You can probably use some help navigating the new tax waters. Changes in 2018 taxes will be the most sweeping in 30 years. These changes will influence both personal and corporate returns. These affect many tax factors including deductions, tax brackets, and corporate rates.
Here are some of the changes that will impact the individual and families. Individual tax changes include the elimination of the “marriage penalty” for most taxpayers so now filing married is no longer an advantage. Standard deductions have also been increased, so more people might want to take this simplified deduction rather than itemize. Furthermore, the increased standard deduction is coupled with the elimination of personal exemptions. Families may gain back some of the personal exemptions through the expanded child tax credit. Additionally, new standard deductions might also impact short term capital gains. Medical expense deductions are reduced from 10% to 7.5%.
On the corporate front, the corporate tax rate has been reduced to 21% instead of the graduated rate of the past. There will be an end to double taxation on foreign profits. There is also a one-time reduced rate for repatriation of foreign-held assets. More changes in corporate taxes are also part of the new tax structure. Companies will need to change withholding on paychecks this year to comply to these changes.
In addition, the tax forms are changed and line items will be different than they were for previous year filings.
All in all these significant deviations, although meant to simplify filing, will make big changes in calculating tax returns this year. Many individuals, families and companies may need to figure their taxes twice to see if the new deductions are tax saving or whether itemizing deductions will be more advantageous.
If there were ever a year to get help from a CPA, this is that year. Les Merritt, CPA and CFP (Certified Financial Planner) is ready to lend assistance. He has helped families and companies for over 30 years with tax preparation and planning. Contact Les Merritt at (919) 269-8553 to assist you as you weave through the new tax waters.