Because of the new tax bill, there are potentially large tax planning opportunities here. If you own a pass through business (or any business other than a C-Corp), you could save thousands in taxes over the next several years by ensuring you qualify for the maximum deduction.
The Tax Cut & Jobs Act was passed by Republicans at on December 22nd, affecting our filings for 2018 and beyond. The new law sets seven individual income brackets at 10%, 12%, 22%, 24%, 32%, 35%, and 37%. It also nearly doubles the standard deduction, to $12,000 for single filers and $24,000 for joint filers.
The Republicans’ objective in this bill was to simplify the tax code. The sound bite you’ve probably heard is that they’d like everyone to be able to “file their taxes on an index card”. The new law mostly accomplishes that objective. The vast majority of Americans will end up claiming the new standard deduction instead of itemizing.