SMB’s (a business with 100 or fewer employees) are looking forward to the 20% tax overhaul deduction for pass-through businesses. But less obvious is an additional savings opportunity this pass-through deduction offers married couples filing separately.
The “married, filing separately” tax status is rarely used because it doesn’t allow spouses to file as though each is single. Instead, filing separately more often limits the tax breaks that joint-filing couples can take. IRS Publication 501 has a list of limits for “married, filing separately.”
What is the history behind tax benefits favoring couples to filing jointly?
The tax savings for couples filing a joint return amounted to a “marriage bonus.” The status favored families with one spouse earning most of the income. Because this formula was unfavorable to single filers, Congress made past efforts to help them which just created burdens for two-earner married couples.
However, the 2017 tax overhaul provides benefits for “married, filing separately” when one spouse is a pass-through business owner, and the other is a high-income wage earner. If the combined income is above a $315,000 limit, a filing separately married couple might get the break from the business owner.
Like everything ‘taxes’ each couple has to crunch the numbers. There are limitations and caps so for most of us our CPA has the answers for tax-saving opportunities in 2018. The capped deductions for state and local taxes, or SALT, adds another twist to 2018 planning.
To help our friends and clients navigate the 2017 tax overhaul, here is the WSJ ‘Guide to the New World of Taxes’. This handy ebook will not elevate you to an economist status, but we hope it will inform you about the tax code changes. The ebook is a quick need-to-know reference for homeowners, families, investors, retirees, professionals and SMB’s owners.
Download your ‘Guide to the New World of Taxes’.
What’s Covered in this guide?
The Big Picture
• Tax Rates and Brackets
• Standard Deduction and Personal Exemption
• Child and Dependent Tax Credits
• Taxes on Investment Income
• Alternative Minimum Tax
• Home-Sellers’ Exemption
• The Marriage Penalty
• Estate and Gift Tax
• State and Local Tax Deductions
• Mortgage-Interest Deduction
• Charitable-Donation Deductions
• Medical-Expenses Deduction
• Other Deductions
Retirement and Education
• Retirement Savings
• Retiree Tax Issues
• 529 Education Savings Accounts
• Other Education Tax Benefits
For Business Owners
• Pass-Through Income
• Debt Interest Payments
Now, when it comes to insurance premium savings our team knows where to find all the discounts. Just like taxes, there is not one formula to fit everyone. And there is not one insurance underwriter that offers the best of all coverages. That’s why the Brady Insurance Group represents over 50 A+ rated insurance companies. We shop rates so you don’t have to.
Call 866.764.1944 now and talk to a real person who will make understanding and buying insurance coverage easy.