President Trump released his new tax reform bill in December of 2017. There are a few notable changes that affect business return filings for 2017, but the primary effect will be seen on the 2018 tax returns. I wanted to list out a few important considerations that may be discussed in further detail in future blog posts.
1) Section 179 expensing dollar limitation has been increased to $1 million.
2) Net Operating Losses (NOLs) may no longer be carried backwards. However, currently they may be carried forward indefinately, but may only reduce 80% of taxable income for the tax year the NOLs were carried forward to. There are a few exceptions to NOLs not being carried backwards for farmers and insurance companies.
3) Paid family and medical leave may be eligible for certain employers to claim a credit for paid family and medical leave equal to 12.5% of wages paid to qualifying employee's during the time they are on family or medical leave provided the rate of payment is 50% of the the wages normally paid to the employee.
4) The qualified business income deduction currently looks to be one of the best aspects about the new tax law as it allows non-corporate taxpayers to deduct up to 20% of domestic qualified business income from an S- Corp, partnership, or sole-proprietorship. There are some exceptions to this as well as limitations based on wages paid that may affect your business. You should speak with a tax professional to see how this will more accurately affect you with your specific situation.