While the new tax reform will not affect your 2017 tax filing, it may affect some of the choices you make throughout the year. Depending on if you are filing as an individual filer or a business may change what help you need from our accountant.
Complicated Aspects Of The Tax Reform For Individual Filers
Many of the changes that came about during the tax reform were aimed at individual filers. While these changes are not permanent and are slated to end in 2025, they will affect your filing for the next handful of years. Below are some of the major changes which may affect you enough that you need to talk to our accountant to understand the full effects on your personal taxes.
Personal exemptions are gone. Your personal exemptions were deductions which allowed you to exempt some of your income. After they were applied, the IRS only taxed the remaining income. However, with the tax code change, you can no longer make these personal deductions.
The standard deduction has nearly doubled. Perhaps to balance the lack of the personal exemptions, the standard deduction for single filers, married joint filing, and head of household has nearly doubled. This move has made it less appealing to file an itemized tax return, though it will depend on your personal circumstances.
For more individual filer changes, be sure to check out our breakdown on the Trump tax reform.
Navigating Business And Corporate Tax Changes
There were not many changes to business and corporate taxes but the changes which occurred were impactful. A couple may require you to consult with our accountant to fully understand the ramifications of the change.
Pass-through business owners have a new tax break. If you own a pass-through business which you draw a salary, you will be allowed to take 20% out as a deduction. There are some stringent rules tied to this break, so you should definitely consult with our accountant to understand the full impact on your income and taxes.
U.S. companies earning overseas have new taxes. Previously, U.S. companies which earned money in foreign countries were not taxed on those earning until they were brought back to the U.S. The tax reform has changed it so that they are all required to pay 15.5% on their cash assets and 8% on all non-cash assets.
If you feel concerned about the new tax reform and are wondering how they will affect you in the next tax year, be sure to contact us. Our accountant is more than willing to walk you through the changes and help you understand what you need to know.
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