Tax Cuts Not Just for Big Business

As you may have heard, the 2017 Tax Cuts and Jobs Act is the biggest change to tax laws in 31 years. And while "Big" business is thrilled to see their corporate tax rate cut for 2018, there are provisions for the small guys too!

The following are highlights of the 2017 Tax Cuts and Jobs Act:

For tax years beginning in 2018 and through 2025 Congress has come up with a new 20% Qualified Business Income Deduction. If your business income as an individual is for example $100,000, you would only pay Federal taxes on $80,000! The threshold for individuals is $157,500 and $315,000 for married filing joint taxpayers.

The estate tax exclusion amount has been doubled to $11.9 million for individuals or $22.36 million for married couples filing jointly. Now is the time to get your rich uncle to his tax advisor (me of course) to arrange planned gifting for 2018.

Bonus depreciation is now at 100%. What does this mean? This means you can purchase assets that you may capitalize for your books, but that you can expense for your tax return. What propoperty qualifies? Personal property used for business purposes that remains useful for 20 years or less does qualify. That includes cars, computers, software, machinery, equipment, office furniture and more. Do you need a new van for your catering business or a new computer for your flower shop? Purchase these items prior to year end to lower your 2018 tax liability.

Are itemized deductions eliminated? No you can take the higher of the itemized or standard deduction. The tax reform bill nearly doubled the Standard Deduction from $12,700 to $24,000 for married couples filing jointly (and from $6,350 to $12,000 for single filers).

Retroactive tax refunds are still available! If you paid taxes in 2017, 2016, 2015, you can get a 3-year review of your tax returns to look for missed tax savings. If you’re one of the 93% of business owners who paid too much in taxes, you qualify for a retroactive tax refund. This law was not changed in the tax reform bill, I can assist you in a review of prior year returns.

Now is the time to plan for 2018 tax returns to be filed in 2018. January 1, 2019 is too late! As humans we don't plan to fail, what we do is fail to plan. Take this opportunity to set your business and yourself up for success, contact me!