Written by partridgecpas

The Tax Cut and Jobs Act of 2017

Tax Cut and Jobs Act of 2017

  • The President signed the biggest tax reform law in over 30 years
  • Most of the changes will take place in 2018, expire after 2025
  • Your tax return could look very different
  • In many business areas, the computation will be very complex and will require on-going accounting and planning prior to year-end to maximize your tax savings

Small Business Tax Return Changes

  • There could be up to a 20% deduction for individual owners of-flow through” businesses (sole proprietors, LLCs (excluding C corporations), partnerships, S Corporations, renal activity and REITS) on qualified business income. The new IR Code Section 199-A is very comprehensive and is not always easily understood. Because of its complexity and difficult interpretation, it is highly advised to consult with a tax professional – before the end of the year.
  • The new corporate income tax rate will be a flat 21% (permanent)
  • The business deduction for entertainment is eliminated
  • The 50% meals deduction now includes meals on the employer’s premise
  • Many more and enhanced business asset write-off options (including increased Section 179 deduction)
  • New Net operating rules eliminating the two-year carry back and the percentage of the loss carried forward.

Individual Tax Return Changes

  • Tax brackets have been expanded-ranging from 10% to 37% (lower top rate). There are no changes in the tax rates for long-term capital gains and dividends
  • The is no longer a deduction of personal and dependent exemptions
  • The maximum child credit is increased to $2000 per qualifying child (up to $1400 refundable) with higher income limits to qualify
  • You will no longer be able to deduct state and local taxes above $10,000 per year
  • There is a limit on new home mortgage interest deductions limited to %750,000 and home-equity loans not used to purchase or substantially improve the home are eliminated.
  • Member of American Institute of Certified Public Accountants and Arizona Society of Certified Public Accountants

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