2018 Tax Updates and Changes
Good news for the American taxpayers… they have until April 17, 2018, to file their 2017 tax returns. Why? As per the I.R.S., the regular April 15 tax day is postponed when that date falls on a weekend or legal holiday.
The recent tax plan enacted by Congress for 2018 means a slew of changes as you file your return. Many of these changes might reduce your tax burden, so it is important to know what will affect you and how to pay your taxes for the year.
Standard Tax Deductions Increases
The standard deduction for both individuals and couples has increased dramatically. It is now $24,000 for married couples filing jointly and $12,000 for individual filers. This increase helps offset the lack of a personal exemption.
Reduced Top Income Rate
While this won’t apply to most filers, those in the top income bracket of $500,000 or higher for individuals and $600,000 or higher for jointly filing couples will see a slight decrease to 37 percent.
Corporate Tax Rate Changes
The tax on business profits is way down, with a new top tier of 21 percent. As a flat tax rate, that also means that small business owners pay the same 21 percent on their earnings.
For business owners with pass-through income where their business is a sole proprietorship or other corporate structure that accounts for their own income, a 20 percent deduction instantly reduces the total tax burden. For example, a business owner with $80,000 in business income can deduct $16,000 from the total. There are phase-outs for higher earners that eliminate this deduction.
Increased Phase-Out on Retirement Savings
Individuals and married couples get a small boost to the amount they can put away from retirement and an increase total income before they lose the tax deferment on those savings.
These are just a few of the changes, but as you can see, the updates to the tax code are sweeping and will affect most filers to a greater or lesser degree.
Clover Station, Clover Mini, Clover Flex offers integrated POS options that include making estimated tax payments for your business. The Mini and Flex versions also include tax software, so you can track daily sales, arrange for sales tax payments and handle payroll, all through the same system you use to collect customer payments. getvms.com Other blogs you may be interested in is: insight.getvms.com/budgeting-for-small-businesses from Velocity Merchant Services, your choice in credit card services.