Get started on tax planning before end of year, experts say
"This is affecting what you're filing a year from now,"
Employers adjusted employees' federal income tax withholding based on
The most significant tax law overhaul in more than 30 years -- the Tax Cuts and Jobs Act -- was signed by President
And while accountants and tax experts can help taxpayers plan ahead, a lot of the regulations still have yet to be written, said
Having too little withheld can result in owing taxes, while other taxpayers may want more money in their paychecks up front instead of a large refund.
Overall, the law lowered individual tax rates in six of seven tax brackets while also widening the brackets. High-income earners in the top bracket will see a more substantial reduction than low-income earners, Mendelsohn said.
The tax law gets rid of exemptions and limits deductions in exchange for a near doubling of the standard deduction that is expected to significantly decrease the number of taxpayers who itemize, Mendelsohn said. Still, the tax law did not result in tax simplification, he said.
Tax reform repealed the penalties of not having health insurance under the Affordable Care Act, but that change does not go into effect until 2019, Mendelsohn added.
Starting this year, the itemized deduction for state and local income taxes is limited to
The child tax credit also increased from
One major source of confusion -- and possibly one of the biggest benefits to small business owners -- is the new 20 percent deduction for qualified business income from partnerships, S corporations or sole proprietorships, Mendelsohn said. There are a lot of uncertainties as taxpayers are still waiting on
Another limitation is being a higher-earner in "specified service trade or business" such as in the fields of health, law, accounting, consulting, financial services or any trade or business in which the principal asset is the reputation or skill of one of more of its employees or owners, Mendelsohn said. He said he expects there to be disputes over such professionals or businesses not being able to get the 20 percent deduction.
"There are going to be a lot of nuances depending on your business," Pittman said. "It's going to vary greatly on your individual circumstances."
"Tax impacts everybody," Gere said.
Small business owner
"I came out because these laws are so complicated," Lee said of attending Tuesday's session. "I wanted to be more informed."
Bozick can be reached by phone at 757-247-4741. Sign up for a free weekday business news email at TidewaterBiz.com or follow @TidewaterBiz.
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