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Tax Laws Have Changed!

| August 20, 2018
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You've probably heard a lot about the income tax law changes passed last year. While most of the tax cuts went to corporations, there was a slight reduction in tax rates for most individuals. There was also an increase in the standard deduction and major changes major changes to itemized deductions. Here in the California, the cap on deducting state and local taxes of $10,000 will affect many homeowners.  Add in the elimination of un-reimbursed employee expenses and you may end up owing more in federal taxes this year!

If you haven't checked the amount withheld from your paycheck, now is a good time to do so. There is still time to adjust the withholding and avoid nasty surprises in April! Use this handy calculator from the IRS:

IRS income tax withholding calculator

You'll need your most recent paycheck stub and approximate amounts for major itemized deductions - mortgage interest paid, taxes, medical & dental expenses and charitable contributions. If you need to withhold more, the calculator will even provide guidance on how to make the adjustments to your W-4!

Business owners with an S-corp, partnership or sole proprietorship may benefit from the new 20% business income tax deduction. However, claiming the new deduction requires navigating a tangle of limitations, terms of art, thresholds, phase-ins and phase-outs. 

Forbes - Making Sense of the New 20% Qualified Business Income Deduction

IRS will be examining these new deductions closely so schedule time now with your tax advisor to review whether your business qualifies and what changes you can make before the end of the year.

Despite the administration's claim that they were simplifying the tax code and reducing everyone's taxes, the reality is that preparing income tax returns will be more complex and some people will pay more in taxes.Take some time now to make sure you are on track.

And if you have any questions, don't hesitate to contact us!

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