Taxes never sleep. While the time to file taxes has passed, and people have either received a refund or paid the government, the effects of the new tax cuts bill are beginning to roll out as we head into the next year.
There have been many stories to tell, from Easter eggs ensconced in the bill to benefits companies and individuals can take. Here are a few story ideas that can help you localize the effects of the new tax law.
Tax breaks for craft breweries
When Congress passed the Tax Cuts and Jobs Act at the end of 2017, policymakers were making headline citing the benefits of tax cuts to corporations and individuals, but there are some other items that also made it into the bill. For example, the law gives a tax break on the first 60,000 barrels of beer produced in the U.S. by small breweries. Before the law was enacted, breweries were charged $7 a barrel on the first 60,000. Now small breweries will only pay $3.50 on the first 60,000. It also reduces the amount taxed to bigger breweries. This benefit is set to expire in 2019.
How are local breweries taking advantage of this new tax break? Ask your local breweries if they plan to expand or hire more employees?
Small business deduction
The tax cuts law also gives a 20 percent deduction to pass-through businesses, which are companies such as S-corporations or a sole-proprietorships that are taxed at the individual rate rather than the corporate rate. In order for small businesses to benefit from this deduction, they have to meet certain criteria.
As more details for these pass-through businesses are yet to be announced by the IRS, small companies are looking to take advantage of this deduction to reduce their tax bill. One way businesses are hoping to take this 20 percent deduction is by restructuring their businesses.
“When you have a company that is doing multiple things in the same business, given the new tax law, it may be advantageous for them to take those two lines of business and separate them into their own companies,” said Armando Roman, co-founder of AXIOM Financial Advisory Group, a financial management firm based in Scottsdale, Arizona. He added that restructuring a company can help a business receive that 20 percent deduction.
Find out what businesses in your area are doing within their businesses to gain some of the benefits from the new tax law.
Check the withholdings!
The debate over the new tax law has centered around if it helps expand the economy or if it’s going to be a burden to the economy.
One of the promises congressional Republicans said is that it will lower Americans tax bills. In order for people to benefit from this new law they have to review their withholdings. The IRS released a withholdings calculator, which helps taxpayers review how much withholding is appropriate. It’s crucial some taxpayers such as self-employed business owners and pension recipients to review their withholdings; otherwise, they will end up paying more taxes come next year.
While the effects of the new law lowers taxpayers income-tax bill, people can still end up owning a lot more to the IRS if they don’t review their withholdings before the next tax season. Check with local tax accountants and Certified Public Accountants, or CPAs, to talk about the importance of checking withholdings before next filing year.