Commentary about the new tax laws is fast and furious. We would give you quick answers about the computation of the new business deduction, a possible change in tax status, and other unintended effects if this information were available. As your trusted adviser, we cannot give you quick answers that are relevant to you because everyone’s tax situation is unique to them.
Based on commentary, there may be changes to the types of businesses which qualify for the 20% deduction. The ABA, AICPA, and AMA (attorneys, accountants, and doctors) are very vocal with their disapproval on the restrictions of the tax rate decrease to owners of service industries ($315,000 of taxable income). We are hoping for changes. (One suggestion – consider increasing your retirement plan contributions to decrease your tax rate.)
The law eliminated exemptions. The IRS is still trying to change instructions for Form W-4 and the withholding tables. The rule makers have not started analyzing the changes in tax filings and rules resulting from the new act. So we do not have their interpretations, examples, and guidelines for implementing the new law.
Most of the changes apply to tax years beginning after December 31, 2017. Quick answers are not always the right or most correct answers. We are studying the new law and will be posting to our website and sending out updates to our social media channels.
Please contact us if you would like to conduct a more in-depth analysis of the tax implications for you.
Happy New Year!