Start Planning Now for 2018 Income Taxes
JUSTIN KORTH, SENIOR ACCOUNTANT
Probably the last thing you want to do in the summer is to start thinking about the current year’s taxes that aren’t due for many months. But it’s actually the perfect time to start planning. It’s a good idea every year, but especially this year, considering the changes initiated by the Tax Cuts and Jobs Act passed and signed in December of 2017.
You’ve undoubtedly heard something about how the new law will affect individual taxpayers or small businesses. Here’s a quick recap of a few questions and highlights:
- Can you claim the new 20% deduction for pass-through income?
- If I am currently an accrual basis taxpayer do I now qualify to use the cash method of accounting for taxes?
- No deductions are allowed for entertainment, amusement or recreation expenses even if conducting business.
- Cutoffs for individual tax brackets are lower: 10, 12, 22, 24, 32, 35, and 37 percent.
- The standard deduction increased to $12,000 (single filers); $18,000 (heads of household); and $24,000 (joint filers).
- The personal exemption is discontinued.
- If you do not take the standard deduction, you are allowed to deduct a maximum of $10,000 for property taxes plus either state/local income tax or sales tax paid.
- The Child Tax Credit is now $2,000, including a $1,400 refundable portion.
- Mortgage interest is limited to $750,000 of acquisition debt.
- The Alternative Minimum Tax (AMT) exemption amounts have increased.
With the new tax laws, there are many questions. How does it affect you? For most taxpayers, the deadline for 2017 filing has passed. By being proactive and organized, you can save money and time by planning for your 2018 taxes.
Be sure to maintain a filing system for income tax papers. You could either use paper file folders or electronic folders (with documents scanned in). Make a habit of this, and you won’t have to scramble when tax prep time comes.
Since you will have all of your tax minutiae in one place, it is easy enough to do some periodic estimating.
Providing this information to your tax professional will enable him or her to evaluate your tax scenario. If you are a W-2 employee, you may need to adjust your withholdings by completing a new W-4.
If you’re conscientious about these two activities, you’ll have the information you need to be proactive before the end of the tax year. Year-round planning can help minimize your total tax obligation.
Whatever your tax planning and preparation needs are, we can help. Connect with us anytime during the year, and we’ll put together a comprehensive plan that works for you.
ABOUT THE AUTHOR
JUSTIN KORTH + SENIOR ACCOUNTANT
Justin Korth is a Staff Accountant at Lutz with over 3 years of experience in taxation. He specializes in individual, business, and fiduciary income tax returns, estate and business planning, and taxpayer representation on IRS matters. In addition, he provides consulting on small business accounting and payroll tax reporting.
AREAS OF FOCUS
- Income, Business, and Fiduciary Income Tax Returns
- Taxpayer Representation
- Estate and Business Planning
- Payroll Processing
- Payroll Tax Reporting
- Client Accounting Services
- Small Business Accounting Consulting
AFFILIATIONS AND CREDENTIALS
- Nebraska Society of Certified Public Accountants, Member, Career Committee
- Certified Public Accountant
- BSBA in Accounting and Finance, University of Nebraska, Omaha, NE
- UNO Young Alumni Academy, Member
- St. Vincent de Paul Knights of Columbus, Member
- Youth Catholic Professionals, Parish Ambassador
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