The Tax Cuts and Jobs Act (TCJA), which was approved and signed on December 22, 2017, affects both individuals and businesses filing in 2018, and in a big way. The IRS recently released Publication 5307 to help taxpayers learn how this tax reform impacts them, but what does this mean for you as a business owner? Let’s talk about that.
As a Business owner, you should be prepared to work with your employees and make sure that they’re withholding enough money from paychecks to avoid large amounts due to the IRS at the end of the year. This recent tax reform also affects your estimated quarterly taxes sent. Be sure to adjust this according to the new guidelines.
The IRS has recommended three easy steps to prepare for the upcoming tax season. Sharing these tips with your employees will help ensure a smooth tax reform transition for everyone. They’ll thank you for it.
Gather Your Documents
It is best to gather all needed documents before sending in your tax return. Some of these forms include: W2’s, 1099’s and 1095-A’s. It’s always a good idea to have the previous 3 years tax returns on hand in case of an audit.
Choose E-File & Direct Deposit
Electronic filing is the quickest and easiest way to avoid errors when filing your tax return. The best ways to e-file are:
If you’re getting a tax refund, choosing direct deposit to your bank account is the fastest and safest method of return. You will receive your money quicker, and you won’t have to worry about a lost or stolen check.
Renew Your Expiring Identification Number
If you have an Individual Taxpayer Identification Number (ITIN), you should check the expiration date. Any ITIN not used on a federal tax return in the past three years will expire Dec. 31, 2018. Also, any ITIN with middle digits 73-77 or 81-82 will need to be renewed by the end of 2018. You can renew your ITIN by using Form W7.
Being proactive to understand how the new tax reform affects everyone will help you and your employees avoid surprises or penalties.
To learn more about the Tax Cuts and Jobs Act, visit IRS.gov/getready.