2018 is quickly coming to a close. Tax planning is in full swing and soon we will be neck deep in business tax preparation and individual tax preparation soon after. We, at Summit Tax Solutions, wanted to highlight 3 major changes from the 2017 Tax Cuts & Jobs Act:
Qualified Business Income Deduction:
In our previous blog post, we highlighted the benefits of this wonderful deduction for small businesses LINK. We wanted to provide the IRS link of FAQ's related to the Qualified Business Income Deduction LINK.
100% Expensing for Certain Business Assets:
Businesses have been given a temporary increase in their ability to fully deduct (Section 179) new assets in a given year. Starting in 2018, the amount increases from $500,000 to $1 million. The new law also increases bonus depreciation from 50% to 100% for qualifying assets (usually defined as new property). This is a game changer for many small businesses looking to purchase new assets in 2018. The assets obviously need to be purchased on or before December 31, 2018.
Estimated Taxes:
The IRS now requires sole proprietors, partners, members (LLC's) and S corporation shareholders to pay in quarterly installments of estimated taxes unless they owe less than $1,000 when they file their taxes. Don't get burned by penalties for not paying your estimated taxes!
The benefits of this law certainly outweigh the new burdens placed on small business owners in the business tax preparation process, so talk with your tax advisor today to make sure you are taking advantage of these changes!