The Importance of a Tax Planning Advisor
A tax planning advisor’s expertise could be critical as you plan for the new year. This month in the Small Business Monthly “Financial Fitness” column, Karen Stern, Partner in Charge, Entrepreneurial Services Group, outlines some of the new tax reform laws that may affect your tax planning strategy.
The start of a new year means tax planning. Whether you are preparing to file 2018 taxes, creating a business plan, or strategizing how to make gifts and manage investments, a tax advisor can help you maximize your tax benefits under the Tax Cuts and Jobs Act.
Your tax advisor can help you navigate the new tax law by creating a customized tax strategy that fits your situation. Below is a small sample of recent tax changes. Consider talking with your advisor about how these changes could impact you.
- C corporations, including personal service corporations, are now taxed at a flat rate of 21 percent.
- Individual income tax rates have decreased by 2 to 3 percent at almost all income levels.
- The individual state and local tax deduction is limited to $10,000 and miscellaneous itemized deductions are eliminated.
- Pass-through entities and individuals with Schedule C or F income on their individual tax return may benefit from a 20 percent deduction of their qualifying business income.
- The domestic production activities deduction has been eliminated.
- Business interest expense is now limited to 30 percent of adjusted taxable income.
- Net operating losses (NOLs) are now limited to 80 percent of taxable income and cannot be carried back, but can be carried forward indefinitely.
- There is a 100 percent bonus depreciation on qualifying business assets until December 31, 2022.
- Section 179 limits were raised. The maximum allowable expense increased to $1 million but starts being phased out when asset purchases exceed $2.5 million.
- Entertainment is no longer a deductible business expense.
Learn more about how the new tax law could impact your tax planning. Contact your tax advisor or Karen Stern, Partner in Charge of the Brown Smith Wallace Entrepreneurial Services Group, at firstname.lastname@example.org.