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New tax bill would change Marylanders' refunds and dues

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Posted at 2:02 PM, Nov 07, 2017
and last updated 2017-11-07 14:02:34-05

The new tax bill is already getting modified, after it was released Thursday, making tax workers nervous of the changes for their clients.

Richard Friedlander, a partner of Rosen, Sapperstein and Friedlander, Chartered, said depending on your circumstances the changes in the new tax bill could save or hurt you.

"In 2018 there's going to be a new rule book we believe, 100 percent sure, no," Friedlander said.

Monday night, a key House panel approved a new version of the bill, restoring tax exemptions for child care through work and implementing new requirements for tax credit for the middle class.

Friedlander explained the difference between a tax credit and exemption, "A $300 tax credit means you're getting back $300, so credit is dollar for dollar, an exemption is done times the tax rate."

Something that will help the middle class, the standard deduction nearly doubled, if you choose not to itemize your tax deductions.

"If you're single the standard deduction is raised to $12,000. If you're married it's $24,000, that will eliminate a lot of people, especially when these deductions are being not allowed, like the state and local income taxes, property taxes on one's residence limited to $10,000, home mortgage interest is also being limited," Friedlander also said any interest on a home mortgage balance higher than $500,000 is not deductible.

Another thing eliminated are medical exemptions.

"Which I personally think is really a mistake because if you have medical, you have a problem and the question is fairness," Friedlander said.

Friedlander is also concerned about Maryland's economy taking a hit under the new tax bill, "The question becomes do high earners, people that can afford to, suddenly relocate, it's happened over the past years because of Maryland being a high-income tax state."

Income tax brackets would also change under the proposal, from seven to five. This is part of President Donald Trump's attempt to simplify the current tax system.

The highest bracket would still pay 39% and would start at 12% for anyone earning $0 - $45,000.

One other exemption dropped in the bill, employee business expenses.

Congress hopes to get a finished proposal on Mr. Trump's desk by Christmas.