, so they expanded all of the brackets. The top bracket went from 39.6 down to 37%.
Jay Curry: Okay, so you got a benefit there, you got a benefit with the deductions, and they’re cleaning the board and trying to make it simple. All of that was accomplished. Not bad.
Brian Miller: It’s not bad, and I think a lot of people will see that that bracket change really does impact them, that all of the brackets change. Some of the brackets even got larger, so it used to be some of the income was taxed at a certain rate up to 15,000 and now they’ve moved all of those down. I do think regardless of everything, that’s where most people are going to get the benefit is in the reduced tax rates.
Jay Curry: Well, this is great. Thank you, Brian, for coming on and giving us this. If somebody wants to learn more about it, how do they get ahold of you?
Brian Miller: They can get ahold of us a number of ways. Our website’s a great place to learn about the firm and what we’re doing. Our website is www.mgallp.com, or they can give us a call at 713-622-3960.
Jay Curry: All right folks, there you have it. Brian, thank you so much for joining us.
Brian Miller: Pleased Jay, thanks for having me.
Jay Curry: This has been Jay Curry. We’re going to have to take a break, because we have taxes to pay, and we need to help our sponsors pass a few bills. We’re going to take a break folks. Don’t go anywhere, we’re going to be right back.
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Jay W. Curry
Along with hosting “Texas Business Radio”, Jay is a Professional Certified Coach and Master Chair facilitating four Houston-based Vistage peer groups. In addition to being a best selling non-fiction author, the 2015 release of his award winning novel, Nixon and Dovey: the Legend Returns, adds novelist to his title. Jay holds a BS in Mathematics from Oklahoma State and an MS in Computer Science from Kansas State. You can learn more about Jay HERE.