Every tax-paying American knows that new tax laws were passed at the end of 2017. Now businesses defined as limited liability companies (LLC), partnerships and S corporations are reportedly going to be able to pay 20 percent less taxes through a special tax break for pass through businesses (these entities don’t pay taxes at a corporate level, thus owners avoid taxing your business and then you again for personal income taxes), but the actual guidelines of how it will work have yet to be announced.
Officials will reveal the details at the end of July after initially promising them in June. July, however, may also be unlikely since any regulations will likely need to be reviewed by the White House’s Office of Management and Budget’s regulations office. According to Bloomberg, no one in the office has received a formal submission of draft regulations from Treasury, but there have been some information passed along.
Who will be affected?
These are some of the most highly anticipated changes and they could affect 100,000s of employers with 90 percent of American businesses organized as pass-throughs (which can be anything from private equity funds to neighborhood convenience stores. Anyone earning less than 157,000 or married couples who earn $315,000 can deduct up to 20 percent deduction in their income.
The delay causing some concern
Tax professionals would like to see these regulatory changes soon, so that they can best understand how to comply to address their tax obligations. This will also enable them to make smart decisions in regards to entity structure, cash flow and other tax matters.
Professional help is advisable
With the many changes to the tax system, it is advisable for businesses and individuals to think now about these changes and how they will affect taxpayers financially. Tax planning is crucial to avoiding tax litigation, audits and owing more money than necessary. Legal professionals can guide clients through this process and help them understand the issues involved in this new set of regulations.