Benefits Nearly All Around In New Tax Laws
WENATCHEE, WA – New tax laws were passed at the end of 2017 that now take effect in 2018. Certified Public Accountant and Director of Tax for Cordell, Neher & Company Tim Dilley, says the biggest change in the laws effects US corporations…
All Corporations, Regardless of Size, Will Pay a Flat Tax
“We got a flat tax for corporations at 21-percent. Flat tax! We haven’t had that actually on the books. People talk about flat tax and like ‘Wow, wouldn’t that be great!’ Well, we got it in corporations. So is that a good thing? Well, for some it is. If you’re a modest corporation, though, remember that you have now lost the 15-percent bracket is gone. The 10-percent bracket is gone. So, if you were a corporation that didn’t create a whole lot of taxable income every year but happened to be in that type of tax structure, you actually lost a little bit of benefit. But most of the corporations we talk about are certainly up in the 25-percent or 35-percent and beyond. In which case, they got a great benefit,” said Dilley.
Dilley says the benefit doesn’t just impact “C” Corporations. “Schedule-C, Sole Proprietors; Partnerships; and “S” Corporations (will benefit). That “C” Corporation could have been any one of those others, depending upon the size and a lot of other things. But just because of that particular choice of formation, why should these other businesses not get some sort of benefit? So, they came up with the pass through deduction. And why do they call it the pass through deduction? Because an “S” Corp or a Partnership are pass through entities. Those are entities that file their own tax return but they don’t pay tax at the entity level. Because they pass out all income or losses every year via a Schedule K-1 that goes out to the shareholders or partners of those entities,” Dilley added.
Joe Tax Payer May Receive a Little More in His Paycheck
In fact, if you get your paycheck today you may see a little bit of an increase in your take-home pay because of an adjustment in the tax levels. “If we sort of take out all these complexities, all rates lowered in those lower brackets, (which) is a good thing. Whether they get a little two percent or three percent benefit, that’s still a benefit. There’s certainly lots of circumstances where you could say, ‘It didn’t do much’ or ‘That guy got more than I got’. But, life’s not fair and everybody’s tax situation is different. Which is why, when somebody says that, it just depends,” said Dilley.
Watch our Tax Tips series on “Let’s Learn” on NCWLIFE
You can find out more about how the revised tax codes may have an impact on your life with our Tax Tips series on “Let’s Learn” on the NCWLIFE Channel. Watch Monday though Saturday at various times throughout the day or stream on-demand on our website at www.NCWLIFE.com.