Tax reform a win? Small business still anxious, unsure (FoxBusiness)

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Tax reform a win? Small business still anxious, unsure (FoxBusiness)

With a new tax law fully in effect for the first time this income tax filing season, most Americans – including the small business community – are understandably apprehensive about how the revised tax code will impact their returns this year. Despite this anxiety, the overwhelming majority of small businesses and self-employed entrepreneurs can expect to benefit from key changes and updates to the tax code that will help save both time and money.

When the nation’s most sweeping tax reform was signed into law in late 2017, our elected leaders in Washington, D.C., promised American taxpayers, including millions of small business owners, they would pay lower taxes, keep more of their money and reap the economic benefits of tax reform for generations to come. Yet over a year later with the law now in effect, many continue to be confused about its impact on their bottom line and unaware of how to make the new system work for them.

The nation’s new tax code is based on the simple principle of small businesses reinvesting their tax savings directly back into their day-to-day business operations by purchasing new equipment, investing in expansion, and/or hiring new employees -- helping to spur overall economic growth throughout the country. However, it is understandably difficult for the small business owner to invest in new opportunities or to create that extra job when they are still unclear on exactly how much in tax savings that will actually be realized.

Further compounding the uncertainty was the recent government shutdown. As the income tax filing season officially opened, businesses from Maine to California were unable to get answers to tax questions from the Internal Revenue Service (IRS)Opens a New Window., apply and receive loans from the Small Business Administration and access small business regulation assistance. Even now with the government back up and running, the American public and small business owners alike could still experience a delay in tax refunds.

But now the longest government shutdown in history is over, the American public – including millions of small businesses from the self-employed to small employers with up to nine employees – are preparing to file their 2018 tax return under the new tax system.

Here are some key changes and reminders regarding the new tax code that all tax filers should be aware of during the first filing season under the new law:

 - A lower individual rate, which is where individuals and most self-employed small businesses file.

 - A doubling of the standard deduction, which is $12,000 for single filers and $24,000 for married couples.

 - Reduction or elimination of specific deductions, such as for moving expenses or the unlimited state and local tax deductions known as SALT deductions, which are now capped at $10,000.

 - The standard mileage rate for business use of an automobile is 54.5 cents per mile for 2018 tax returns.

 - Limits for retirement plan contributions such as SEPs, IRAs and 401(k) plans may have changed for your situation.

If applied correctly, the new tax code should save time and money for small businesses to grow and expand. The new policies outlined above offer a more simplified process for completing and filing tax returns, which could translate into better bottom lines, a reduction in overall taxes and more money in people’s pocketbooks.

Keith Hall is a certified public accountant and president and CEO of the National Association for the Self-Employed (NASEOpens a New Window.), the nation’s leading resource and advocate for the self-employed and micro-businesses.

See the article online at FoxBusiness

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