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More Thoughts on the Tax Cuts and Jobs Act [From a Dallas Business Lawyer]

Dallas business lawyer, Richard “Ric” Armstrong, explores how the Tax Cuts and Jobs Act will impact Texas entrepreneurs.

With sweeping changes in the tax code going into effect on January 1, 2018, many business owners are scrambling to understand how (or if) they will benefit from the promised tax cuts. Corporations have received the biggest tax breaks, but most small business owners also stand to see potential reductions in their taxes starting this year.

That said, by the time both houses of Congress and the President agreed on a finished version of the tax bill, it had become far more complex than initially promised. (Isn’t that ALWAYS the case? So much for those “postcard-sized tax returns.”) Here’s what Texas business owners need to do to make sure they’re receiving the best benefit from the new law.

For Mid- to Large Sized Corporations

Aside from your accountants needing a crash-course in how the new law works, most of the tax breaks for corporations will occur without a lot of adjustment or restructuring needed. There may be a few tweaks here and there to take advantage of certain benefits, but corporations for the most part will simply enjoy a slashed tax rate that saves them thousands to millions per year.

For Small Businesses and Pass-Through Businesses

The tax law becomes a bit more complicated for smaller businesses, even with the new deductions for so-called “pass-through” businesses (typically, S-corps) where revenue is reported as personal income by the owners. For example, individuals owning service businesses can only claim the deduction if they make less than $157,500 per year (double that amount for married couples). For this and other reasons, small business owners and service professionals should consult with a qualified business law attorney to make sure their business structure enables them to receive the full benefits of these deductions.

Other Key Points for Businesses

  • The Act prevents corporations from deducting interest expense in excess of business interest income to 30% of your adjusted taxable income.
  • When you acquire qualified depreciating assets, you can now deduct the costs in a single year as opposed to over many years.
  • You can no longer deduct the costs of free snacks for employees!

Impacts on the Personal End

You are not just a business owner (presumably!)—so how will the Tax Cuts and Jobs Act affect you and your family?
Here are some highlights, courtesy of The Balance:

  • “It doubles the standard deduction.”
  • “It eliminates personal exemptions. Before the Act, taxpayers subtracted $4,150 from income for each person claimed. As a result, some families with many children will pay higher taxes despite the Act’s increased standard deductions.”
  • “The Act eliminates most itemized deductions… [but keeps them] for charitable contributions, retirement savings, and student loan interest…. [while limiting] the deduction on mortgage interest to the first $750,000 of the loan.”

If you need advice from a Dallas business lawyer who has booked up on the new law, we’re here to help. Call Armstrong The Law Firm, P.C., today at 972-424-L-A-W-S (5297).

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Armstrong The Law Firm, P.C.
Plano Location
1400 Gables Ct #103
Plano, TX 75075

Fort Worth Location (By Appointment Only)
5601 Bridge Street, Ste. 300
Ft. Worth, Texas 76112

Phone: (972) 424-5297