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HAPPY CHANUKAH
The Finest in
Men's Fashion
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A Happy & Healthy
Hanuka To All
Our Friends, Relatives
And Customers
Jewish Community Council
We don't know the date. We don't know the time.
But we know we'll be there!
A sea of demonstrators representing
our brothers and sisters in the Soviet
Union must greet Soviet General
Secretary Gorbachev when he comes
to the United States for Summit II. We
must tell him:
"Let Our People Go."
Soviet Jewish Prisoner of Conscience
Anatoly Shcharansky was released
from the Soviet Union because
people demonstrated that they cared.
Won't you join us in Washington to
show Gorbachev we care?
Please sign and return the form below
so we may send you details of this
major rally in Washington when the
date for Summit II has been set.
Return to:
Summit II Task Force
163 Madison Ave.
Detroit, Michigan 48226
Tax Reform Act
Changes, Tips
2823 Coolidge, Berkley
543-3505
BIRMINGHAM
FLINT
Mikhail Gorbachev will be in
Washington, D.C. sometime during
the next few months.
FINANCE
Berkley Health Foods
NATIONAL MOBILIZATION FOR SOVIET JEWS
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SINGLE
ALAILAN's
SOUTHFIELD
WEST BLOOMFIELD
Ttopmr.07,-,la
Please Print
Yes, I will be there to greet Gorbachev.
Let me know when this important meeting
will take place.
Name
Address
City/State/Zip
OO
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86 Friday, December 26, 1986 THE DETROIT JEWISH NEWS
JAMES D. GREY
The Tax Reform Act of 1986
affects nearly every taxpayer,
whether single, separated,
head of household or married.
This article highlights the tax
law changes that will affect in-
dividual taxpayers beginning
in 1987, as well as offer "last
minute" tax tips and sugges-
tions for the balance of 1986.
Tax reform legislation
changed nearly every area of
taxation, including the tax
rates, exemptions, itemized
deductions, IRA contributions,
capital gains and tax shelters.
Among the most sweeping
changes made by the Tax Re-
form Act of 1986 is the reduc-
tion in the number of tax brac-
kets for individuals,from 15 in
1986 to only two in 1988. The
act also reduces the top tax rate
from the current 50 percent to
28 percent in 1988.
The act provides for phasing
in the new tax rates. Thus, the
tax rate for 1987 is actually a
blend of the old and the new
rates.
The act increases the
amount of the current personal
exemption from $1,080 to
$1,900 in 1987, $1,950 in 1988
and $2,000 in 1989. Also be-
ginning in 1987, a taxpayer
who can be claimed as a xlepen-
dent of another taxpayer's re-
turn may not claim a personal
exemption for himself on his
own tax return.
What does this new tax law
do for the single taxpayer? As-
sume a single taxpayer has
$12,000 of salary income, $100
of interest income, no IRA, no
charitable contributions and
no itemized deductions. The
federal tax for 1986 is $1,197
(about 10 percent of gross in-
come); the tax for 1987 is
$1,077 (about 9 percent of gross
income, but about 10 percent
less than the 1986 tax); the tax
for 1988 is $1,072. The tax for
1988 is $1,072. The federal in-
come tax decreases slightly
each year.
A single taxpayer with taxa-
ble income of $110,000 will pay
federal income tax of $41,981
in 1986 (50 percent marginal
tax bracket), $36,314 in 1987
and $31,346 in 1988 (28 per-
cent of taxable income plus the
personal exemption of $1,950.
The decrease in tax from 1986
to 1988 is 25 percent.
Taxpayers will no longer be
able to use income averaging to
compute their tax liability, be-
ginning with the 1987 tax
year.
The deduction for consumer
James D. Grey, C.P.A., is a
partner in the firm of Gross,
Bornstein, Grey and Co., P.C.,
in Birmingham.
interest, such as interest on a
personal auto loan or credit
card, will be phased out over a
five-year period.
The tax act retains the de-
duction for mortgage interest,
but only for the taxpayer's
principal and a secondary resi-
dence. Moreover, the deduction
is limited to interest on inde-
btedness up to the purchase
price of the property plus the
cost of any improvements. The
interest on additional inde-
btedness may be deductible if
the debt is incurred for- educa-
tional or medical expenses.
Observation: Taxpayers
may find - it advantageous to
obtain a higher mortgage on
their homes to replace con-
sumer debt, for which the
interest deduction is phased
out.
The act repeals the itemized
deduction for state and local
sales taxes beginning with the
1987 tax year.
Planning tip: consider ac-
celerating major purchases be-
fore the end of 1986 in order to
obtain the benefit of the sales
tax deduction for such items as
an automobile, boat or
airplane.
State income taxes, as well
as local property taxes, are still
fully deductible as itemized
deductions under the act.
The act raises the floor for
deductible medical expenses to
the amount over 7.5 percent of
adjusted gross income, begin-
ning with the 1987 tax year.
Presently unreimbursed medi-
cal expenses over 5 percent of
adjusted gross income are de-
ductible.
Taxpayers may no longer
deduct a non-business casualty
loss that is covered by insur-
ance but for which they choose
not to file a claim. Beginning in
1987, no deduction will be
allowed unless a timely insur-
ance claim is filed.
Only the aggregate amount
in excess of 2 percent of ad-
justed gross income is de-
ductible, beginning with the
1987 tax year. These de-
ductions include unreim-
bursed employee travel costs,
union dues, business periodi-
cals, tax preparation fees, in-
vestment advisory fees, safe
deposit box rental, uniforms
and job-related education ex-
penses.
The act still allows tax-
payers to avoid estimated tax
penalties if they pay 100 per-
cent of.the previous year's tax
liability during the current
year. However, the act mod-
ifies the alternative basis for
avoiding the estimated tax
penalty. Beginning in 1987,
the required estimated tax
payment is increased from 80