The 2017 tax reform reconciliation act, also known as the Tax Cuts and Jobs Act, represents the most sweeping rewrite of the federal tax code in more than three decades. It includes significant changes for businesses and individuals alike. Under this new tax landscape, it’s essential for individuals and business owners to consider a wide variety of tax strategies to best position themselves for the future.
It’s important to evaluate your options and outline tax planning strategies with your tax advisor sooner rather than later. In addition to referencing this guide during tax planning season, it can also be a helpful year-round tool. Staying actively involved in these and other underlying areas of tax planning will help keep you in a position to preserve and create longer-term wealth for you and your family.
We'll continue to update this page throughout the year. To learn more about these changes and how they affect you or your business, visit our dedicated tax reform page for a comprehensive list of topics and industry insights, or contact your Moss Adams professional.
Most individuals will see a reduction in their tax rates with tax reform. This creates some considerations to take into account when planning for the timing of income and deductions.
Explore what’s changed, your planning opportunities, and additional resources on this topic.
Tax reform roughly doubled the standard deduction amounts while suspending personal exemptions. This could result in fewer taxpayers choosing to itemize deductions which are discussed in more detail in the next section, Other Deductions and Credits.
Despite a considerable number of changes to deductions and credits, many taxpayers may opt to utilize the higher standard deduction rate instead. For those who do itemize deductions, careful planning is important to help identify new opportunities.
Tax reform included significant increases to the alternative minimum tax (AMT) exemption amounts and phaseout thresholds. Combined with no longer being able to deduct miscellaneous nonbusiness and state and local tax costs, taxpayers may find that they no longer qualify for AMT.
The new combined gift and estate tax exemption and the generation-skipping transfer (GST) tax exemption have created a considerable number of estate planning opportunities, including the following:
The federal tax reform limitation on the state and local taxes paid deduction has prompted more aggressive tax planning in states with higher taxes. Many taxpayers are looking for ways to decrease their tax liability, but there are some important things to consider when planning an individual residency or sponsored transition.
What states are contemplating regarding trust taxation could really affect potential trust taxation for beneficiaries. Explore what’s changed, your planning opportunities, and additional resources on this topic.
Capital gains didn’t change much through tax reform, so many planning opportunities are still the same as they have been in the past. Explore the minimal changes, your planning opportunities, and additional resources on this topic.
Companies that relied on Staff Accounting Bulletin 118 will need to complete and disclose the results of their provisional estimates within the 12-month measurement period that began in December 2017.
Tax reform made substantial changes to the way businesses now must manage their expenses, requiring additional scrutiny, increased data management, and extra review of contract details.
With the new, significantly lower C corporation tax rate of 21% and ability to deduct state income taxes in full, many business owners are exploring whether to convert their companies to C Corporations. However, this strategy isn’t right for everyone.
While there aren’t any specific tax-related changes when it comes to exit planning, there are still several strategies to consider when planning for the future of your company. These include:
Tax reform introduced sweeping changes to how the United States taxes international business while preserving many of the concepts that previously existed. With new GILTI provisions and a new tax on offshore earnings, there are several considerations for taxpayers making cross-border transactions and investments.
Companies that incur qualified R&D costs are eligible for a R&D tax credit, which could potentially save them thousands of dollars in annual state and federal taxes.
The R&D credit is based on four criteria:
Companies that don’t perform an R&D tax credit study risk improperly calculating the credit and lacking sufficient documentation in the case of an IRS audit. The ASC 730 Safe Harbor Directive offers an opportunity to reduce this risk.
ASC 606, Revenue from Contracts with Customers, represents a monumental change to how companies recognize revenue. The tax implications of a company’s adoption of ASC 606 for financial reporting purposes are varied and complex—in some cases, creating new book tax differences and additional data maintenance requirements. Compounding the tax impacts are changes to the tax rules under Internal Revenue Code (IRC) Section 451 for revenue recognition.
Following the US Supreme Court’s decision in South Dakota vs. Wayfair on June 21, 2018, many states have enacted economic nexus laws. These laws require remote sellers to collect sales tax into their respective states, similar to laws enacted in South Dakota.