Are you are 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 about what to do or even what to ask a tax consultant. Before collecting your box of receipts and making a trip to the accountant, you are required to know certain key details that will make business tax filings a lot more bearable.
People might ascertain that with the approval of the tax reform bill 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 only offered you limited options, such as paying valued property taxes for the next year and increasing charitable donations, there is a modification that some can still cash in on. 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 is a considerable drop from the previous limit, which stood at 10%.
For small businesses, the changes are not as simple as all of the information is not yet clearly provided. The treasury department has stated that some service-oriented businesses, such as bookkeeping services and law firms, are not eligible to take benefit of 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 is scheduled 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 inn 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 means that taxpayers should ensure the exact amount that is being withheld from their paycheck as they do not want to end up owning the IRS at the end of the current year. This change will significantly affect businesses tax filings for the vast majority of the population in the upcoming year.
If you are expecting a refund this year, you might need patience as all federal refunds filed by standard mail might be running late. This, however, might not be such a significant issue for most citizens. Although low wage earners who are relying 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 and, 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 possible. Moreover, if an outside company is offering you quicker refunds, the likelihood of a scam is quite imminent. You are also advised not to trust any phone calls that portrays 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.
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