Understanding the Tax Cuts and Job Act of 2017
With all of the panic and questioning around the new tax laws, we wanted to bring in a professional to help educate you on what’s going on and what you need to know.
Since we started our CPA Advisory Board, we have a go-to panel of these experts that keep us on top of everything we need to know in the industry so that we can better serve our clients.
To get you up to speed on the new tax changes, we tapped into one of our CPA Advisory Board members, Tom Angelo, a Managing Partner at Spire Group.
Enter: Tom Angelo…
On December 22, when many of us were finishing up our holiday shopping and preparing for holiday celebrations with family and friends, President Donald Trump signed the Tax Cuts and Job Act of 2017.
As you might have heard, it is a major change to our current tax law and makes widespread changes to the Internal Revenue Code. Most of the new provisions took effect January 1, 2018.
Typically, at holiday parties, most people would rather not engage in a conversation with me about depreciation or how their itemized deductions are going to get phased out.
However, this year?
It was a different story.
I found myself being asked everything from “What is my tax rate going to be next year?” to “Should I make my business a C Corporation again?”
Since our legislators and president were rushing to get this bill passed and signed, there was a lack of clarity on all the rules and regulations of the new tax law. The Internal Revenue Service is only now translating what the new law is into procedures and regulations, as well as tax forms for 2018. Obviously, this leaves a lot of ambiguity around what impact the new law will have on a particular individual or business.
Essentially, each person needs to have their return evaluated to determine what their projected 2018 tax liability will be based on the new law. In some cases, the new law could have a positive effect on you, especially if you previously did not itemize your deductions and you elected to use the standard deduction, which has doubled in this new bill.
However, we no longer have any personal exemptions.
Can you see where I am going with this?
Oh! And let’s not forget that there is a limit on deducting state and local income or property taxes of $10,000 next year. Which, as you know, forced many people to contact their accountant during the holidays to determine if it makes financial sense to prepay their taxes and if yes, then head to their local municipal tax assessor and process the prepayment.
Another big change?
The individual mandate to have insurance under the Affordable Care Act (ACA) is repealed, which eliminates the penalty for those who don’t have coverage. Didn’t we just finally figure out all those new forms?
As you can see, the new law and the timing of its passage has created both some excitement, as well as fear.
So, if you’re wondering how your business and personal finances will be affected, you are not alone!
Here at Spire Group, our tax committee has put together a thorough synopsis of the changes that affect you both personally and your business.
Check out the link here: http://www.spirecpa.com/spire-blog/understanding-tax-cuts-jobs-act-2017