As the Obama administration makes way for the Trump administration, you could expect certain tax changes that might impact your small business. This article shares a few important things to know to prepare your business for the 2017 tax year.
Changes in Filing Deadlines
Deadline dates for C-Corps have now been pushed back to April 15 from March 15, while deadline dates for S-Corps and Partnerships have now been pushed forward to March 15 instead of March 15.
Extensions on Tax Breaks
The good news is that several tax breaks have been extended until 2017, these include the following:
- Bonus Depreciation – This tax break enables a business to deduct 50% of purchase costs for new capital equipment until 2019. But take note that deductions would be lowered every year until 2020.
- Section 179 – The PATH Act’s passage made a deduction of $500,000 for equipment purchases not more than $2 million permanent. This applies to new and used equipment.
- Social Security Taxes – The administration behind Social Security has increased the cap on income they consider taxable subject to 7.65% tax rate combined with Medicare and Social Security from $118,500 to $127,200. For self-employed individuals subject to the match requirement would have to pay 15.3% of tax on the first $127,000 they make.
- Tax Credit for Research and Development – All businesses that heavily invest in research and development, and earns under $50 million every year could now apply the AMT or Alternative Minimum Tax credit or maybe offset their payroll taxes.
- Work Opportunity Tax Credit – This tax break provides incentives to employers who hire particular long-term unemployed people, which includes military veterans.
Possible Changes to Corporate Tax Rate and Affordable Care Act
Experts are expecting a significant decrease in corporate tax rate due to the incoming president. A licensed CPA at Sorenson & Company also adds that the incoming Republican-controlled government might prioritize the replacement and repeal of Obamacare.
While tax laws could be quite complicated, you don’t have to feel overwhelmed. Prioritize tax laws that already in place, keep yourself updated with the ever-changing laws, and get professional help when needed. More importantly, plan your taxes all year round so that you could reduce the risk of making errors.