If you’re a small business owner, chances are you’ve been researching and looking at the new tax law to see how it could affect you. Depending on how you are structured, there are a few changes that will apply to you, and it’s important that you pay attention to your business structure, because that can mean more or less taxes.
If you are a C corporation and bring in more than $50,000 each year, you’re in luck! You will now be taxed at a new rate of just 21 percent. This is the new flat rate for all C corporations. Previously, the rate at which your corporation was taxed was determined through a bracket that was based on your income and increased as your income did. The rate did cap off at 35 percent.
If you are an S corporation, partnership, or sole proprietor that has flow through income, there’s good news for you as well. You may have a new deduction! With the new tax law, you may be able to deduct up to 20 percent of your qualified business income. However, there are certain criteria you need to meet. Depending on how much you make, you may not be able to deduct the full 20 percent. For married filing joint business owners that make less than $315,000 or single filers that make less than $157,500, you should be able to take the full 20 percent deduction. If you make over those amounts, depending on what type of business you own, you may still be able to take this deduction. If your business is considered a service business, once you hit the income threshold, you will not be able to receive this deduction. If your business is considered a non-service business, you can still take the deduction even after the income threshold is met. How much you can take will be the lesser of: 20 percent of your qualified business income, or the greater of: 1) 50 percent of your W-2 wages or 2) 25 percent of your W-2 wages plus 2.5 percent of your qualified property cost.
If you’re still confused on how the Tax Cuts and Jobs Act affects you or your business or need help keeping up with which deductions apply to you, Polston Tax can help. Our team of tax attorneys and tax accountants have studied the new tax law and know all the changes and how they affect each type of taxpayer. Call us today at 844-841-9857 or click below for a free consultation!
Additional Readings
Getting a notice that you’re facing an IRS audit can be unnerving, to say the least. Last year, 3.8 of every thousand tax returns were audited. An IRS audit is something no one wants to face, but it’s always a possibility. Even if you’ve followed every rule for filing your taxes and think you have accurate returns,...
We have compiled this comprehensive guide to help businesses understand their obligations related to sales tax in the state of Kansas. The guide covers various topics, including what items are subject to sales tax, how to register and file sales tax, and how to collect and remit sales tax. In addition to providing information on...
We’re in an era in which more small businesses are launching like wildfire. Recent studies showed that 17 million new small businesses were expected to launch in a single year. Small businesses are the backbone of the economy. But they’re often more tumultuous, have fewer resources, and are run by less experienced professionals. If you...
April 18 is fast approaching. That’s the official deadline for filing your 2022 federal tax return. As you gather your documents and assemble your information, it’s important to know about recent changes that have occurred. This year, the Internal Revenue Service (IRS) adjusted many of its 2023 tax rules. While you’ll still follow 2022 rules to...
Sales tax is paid to a local or state governing body for the sale of certain services and goods. In Oklahoma, the state sales tax is 4.5%, which is charged on sales of certain services and tangible personal property. Along with the state sales tax, local sales taxes and special district taxes may apply. Business owners...
If you have been struggling to pay the bills or your taxes, you may receive a notice that a garnishment or levy has been placed on your wages or bank account. Even if you make every effort to pay your back taxes, your circumstances may make paying your taxes difficult, such as a job loss...