Chinese Residents in US Brace for GOP Tax Impact
By Yaoran Yu
Global Times
2018/1/4 23:23:39
The GOP tax package cleared its final Congressional hurdle on Wednesday after winning House approval where it was then delivered to the White House and signed by President Donald Trump on December 22.
US media said the measure was one of the most "sweeping overhauls" of the country's tax system in 30 years.
Across the US, Chinese taxpayers are wondering what kind of household budget adjustments they will need to make for 2018.
Trump said the bill would be a "big beautiful tax cut for Christmas," promising Americans lower taxes and a brighter future for the American economy, but the Chinese typically do not celebrate the holiday, leaving many questioning the cause for celebration.
Senator Bernie Sanders refuted Trump's enthusiasm and said the so-called tax reform was really a "great victory" for billionaires and a disaster for the American people.
It could be a double-edged sword for America's Chinese taxpayers and business owners. Planning yearly family budgets and expenses could provide opportunities for some to reap financial gains with less money leaving their pockets.
Deduction concerns
Personal income tax has always been a major concern with Chinese immigrants.
Eric Zhang, a renowned CPA and tax specialist based in California, explained that the standard deduction will increase dramatically from $6,350 to $12,000 for those who file individually, while married households who file jointly can expect the figure to reach $24,000.
But the new bill could eliminate most itemized and SALT (State and Local Tax) deductions. SALT deductions include state income tax, property tax, personal property tax and sales taxes, with the ceiling set at $10,000.
Zhang said this would be a blow for middle-class families and homeowners with high itemized deductions.
Child tax credit and healthcare issue
According to the tenets of the new bill, households with children under the age of 17 and who earn less than $400,000 are eligible for a $2,000 tax credit per child.
"This is good news for lower and middle-class families," Zhang said. The new tax plan offers a maximum $1,400 refundable credit for each child. And for filers with dependents who are not qualified children may be able to claim $500 nonrefundable credit per dependent."
The GOP bill will also see the end of Obamacare in 2019. Zhang said this particular item will create new challenges within the healthcare market.
Derek Tung, a renowned CPA and tax attorney based in California, said that both individuals and businesses will benefit from the elimination of Obamacare. For those who are young and healthy, insurance spending may drop. Corporations will benefit as they will be exempt from healthcare expenses, and it will increase profit margins to some extent.
But Tung warned that the absence of healthcare subsidies would place elderly family members and children at risk.
"Families with elderly members and children may have to pay for health insurance on their own which could cost hundreds or maybe more than a $1,000 a month. It will be more of a financial burden on families from lower income brackets," Tung said.
Big break for big business
Business tax reform was a major focus, and the highest corporate tax rate went down from 35 percent to 21 percent.
"This is a favorable policy for American businesses. Trump's new tax bill will stimulate investment willingness and business surplus. Large companies will emerge as the biggest winners," Zhang pointed out.
Kevin Wang, vice president of the US Chinese Chamber of Commerce, explained many Chinese who invest in S corporations (small businesses) may benefit from the new tax bill. The new tax bill allows for a 20 percent tax deduction on income from pass-through entities for married filers whose taxable income is
below $315,000 and single filers whose taxable income is below $175,000.
"The new tax law tends to be more beneficial to the richest class and big corporations, although some of its tax reforms like child tax credit can be friendly to others," Zhang concluded.
Global Times
2018/1/4 23:23:39
The GOP tax package cleared its final Congressional hurdle on Wednesday after winning House approval where it was then delivered to the White House and signed by President Donald Trump on December 22.
US media said the measure was one of the most "sweeping overhauls" of the country's tax system in 30 years.
Across the US, Chinese taxpayers are wondering what kind of household budget adjustments they will need to make for 2018.
Trump said the bill would be a "big beautiful tax cut for Christmas," promising Americans lower taxes and a brighter future for the American economy, but the Chinese typically do not celebrate the holiday, leaving many questioning the cause for celebration.
Senator Bernie Sanders refuted Trump's enthusiasm and said the so-called tax reform was really a "great victory" for billionaires and a disaster for the American people.
It could be a double-edged sword for America's Chinese taxpayers and business owners. Planning yearly family budgets and expenses could provide opportunities for some to reap financial gains with less money leaving their pockets.
Deduction concerns
Personal income tax has always been a major concern with Chinese immigrants.
Eric Zhang, a renowned CPA and tax specialist based in California, explained that the standard deduction will increase dramatically from $6,350 to $12,000 for those who file individually, while married households who file jointly can expect the figure to reach $24,000.
But the new bill could eliminate most itemized and SALT (State and Local Tax) deductions. SALT deductions include state income tax, property tax, personal property tax and sales taxes, with the ceiling set at $10,000.
Zhang said this would be a blow for middle-class families and homeowners with high itemized deductions.
Child tax credit and healthcare issue
According to the tenets of the new bill, households with children under the age of 17 and who earn less than $400,000 are eligible for a $2,000 tax credit per child.
"This is good news for lower and middle-class families," Zhang said. The new tax plan offers a maximum $1,400 refundable credit for each child. And for filers with dependents who are not qualified children may be able to claim $500 nonrefundable credit per dependent."
The GOP bill will also see the end of Obamacare in 2019. Zhang said this particular item will create new challenges within the healthcare market.
Derek Tung, a renowned CPA and tax attorney based in California, said that both individuals and businesses will benefit from the elimination of Obamacare. For those who are young and healthy, insurance spending may drop. Corporations will benefit as they will be exempt from healthcare expenses, and it will increase profit margins to some extent.
But Tung warned that the absence of healthcare subsidies would place elderly family members and children at risk.
"Families with elderly members and children may have to pay for health insurance on their own which could cost hundreds or maybe more than a $1,000 a month. It will be more of a financial burden on families from lower income brackets," Tung said.
Big break for big business
Business tax reform was a major focus, and the highest corporate tax rate went down from 35 percent to 21 percent.
"This is a favorable policy for American businesses. Trump's new tax bill will stimulate investment willingness and business surplus. Large companies will emerge as the biggest winners," Zhang pointed out.
Kevin Wang, vice president of the US Chinese Chamber of Commerce, explained many Chinese who invest in S corporations (small businesses) may benefit from the new tax bill. The new tax bill allows for a 20 percent tax deduction on income from pass-through entities for married filers whose taxable income is
below $315,000 and single filers whose taxable income is below $175,000.
"The new tax law tends to be more beneficial to the richest class and big corporations, although some of its tax reforms like child tax credit can be friendly to others," Zhang concluded.
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