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San Jose tax law attorney tax returnsIncome Tax Day--April 15, 2019--is just around the corner. This year, your taxes may be different from years past, thanks to the tax reform passed by the U.S. government. The Tax Cuts and Jobs Act (TCJA) has changed a wide variety of tax laws, and the IRS has stated that nearly every taxpayer will be impacted. 

These are some important ways taxes have changed that should be kept in mind when filing your 2018 taxes:

  • Tax rates changed. Taxes will be levied against taxpayers according to seven income tax brackets. These brackets range from 10 percent to 37 percent.
  • Higher standard deduction. The standard deduction has almost doubled. For 2018, it is $12,000 for singles, $18,000 for heads of household, and $24,000 for married couples filing together. There is a higher deduction available to the blind and those who are 65 and older. This means that many people will opt to take the standard deduction instead of itemizing deductions.
  • Certain deductions are limited or eliminated. One of the most common deductions that has been reduced is that for state and local tax. For 2018, the deduction is limited to $10,000 and to $5,000 for couples who are married and filing separate tax returns.
  • Child Tax Credit increased and expanded. The credit tops out at $2,000 for each qualifying child age 17 years old and under. Also, the income restriction for receiving full credit has been bumped up to $400,000 for joint filers and $200,000 for other taxpayers.

tFinally, it should be noted that the deadline by which you must file your tax return along with payment of any taxes owed has not been changed. While you can file for an extension, you must do so before Tax Day. Note: As in prior years, although an extension to file may be obtained, there is no extension to pay taxes due. Failure to timely file (in April or on extension) can mean an assessment of penalties and interest. Failure to timely pay (in April) can also mean an assessment of penalties and interest.

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San Jose tax attorney, tax reform, Tax Cuts and Jobs Act, business auto deductions, tax codeThe Tax Cuts and Jobs Act of 2017 made seismic changes to tax law in the United States, and individual taxpayers, small businesses, and large corporations are working to determine how they will be affected by the updates that will be going into effect in the near future.

One aspect of the new law that many may not be aware of concerns vehicles purchased or leased by businesses. It is essential that business owners be aware of how these changes can impact the deductions they may claim.

Business Auto Deductions

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San Jose tax lawyer, gig economy, tax reform, tax cuts, independent contractorsFollowing the passage of the Tax Cuts and Jobs Act of 2017, financial experts across the United States have been working to understand the full impact of this historic legislation. Much of the discussion surrounding the tax reform bill has focused on how its changes to tax law will affect large corporations (which have seen a reduction in the corporate tax rate from 35 percent to 21 percent). However, the growing portion of the country’s population that participates in the gig economy should also understand how it will be affected.

Taxes for Independent Contractors

Surveys have shown that there are 57 million people in the United States who currently perform freelance work either full-time or part-time, including people who earn an income in the gig economy (also known as the sharing economy), such as drivers for Uber or Lyft or people who rent their property through Airbnb. As independent contractors, these freelancers may be able to take advantage of new tax deductions.

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