Tax Reform in 2018 for Individuals and Businesses

Tax Reform in 2018 for Individuals and Businesses
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Tax Reform Changes

The dust is settling, and you made it out of another tax season. Trying to capitalize on every write-off you can before the 2018 tax changes go into effect. You feel like you just barely made it through this tax season, and now you are trying to figure out how you will weather the new tax reform.  Don’t worry you still have time put together a Strategic Tax Plan for 2018.

Difference in Tax Rates and Brackets  

One of the biggest changes in the 2018 tax reform bill involves tax brackets and tax rates. There are still seven tax rates. The rates overall have come down. For individuals, these lower rates are scheduled to expire in 2025 unless congress extends them. To compare the old tax rates and brackets to the new ones click HERE

2018 Changes in Tax Deductions

While the lower tax rates are exciting, you might not have the same enthusiasm about the changes in itemized deductions. Under the new tax law many of the itemized deductions are eliminated or restricted individuals. You can find out more about the changes in itemized deductions Here

 New Child Tax Credit

 If you have one, two, three, or more children than you already know children are very expensive. Thankfully, there are a number tax breaks designed to ease the burden on the parents. But these breaks have also undergone some changes. To read more on the changes to the Child Tax Credit click Here.

Medical Deductions

If you pay for health insurance with after-tax dollars, your premiums might be able to count toward the deductible. For the Self-Employed, premiums for health, dental and long-term care insurance for you and your dependents may be deductible if you show a profit.  To read more on changes in the Medical Deduction click Here.

Business

 The Tax Cuts and Jobs Act brought on numerous tax changes for 2018. While many of the tax changes generally apply to larger business entities, a few apply to small businesses. These changes make tax analysis extremely important when forming a business. Companies should consider how they are currently structured and if changes should be made to maximize deductions. It’s important to talk to a tax professional to understand your options. To find out more how the 2018 Tax Reform impacts small business click Here.

 Other Deductions That Are Disappearing

 Other deductions that did not make it into the new tax reform bill:

  • Casualty and theft losses
  • Unreimbursed employee expenses
  • Tax preparation expenses
  • Alimony payments
  • Moving expenses

What does this mean for you?

The one thing that’s clear through all of this is that taxes are complicated. Even the IRS is scrambling to keep up with all the changes in the new tax reform bill.

Add to the fact that millions of Americans over pay their taxes each year, and it’s easy to see why you need a tax professional now more than ever. Let a  tax professional handle the heavy lifting of tax preparation, and make sure your taxes are done right. No more overpaying! Just one missed deduction could cost you far more than the fee of a professional.

But what about tax software or online tax prep? Prior to the new tax reform bill, it might have been safe to rely on those options to file your yearly taxes. But with all the changes coming, there’s no guarantee these programs have caught up. If any year is the year to work with a tax advisor, it would be 2018.

 

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