Well, Congress has made it official. The Tax Cuts and Jobs Act narrowly passed the Senate on December 20th, and now it’s on us to deal with some pretty dramatic changes. Despite cries to simplify the tax code—and claims that this tax overhaul would do so—it probably comes as no surprise that the newly amended tax code is about as enigmatic as before.
Now that all the nips, tucks, and negotiations the bill endured as it bounced back and forth between the House and Senate are said and done, you might benefit from this tax reform cheat sheet from the Tax Foundation. It outlines what’s changed in (mostly) plain English.
WHAT THE TAX CUT AND JOBS ACT MEANS FOR YOU
These changes take effect for the 2018 tax year—you have a full year before dealing with the changes directly on your individual tax returns. However, given the many and complex changes, it’s a good idea to educate yourself about what’s coming.
If you’re running a small business, you’ve got about a week to begin adapting to the amended tax law. One of the most significant for businesses is the special treatment of “pass-through” businesses: sole proprietors and partnership owners will now be able to deduct up to 20% of taxable business income that previously was taxed. Corporations will also enjoy a reduced tax rate of 21%, and if you do business abroad, you’ll now be negotiating a territorial tax system vs a worldwide tax system.
While certain aspects of the tax overhaul are going to impact you more than others, nearly every individual and small business owner will be affected: payroll deductions will change, and your accounting will change, meaning your budget—and possibly even your business structure—may need to be updated as well to reflect these changes.
It would behoove you to make an appointment with your accountant and your small business attorney as a New Year’s resolution. Seeking guidance from experienced accounting and legal professionals is well worth it to help you navigate these changes and avoid potentially costly pitfalls.
If you have any questions about the new tax reform plan or how it might affect your family or business in Asheville, attorney Chris Craig and our experienced legal team will be happy to help. Please contact us to set up a time to talk. And Happy New Year!