The Tax Cuts and Jobs Act for Privately Held Business Owners
Dear Clients and Friends,
Besides being one of the largest tax acts in history, it seems this may be one of the most entertaining. Business websites are now flooded with interesting articles on how the tax act will affect the world. News reports are saying that CPAs are the center of attention at parties. One headline said that Goldman Sachs is having their first quarterly loss in six years due to $3 billion in taxes they will have to pay on $31 billion in past profits they kept overseas. Apple, Microsoft, and other international companies are expected to pay $235 billion in taxes for more than $2.8 trillion dollars of past earnings parked outside the country. It seems the days of moving operations and keeping profits overseas to avoid taxes are over. These taxes on overseas profits that were never taxed in the US may hurt corporate financial statements in the short run, but companies are expected to come out ahead in the long run with the new low 21% C corporation tax rate.
With employees eyeing the 14% drop in corporate taxes, large corporations are tripping over each other to let employees know they will share in the companies increased profits from the tax act. Many large businesses have already announced employee raises, bonuses, and increased 401K contributions before employees even have a chance to ask for them. The act simplifies taxes for low income and middle class taxpayers who are expected to pay lower taxes and be able to file a simple one page return. But for the rest of the taxpayers, especially the ones who make more than $157,500, things may be more complicated than ever.