We all enjoy a big surprise, but not when it comes in the form of a large tax bill. By making sure right now that you have the correct amount of tax withholding, you can save yourself a lot of aggravation when it comes time to file your 2018 tax return.
The Franchise Tax Board (FTB) recently published a news release recommending that taxpayers check the IRS online Withholding Calculator to ensure that they won’t be faced with a large tax bill and penalties this time next year. Those expecting a large tax refund may prefer to have less money withheld each month rather than wait until after their 2018 filing to get it back. Note that employees can change their tax withholding by filing a new Form W-4, Employee’s Withholding Allowance Certificate.
Most taxpayers, however, would benefit more by seeking professional tax advice first. The Tax Cut & Jobs Act made some significant tax law changes that affect taxpayers from all walks of life. It raised the individual tax thresholds and reduced the top tax rate to 37%. It doubled the standard deduction, increased the child tax credit, and removed personal exemptions. It either reduced or eliminated many popular itemized deductions. Business owners and real estate investors are also advised to explore strategies that take advantage of the new Section 199A 20% deduction.
Take the steps necessary to be as prepared as possible for the 2018 tax season. Visit with your tax advisor now to determine how the new tax laws affect you and to make the most tax-efficient plans for 2018. The tax preparation team at Moskowitz, LLP is ready to help you structure your personal and business affairs in a tax efficient manner. Contact our San Francisco office for a consultation.