By Kevin Scanlan
Certified SCORE Mentor
The Tax Man Giveth and He Taketh Away
It’s that time of year again, Income Tax Season. As we prepare to file our 2018 taxes there are several changes to our tax laws and regulations that may impact you, both positively and negatively. NOTE: This article is not intended as legal or tax advice. You should always consult with your attorney, accountant or tax preparer to determine how the changes in the tax laws and regulations will impact you.
Among the major changes in 2018 are the provisions contained in the Tax Cuts and Job Act of 2017. Many believe that these changes are the biggest changes enacted in many years. Here’s an overview of some of those changes and others:
Standard business mileage deduction for 2018 is 54 cents per mile, 18 cents per mile driven for medical or moving purposes and 14 cents per mile driven in service of a charitable organization.
With some exceptions, small pass-through businesses (those businesses that report their business income on their personal tax filing) are entitled to take a Qualified Business Income Deduction equal to 20% of the qualified business income.
The new tax law increases the Estate Tax Exclusion, allowing small business owners to pass on more assets from their business to their heirs without incurring estate taxes.
Depreciation is the common tax deduction for the gradual wear and tear on certain types of business assets, typically spread over the useful life of the asset. In 2015, Congress passed a law allowing for a 50% deduction in a single year. The new tax law increases the deduction to 100% in the first year. This higher deduction is scheduled to decrease in future years.
Some business deductions are gone or harder to take, including some business entertainment expenses. Also impacted is Net Operating Loss Carryover.
The maximum wage base for withholding Social Security has been increased in 2018.
With few exceptions, the corporate tax rate has been adjusted to a flat 21%.
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