The new year is upon us. We are a few days into 2017 and many individuals and small business owners are wondering how a new year and a new president may impact their tax planning strategies. However, until any tax law changes are put in place, it will be difficult for people to anticipate their tax liability for the year ahead. Nevertheless, there are still some steps you can take to start the new tax year off on the right foot.
One important step you can take to prepare for the new year is to prepare your 2016 taxes well before the deadline. It is easy to put everything off until the last week or two before the April 18th deadline. However, once you begin tackling your taxes, you may realize that you have to track down receipts or request tax documents.
The Internal Revenue Service allows you to file your tax returns beginning on January 23rd of this year. However, you may be able to prepare your taxes earlier with your tax professionals who will then file your taxes when the IRS systems open. By preparing your taxes a month or more before the deadline, you will have time to make sure you have all the paperwork necessary to complete your tax returns.
Reviewing the prior tax year is also a good way to determine what changes you should make for the upcoming tax year. Perhaps you had fewer deductions than you anticipated, or your tax plans were based on a major life event that will not carry forward to the new year. If you received a large refund or had an unexpected tax bill at the end of the year, it may be a good time to adjust your withholdings to more accurately anticipate your tax liability.
The incoming president has expressed an interest in making major changes to the country's tax policy. Some possible changes mentioned may include reducing individual and corporate taxes, reducing the number of tax brackets, eliminating the Affordable Care Act, and doing away with the federal estate tax. However, the time frames for effectuating these potential changes are unclear. Some of these proposed changes may impact your 2017 taxes, while others may not go into effect until the 2018 tax year.
Other possible suggested changes include eliminating the Net Investment Income Tax, increasing the standard deduction for single filers and married couples filing jointly and decreasing corporate taxes from 35% to 15%. It has also been proposed to allow childcare costs to be deducted above-the-line, and new savings accounts could be created for childcare expenses and care for elderly parents.
It is important to talk to your tax attorneys or tax professionals about how changes to the tax law may impact you or your business. Your tax attorneys should keep up to date on the latest developments in tax law. By doing so, they will be able to advise you on how you can reduce your tax liability and take advantage of changes in tax policy.
Butterfield Schechter LLP is San Diego County's largest firm focusing its law practice on employee benefit legal services, tax law, and business counseling. Our firm can help you and your business identify tax-savings opportunities, avoid tax penalties, and stay informed of the latest changes in tax law. Contact our office today with any questions on how we can help you and your business succeed.