Six Ways the 2018 Tax Reforms May Affect You
January 15, 2018
When you choose a CPA in San Antonio to do your taxes next year, you’re most likely going to see some positive changes as a result of the 2018 tax reform bill. The bill is expected to help most Americans pay lower taxes while encouraging businesses to expand and hire more people. Here are some of the changes that individuals and businesses can expect to see:
The standard deduction will nearly double. The standard deduction for individuals for the 2017 tax year is $6,350; for 2018 it will increase to $12,000. For couples, the deduction will increase from $12,700 to $24,000. After this year you may be better off taking the standard deduction rather than itemizing on your tax return.
New withholding tables are due to be released in January. The effects of the new rates may start showing up on paychecks in February. You may need to change your W-4 after the new guidelines come out.
The “marriage penalty” will be eliminated for all but the highest earners. New tax tables will ensure that for most taxpayers, the income limits for single people will be exactly half that of married couples. This should result in lower taxes for most middle-income households.
Most new assets can be fully expensed in the first year. During the next five years, businesses will be able to fully expense most new assets in the year they are bought. This applies to assets with an expected life of up to 20 years and will be gradually phased out after the five year period ends.
Taxes will be reduced on flow throughs. For many small business owners, including sole proprietorships and LLC’s, income flows through the business account to their personal tax returns. Starting in 2018 many business owners will be able to deduct 20% of their qualified business income and therefore pay taxes on just 80% of their pass-through income.
The cash method will be available to more businesses. The new tax bill will make the cash method available to any business with gross receipts within $25 million, including C corporations, partnerships with a C corporation partner and businesses with inventory on hand.
If you’re looking for a CPA in San Antonio to help you get the biggest advantage from the new tax law, contact Gonzales Group CPA.
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This post was written by Gonzales Group CPA