New Tax Law Means Flurry of Work for Payroll Depts, Accountants and… You?
Join us and tell your reps how you feel!
What’s the story?
Despite the fact that the IRS will have 18 months to actually write new tax rules based on the tax bill, taxpayers will be subject to them in less than two weeks. This narrow window of knowns is sowing chaos among employers, payroll companies and individual taxpayers, who are either scrambling to take financial steps before new rules are in place, or who are trying to figure out how withholding will work starting January 1.
In states with high state and local tax rates like New York and New Jersey, taxpayers are wondering if they can prepay their property taxes for 2018 and deduct them on their 2017 return. The new law caps deductions for property and income or sales tax at $10,000 annually, and GOP lawmakers specifically barred individuals from prepaying 2018 income tax for a tax break. But they didn’t bar prepayment of property taxes, reports Politico.
Some municipalities, anticipating the confusion, already created the means to accept 2018 prepayments, but others have not. And it is unclear if individuals can reasonably take deductions for taxes that have not yet been billed.
Additionally, individuals considering selling real estate or other capital assets, taking out a mortgage or incorporating their businesses will have to quickly calculate whether these actions will cost them more or less in the coming year.
Employers and payroll companies are also scrambling to figure out how to handle withholding on paychecks starting January 1, since rules have not yet been written. It will likely mean tax adjustments in future quarters, since full rules are unlikely to be written before the close of the first quarter of 2018 on March 31.
Taxpayers should consult an accountant before making any significant financial decisions. You may want to call today. The clock is ticking.
What do you think?
Are you concerned about immediate changes to your tax rates? Do you feel you understand the implications? What decisions are you weighing as the clock ticks down to 2018 when new rules will be in place?
Tell us in the comments what you think, then use the Take Action button to tell your reps!
— Asha Sanaker
(Photo Credit: Wall Street Journal via Twitter)
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