Memo – Tax Reform Saved My Clients Over $3Million in 2018

To listen to the podcast version of this memo click here –> Podcast Version

As Tax Season 2018 is approaching, I wanted to give another update on how Trump’s Tax Reform is impacting my clients, the majority of which are middle class families and businesses.

Over the past few weeks I went through every personal and business tax return that I prepared last year, and applied the new tax laws enacted for 2018 to them.

My results even surprised me. I knew that 99% of my clients would be saving money this year compared to last year. This is due to a number of reasons that I will detail in a moment.

So what did I find?

The total projected savings due to the new tax laws in 2018 is over $3Million.

Why is that?

First, let me explain how our tax system works. The amount of income tax that you owe each year is based on your income level. The United States currently uses a progressive income tax system — which means that the more money you earn, the more taxes you have to pay, and you pay a higher rate on those higher levels of income. These are called tax brackets.

In 2017 those tax brackets started at 10% and reached as high as 39.6%.

In 2018, the number of brackets remained the same at seven. Rates overall, however, have come down. 

The top rate will fall from 39.6% to 37%. The bottom rate remains at 10%. So we have a lowering of rates from 2017 to 2018 and we all understand that will give us less tax on the same taxable income.

But another change that was made was how long you stay within those brackets before your income becomes taxable at a higher level. These two things then, the lowering of rates, and moving of brackets to higher income, have dramatically reduced the overall taxes we all will be paying.

Also, the alternative min tax or mat has been dramatically changed and fewer taxpayers will be subject to it in 2018 compared to 2017.

The next tax reduction comes for business owners, which are the majority of my client base. Trump got a lot of heat for reducing the corporate tax rate, but many in the media fail to report that he gave an even bigger tax cut to small business.

What are the tax breaks for small businesses in 2018? Many will be able to reduce their tax bill by 20%. It is that simple. This is the largest tax cuts for small business I have ever seen in my 30 year career.

Of course, this memo has used a broad brush to discuss these very intricate issues. 

Do you know how Trump’s Tax Reform is going to impact your family and your business? If you don’t, you should call me immediately to schedule a consultation so we can analyze that for you. 

I look forward to seeing you in tax season which will be here before you know it!

Click here to request a consultation or ask me a question.

Please reach out to me without hesitation with any tax, business or

accounting question, and to schedule a consultation.

Tax Laws are complex.

It is very easy to make mistakes that can incur penalties.

Do you have a Tax, Accounting or Business Question?

Call Me Immediately. (732) 673-0510.

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Remember,

“If We Aren’t Working For You, Then You Aren’t Working At Your Best”

Chris Whalen, CPA
(732) 673-0510
79 Oak Hill Road
Red Bank, NJ 07701
www.chriswhalencpa.com

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