For many individuals and small business owners, the end of 2017 and beginning of 2018 brought a sharp focus onto the issue of taxation. That is because the Tax Cuts and Jobs Act of 2017 (“TCJA”) was signed into law on December 22, 2017.
While many changes had immediate and obvious impacts – such as changes to the standard deduction for individuals and tax rate for corporations – the effect of other changes was not as immediately obvious. Because of the sweeping nature of many of the changes and the short period of time Congress considered the TCJA, many practitioners and advisors recognized the need for further guidance on how to implement practically the TCJA changes.
As a result, after some initial flurry of activity at the beginning of 2018, the tax community has spent a good portion of the year waiting for the IRS to provide guidance on the TCJA. And until recently, the IRS had provided very little. That all changed within the past month.
The past month has marked what may be the beginning of a steady stream of guidance on important changes the TCJA made to the tax laws. The IRS has finally addressed some of the long-awaited issues for which taxpayers have sought guidance. Most notably, the IRS issued proposed regulations on:
- Section 965 of the Code (related to ownership of certain specified foreign corporations);
- 100 percent bonus depreciation deduction; and
- 20 percent deduction for pass-through businesses.
The IRS also issued guidance related to:
- 529 education savings plans; and
- Small businesses eligible to use the cash method of accounting.
In addition, the IRS has encouraged taxpayers to check their withholding from employment to ensure proper amounts are withheld. For some taxpayers – such as those with children and other dependents – they may have too much being withheld. For other taxpayers – such as those with high incomes and complex returns – the IRS has encouraged them to review withholdings to ensure enough is withheld.
Though the aforementioned regulations and guidance begin to answer some of the questions the TCJA raised, much more guidance is anticipated in the months and years to come. Please contact one of the tax attorneys at Critchfield, Critchfield & Johnston, Ltd. with questions related to how the TCJA affects you or your business.