Are you confused about how the new tax laws will affect you? You are probably not alone, as many people are looking for legitimate answers. With the ink barely dry on the new tax laws, ambiguity proliferates what to do or what to ask a tax consultant. Before collecting your box of receipts and making a trip to the accountant, it requires you to know specific details that will make business tax filings a lot more bearable.
People might ascertain that with the tax reform bill’s approval last December, the changes have taken effect, and they will need to fill out the forms for the next few months accordingly. However, the 500-page law largely affects 2018 filings and not what’s payable for 2017.
Key Highlights of the New Tax Bill
While maximizing deductions for 2017, such as paying valued property taxes for the next year and increasing charitable donations, there is a modification that some can still cash. This is related to a retroactive plummeting of the limit for medical bill deductions. For 2017, if your medical bills are above 7.5% of your income, you are allowed to deduct them from your business tax filings. This percentage is a considerable drop from the previous limit, which stood at 10%.
For small businesses, the changes are not as simple as the information is not yet clearly provided. The treasury department has stated that some service-oriented businesses, such as bookkeeping and law firms, are not eligible for tax reductions for limited liability companies. They typically pay their taxes on the personal tax returns of the owners. However, it is not clearly defined which types of service-based businesses are liable to follow this clause. This clause is to be clarified somewhere later in the year.
Your paycheck will Increase, but is that a Good Thing?
Around 90% of Americans will see a rise in their paychecks, which should be considered good news. But, not for long, as employers will adjust employee withholdings under the new law. A change in the IRS withholding table, which guides employers to deduct from employee’s paycheck, is responsible for the adjustment. This responsibility means that taxpayers should ensure the exact amount that is being withheld from their paycheck as they do not want to own the IRS at the end of the current year. This change will significantly affect business tax filings for the vast majority of the population in the upcoming year.
If you expect a refund this year, you might need patience as all federal returns filed by standard mail might be running late. However, it might not be such a significant issue for most citizens. However, low wage earners who rely on these refunds to pay their bills will get a setback. Therefore, you are better off filing electronically as electronic business tax filings are not expected to be delayed.
Watch Out for Scams and Quick Refunds
As mentioned earlier, taxpayers are expected to get slower refunds. Because of that, short-term anticipation loans are expected to be in higher demand. Therefore, it is advised by the Center for Economic Progress that it is probable that these loans will charge predatory rates. Taxpayers should avoid them as much as possible. Moreover, if an outside company offers you quicker refunds, the likelihood of a scam is quite imminent. You are also advised not to trust any phone calls that portray to be from the IRS as they will only ever reach out to you through the mail.
Following these guidelines for business tax filings will ensure that you end up with a lesser tax burden for the upcoming year.About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks™️ file, critical financial documents, and back-office tools in an efficient and secure environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.