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How Your Personal Income Taxes Will Change in 2018

Personal income taxes are changing with the passage of the December 2017 tax bill. It’s time to decode the new tax law, and the following guide will help you determine how tax rate, bracket and deduction changes will affect your finances in 2018 and beyond.

 

When Does Everything Take Effect?

First, you should understand that unless otherwise noted, the recent tax bill changes will go into effect for the 2018 tax year, which means from January 1, 2018, to December 31, 2018. It will not affect 2017’s personal tax filing, but it will affect take-home pay for many workers, depending on your tax bracket and withholdings.

 

Tax Brackets

Tax brackets have seen significant changes, particularly the top bracket, which has been reduced from 39.6% to 37% and will affect most high-income earners. There are still seven federal income brackets, but the tax rates and income ranges have been amended to the following:

 

For Single Filers

 

10% $0 – $9,525
12% $9,526 – $38,700
22% $38,701 – $82,500
24% $82,501 – $157,500
32% $157,501 – $200,000
35% $200,001 – $500,000
37% More than $500,001

 

For Joint Filers

 

10% $0 – $19,050
12% $19,051 – $77,400
22% $77,401 – $165,000
24% $165,001 – $315,000
32% $315,001 – $400,000
35% $400,001 – $600,000
37% More than $600,000

 

Changes in Deductions

Instead of having a personal exemption and the standard deduction, the new bill simplifies matters by creating a higher standard deduction – up from $6,350 to $12,000 for single filers – and eliminating the personal exemption. When filing jointly, the standard deduction is $24,000.

There are several deductions that have been eliminated for the 2018 tax year. These include:

  • Tax preparation expenses
  • Moving expenses (except for military)
  • Casualty and theft losses unrelated to a federally declared disaster
  • Entertainment expenses
  • Unreimbursed employee expenses

Talk to our team at Robert L. Coval, CPA to determine if you will be affected by any other eliminated deductions.

 

Parental Tax Breaks

The Child Tax Credit has been expanded – up from $1,000 to $2,000 – and the eligibility threshold has increased significantly. For married filing jointly, the new limit is $400,000, while individuals jump to $200,000. These changes should result in a similar tax balance from 2017 to 2018 for most families.

 

Education Tax Breaks

If you’ve been investing in a 529 college savings plan, there’s good news. You’ll now be able to use those funds to help pay for private schooling and tutoring for K-12 grade levels instead of just college. If you decide to exercise this option, it would be wise to speak with a financial planner and make sure you’re still saving enough for your child’s college.

 

Medical Expense Deductions

The current deduction for medical expenses has dropped from 10% of your adjusted gross income to just 7.5%. The primary thing to note here is that this is one of the few provisions that is retroactive to the 2017 tax year, which means it will affect you this April.

 

Charitable Contributions

Taxpayers can now deduct donations of up to 60% of their income, which is up from the previous 50% cap. Ensure you keep diligent records of your charitable giving.

 

Still Confused by Taxes?

It’s okay. Taxes will always be complicated, and the more you grow your income, investments, business and family, the more involved it will get. Thankfully, you have allies at Robert L. Coval, CPA. Our mission is twofold: help you understand the tax code and how it affects you, and make sure you get the most out of each year’s tax return. Stop worrying about your taxes and contact us today!

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good cpa

How a Good CPA Supports Your Business

A good CPA can clear up confusion on business financials and taxes, which is an invaluable resource for business owners. However, a trusted accountant does more than answer tax questions and file paperwork on time. They offer foundational support that lays the groundwork for healthy business growth and longevity.

Here are four ways an expert CPA is an asset to your business:

 

They Act as Your Advisor

It’s important to keep a business’ books in order and file taxes promptly and accurately, but an experienced CPA has skills that extend beyond these tasks. When your CPA takes the time to fully understand how your business operates and sees your short and long-term goals, they can help you manage cash flow and execute smart growth strategies to help you get where you want to be. Underestimating costs and mismanaging expenditures can be harmful to a business’ present and future success, but making accurate forecasts and projections sets businesses up for success.

