"Top Ten Tips" On Tax Reform: What You Need To Know

Boston, MA (February 13, 2018) – BlumShapiro, the largest regional business advisory firm based in New England, has released a summary of the top ten key points Massachusetts businesses and individuals should be aware of regarding the GOP Tax Reform Bill.

The tax cuts and jobs act was signed into law on December 22nd and marked a historic tax reform initiative. "The last time this happened was in 1986," said Alan Osmolowski, CPA and partner at BlumShapiro. There was a need for US tax reform; US tax rates were higher than the rest of the world. One of the key changes in the GOP Tax Reform Bill is the US corporate rates were lowered to 21% from 35%. There is a new deduction available to "S" corporations and partnerships, but not all businesses are eligible. Massachusetts businesses should discuss the option of their entity choice, i.e. "S" versus "C" corporation with their tax adviser.

Individuals won't be able to file their tax return on a postcard just yet. There is a new standard deduction of $24,000 for those married, filing jointly. The state and local tax deduction is limited to $10,000. The child tax credit doubled from $1,000 to $2,000 per qualifying child. The phase out was formerly $110,000 but has now gone up to $400,000. The new tax law has lowered tax rates at most income levels. The top tax rate has been reduced from 39.6% to 37% on income higher than $600,000. The AMT is not eliminated and the threshold has gone up from $84,000 to $110,000. Finally, the estate tax was not eliminated; the exemption doubled to $11.2 million; Massachusetts still taxes estates valued at $1 million or more.

Massachusetts business owners and individuals should meet with their tax adviser to get a comprehensive overview of the tax reform legislation, particularly on the how the changes affect them.

Alan is a partner at BlumShapiro and he focuses on providing tax consulting and compliance services to growing dynamic companies in a broad range of sectors including technology, life sciences, real estate, manufacturing and clean energy. Alan also serves as the firm’s practice leader for its technology and life sciences industry group. With more than 26 years of experience, he assists clients in identifying, evaluating and implementing tax planning strategies that result in significant tax and cash flow savings. He works with other members of the BlumShapiro team to address client tax issues and implement innovative and sustainable tax savings strategies.