Big Changes and the 2018 Tax Law
If you listen to the news, you probably have heard very little about the tax law changes that will impact your 2018 tax filing. Whether the media chooses to report anything on this or not, I assure you The Tax Cuts and Jobs Act, passed in December 2017, will affect virtually every business and individual in 2018 and the years ahead.
Among other things, the new law changed tax rates and impacts the quarterly estimated tax payments that are required to be made during the year.
***Remember the last one for 2018 is due January 15th and there is still time to get the estimates closer to what will be your situation when filing.***
For many pass-through businesses – this includes any self-employed income, income from an S Corporation or partnership that you own, or even profit from rental properties – the law changes created a new 20-percent qualified business income deduction. This deduction allows some of your income to be taxed at ZERO percent!
Other deductions and credits have been changed as well, including revised depreciation methods and expanded options for expensing business property. Many business expenses are now eligible for 100% write off in the first year.
A lot of these changes are impacted by the type of business you operate, the entity you are using, and even the level of income that your business generates. Making sure that you can qualify for 20% of your business profit to be taxed at the ZERO tax rate is definitely worth making any adjustments needed before year end.
***If you need to review your current business situation to see if you qualify – there is still time, but it is almost too late to affect 2018 –but any needed changes now can impact all of 2019.***
Business interest is also limited starting with 2018 returns. Net operating losses starting in 2018 cannot be carried back to prior years and are limited to 80% of income when they are used.
This is starting to sound confusing! These kind of changes make it even more crucial that you call the office and ensure you don’t make missteps during the year that will COST you lot at tax time.
On the personal side- if you have children, many things have changed whether you have younger children still at home or college aged kids. The dependency exemption is gone but was replaced by a tax credit that can be even more valuable – if you plan properly!
College students open up all kinds of planning opportunities. How can the FAMILY maximize the education credits or how could I make my son or daughters college expenses be deductible? (HINT- you have to have some kind of business or self-employment income to make this one work!)
These are just some of the changes affecting the 2018 tax filing year. Every situation is different and not everyone is benefitting or being hurt by these changes. The important thing here from the personal or business perspective is to focus not on how much money you make, but how much you keep. These tax laws only help you if you know and apply the rules.