2018 Year-end tax

Prepare and plan now to minimize tax burden before the end of the year

Crowe releases its 2018 year-end tax planning guide

2018 Year-end tax

CHICAGO (Oct. 31, 2018) – Last December, the Tax Cuts and Jobs Act (TCJA) was signed into law, the most sweeping tax legislation since 1986. To help businesses and individuals navigate the new tax landscape and minimize their tax burden, Crowe has now issued “Tax Planning: 2018 Year-End Guide.” Crowe is a public accounting, consulting and technology firm with offices around the world.

The TCJA made small reductions to income tax rates for most individual tax brackets and substantially reduced the income tax rate for corporations. However, to offset these rate reductions, a number of popular tax breaks were limited or eliminated. According to Gary Fox, managing partner of Crowe tax services, much of the tax relief provided is only temporary. “Unless Congress acts to make the cuts permanent, timing your income and expenses is critical this year and during the next few years,” he said. “Working closely with a tax adviser can help you identify which changes affect you and the best strategies for maximizing the new law’s benefits, while minimizing negative tax ramifications.”

Additionally, the TCJA substantially increased alternative minimum tax (AMT) exemptions, which means fewer tax payers will have to pay the AMT. There are now fewer differences between what’s deductible for AMT purposes and regular tax purposes, which will also reduce AMT risk. Fox noted that the AMT will still remain a threat for some higher-income taxpayers.

For tax years from 2018 through 2025, the TCJA created a new deduction for owners of pass-through business entities, such as sole proprietorships, partnerships, S corporations and limited liability companies treated as sole proprietorships or partnerships for tax purposes. The deduction generally equals 20 percent of qualified business income (QBI), subject to limitations that begin to apply if taxable income exceeds $315,000 for married taxpayers or $157,500 for single taxpayers. This QBI deduction isn’t allowed in calculating the owner’s adjusted gross income, but it reduces taxable income.

The guide also includes deeper insights on the following topics:

  • Year-to-date review: AMT triggers, avoiding or reducing AMT, timing income and expenses, employment taxes, self-employment taxes, additional 0.9 percent Medicare tax, owner-employees and estimated payments, and withholding
  • Executive compensation: restricted stock, incentive stock options, nonqualified stock options and nonqualified deferred compensation plans
  • Investing: 3.8 percent net investment income tax, capital gains tax and timing, wash sale rules, loss carryovers, zero percent capital gains rate, mutual funds, small business stock, passive activities, income investments and investment interest expense
  • Real estate: home-related deductions, home office deduction, home rental rules, home sales, real estate activity rule, depreciation-related tax breaks and tax-deferral strategies
  • Business ownership: taxes on business income, business loss deduction, retirement savings, exit planning and sale or acquisition
  • Charitable giving: cash donations, stock donations, individual retirement account (IRA) donations, making gifts over time, charitable remainder trusts and qualified charities
  • Family and education: the “kiddie tax,” IRAs for teens, 529 plans, education savings accounts, ABLE accounts and the American opportunity credit
  • Retirement: retirement plan contributions, Roth IRA conversions, early withdrawals, leaving a job and required minimum distributions
  • Estate planning: estate tax, gift tax, generation-skipping tax, state taxes, exemption portability, tax-smart giving and trusts

To download the guide, please visit www.crowe.com/insights/asset/t/tax-planning-2018-year-end-guide.

About Crowe
Crowe LLP (www.crowe.com) is a public accounting, consulting and technology firm with offices around the world. Crowe uses its deep industry expertise to provide audit services to public and private entities. The firm and its subsidiaries also help clients make smart decisions that lead to lasting value with its tax, advisory, risk and performance services. Crowe is recognized by many organizations as one of the best places to work in the U.S. As an independent member of Crowe Global, one of the largest global accounting networks in the world, Crowe serves clients worldwide. The network consists of more than 200 independent accounting and advisory services firms in more than 130 countries around the world.

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Amanda Reich
Amanda Reich