Tax Reform: Passed (What does it mean for you?)

Congress passed the ‘Tax Cuts and Jobs Act’ on December 20th, 2017, sending the bill to President Trump to be signed. There are sweeping changes that will be put into law, affecting businesses and individuals.

One item of immediate attention for your 2017 Form 1040: due to limitations that will be imposed on personal itemized deductions for tax payments with the new laws, it is important to pay property taxes and any Michigan Estimated payments by December 31st, 2017 in order to receive a tax benefit.

Additional details will come as we analyze further. If you have questions about the bill that was passed, please contact our firm.

Tax Reform

Most proposals call for a significant reduction in business taxes.

The subject of tax reform has been a topic of discussion for much of this year.  What the ultimate law will look like is uncertain at this time.  Some commentators have gone as far as indicating that we might not even see anything come about this year.  Time will tell.

Most proposals call for a significant reduction in business taxes.  If this reduction does pass and depending what the legislation defines as business income, there likely will be significant tax planning opportunities and traps to become aware of.

Based upon what has been discussed thus far, it appears that the same rate may apply to business income no matter what entity you operate your business in.  However, it is possible that, due to the shape our Social Security system is in, the earnings cap on self-employment income may increase.  It is even possible that self-employment income will be applied to the earnings of S-Corporations.  Again, at this point no one knows.

If anything is ever passed it will be important for you to be aware of the law.  We will be monitoring the developments closely and will be ready to assist you with your tax planning needs.