 

They Help You Balance Personal and Business Finances

In many cases, the small business owner juggles their business and personal finances. A good CPA can help sole proprietors, startups and small businesses find a balance and make the right financial decisions in both personal and professional areas. While this is true for businesses of all sizes, new business owners will especially have plenty of questions on how to structure their company and protect their interests. You should be able to depend on your accountant as a resource during this learning curve.

 

They Enable Faster Growth

Does your business structure support expansion? Can you afford to hire another employee? How can you compile financial statements that will appeal to investors? Trust an experienced CPA with these questions and you’ll be in a position to grow faster and bigger. Whether you’re contemplating a merger or an acquisition, depend on an expert in the field for real-time financial analysis.

 

Their Network Offers Further Support

You can trust your CPA’s recommendation on payroll providers, attorneys, investment managers and more. A good CPA always establishes a solid network of supporting providers to help their clients reach their goals. Whether you need business insurance or a litigation attorney, bring your request to your CPA and get high-quality referrals to the additional professionals you need.

 

How We’re Different

Is there a CPA firm that offers all of the above? Yes: the team at Robert L. Coval, CPA.

If a hands-on, hardworking accounting team is what you and your business needs, call the team at Robert L. Coval, CPA. We take care of the numbers and let you focus on your business, offering data-backed advice and suggestions along the way. When you’re ready to take the next step towards growth and long-term stability, get in touch with our team for a free consultation.

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new tax bill small business

What the New Tax Bill Means for Your Small Business in 2018

Whenever new tax laws are passed, news outlets struggle to accurately report how the changes will affect small businesses. Don’t get lost in the misinformation – come to us.

At Robert L. Coval, CPA, we will help you understand how the sweeping tax reform will directly affect your small business, both for this immediate tax filing in 2018 and beyond. While we can offer a more complete picture during a free consultation, here is a quick list of the changes you’re going to see in the coming months and years:

 

Boons for Pass-Through Businesses

Sole proprietorships, limited liability companies, partnerships, S corporations, and other pass-through businesses are going to see a boost in their deductions in 2018. The standard deduction for these businesses is now 20 percent, as long as their income stays below $157,500 for single filers and $315,000 for joint filers.

 

Go for the Big Purchase

If you’ve been holding off on making an expensive purchase for your business, now is the time. Any assets purchased after September 27, 2017 through December 31, 2022 are eligible for a 100 percent deduction. This write-off now extends to used equipment as well as new.

 

Fewer Client Entertainment Deductions

You can still claim a 50 percent deduction for taking your client out to lunch, but a round of golf will no longer deliver the same tax benefit. The sweeping tax bill has eliminated the 50 percent deduction on client entertainment expenses, restaurants not included.

 

Slashed C Corporation Tax Rates

C corporations’ tax rates won’t be amended at all in time for your 2017 filling, but you’re getting a major tax cut effective January 1, 2018. C corp tax rates plummeted from 35% to 21%, applicable to both small and large businesses. This could have a positive effect on your cash flow this year. Game plan with our team about how changes to next year’s filing can free up funds to put towards immediate business initiatives.

 

Don’t Go It Alone

The new tax bill has left many business owners confused as they struggle to clearly understand how the new changes directly affect their finances. Our advice? Get some professional help from an accounting team that knows business taxes: the team at Robert L. Coval, CPA. It’s our job to understand these developments and we’re good at explaining it in a way that makes sense. Let’s analyze how to maximize the new tax bill changes to your small business’ benefit. Get in touch today.

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Coval Feb Blog Graphic

Six Small Business Tax Deductions and 2018 Tax Deadlines

One of the most effective ways to increase business revenue is by taking advantage of all available small business tax deductions. You will make informed decisions on managing the current year’s expenses and smartly allocate funds for next year.

The following is a helpful list of small business tax deductions that can significantly lower your company’s taxable income for 2017 filings:

1. Insurance

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