By now you have heard about and maybe even read somewhere on the internet about the 2017 Tax Cuts and Jobs Act (“Act”) signed on December 20, 2017, which primarily addressed 2018 (and beyond) taxes both personally and for businesses. The Act is the most robust change and update to our tax landscape since the Internal Revenue Code of 1986.
Download this 13-page booklet for a summary (not all inclusive) of the Act to alert you as you approach year-end.
For 2018 there are significant tax changes in effect for you personally and/or for your business. We are encouraging people to review the information and schedule an early tax planning session. Wait too long and you will not be able to make appropriate adjustments prior to year-end!
We expect something in the highlights below will impact every client’s personal and/or business taxes for 2018.
Schedule Your Appointment
Please contact our office to schedule a year-end tax planning meeting for us to review information as pertains to your circumstances and conduct an analysis for you prior to year-end.
For the years 2018 – 2026 Individual Highlights
- Tax rates – have dropped each bracket by approximately 2%.
- Standard deductions increased to $24,000 for married filing jointly, $18,000 for head of household and $12,000 single taxpayers.
- Personal exemptions are now zero.
- Kiddie tax is now taxed at single rates and net unearned income is taxed at trust and estate rates.
- Capital gains rates of 0%, 15%, and 20% remain in effect.
- Carried interest for certain partnership interests must be held now for 3 years for long-term treatment.
- Excess business loss is now limited and certain NOL’s will be carried forward.
- Personal casualty & theft losses suspended.
- Gambling loss limitation modified provide that all deductions for expenses incurred in carrying out wagering transactions, and not just gambling losses, are limited to the extent of gambling winnings.
- Child tax credit increased.
- State and local tax (SALT) deduction limited to $10,000 (i.e. state income taxes and real estate tax deduction).
- Mortgage interest deduction limited. Certain limitations are in effect for mortgages closed after December 15, 2017, and houses that were purchased prior to April 1, 2018, and certain home-equity lines.
- Alimony deduction by payor/inclusion by payee suspended.
- Miscellaneous itemized deductions suspended.
- Moving expenses deduction suspended.
- AMT didn’t disappear, however higher AMT exemption amounts.
- Estate and gift tax exemption increased.
- Increased due diligence on prepares who file returns for head of household status.
- ROTH IRA recharacterizations repealed.
For years 2018 + Business Highlights
- Corporate tax rate now a flat 21% (blended rate in year 1 for fiscal year ends).
- Dividends-received deduction reduced.
- Corporate AMT repealed.
- Increased Section 179 expense to $1 million and phase out now $2.5 million. Bonus depreciation to be phased out through 2025.
- Qualified real property also defined and subject to Section 179.
- Luxury automobile limitations increased.
- Changes to farming business depreciation lives and method.
- Limits on deduction of business interest.
- NOL carryback is repealed (certain exclusions for farmers intact).
- Domestic production activities repealed.
- Like-kind exchanges limited to real property that is not held primarily for sale.
- Deduction of entertainment expenses are disallowed.
- Tax credits for employer-paid family and medical leave act.
- Below $25 million gross receipts test, the following have different applicable accounting rules (i) cash basis method of accounting, (ii) accounting for inventories, (iii) accounting for long-term contracts, and (iv) limits on deduction of business interest.
For years 2018 + Pass-Through Highlights
- Qualified business income pass-through deduction.
- Partnership technical termination repealed.
Certain of these items will revert back to Pre-Act levels/computations beginning in 2026.