At the beginning of every new year, almost all small business owners take the time to meet with their tax accountants to review business performance of the prior year, and to anticipate any changes for the new year. Tax expectations for 2017 may hold more changes than most years, since a new administration has come into power and new policies are likely to be issued as a result.
New filing deadline
Deadlines for filing your tax returns are the first thing that have changed for 2017. Filing dates for C-Corp entities using form 1120 are being pushed back to April 15 from the previous deadline of March 15. Filing for S-Corp entities using form 1120–S, as well as Partnerships filing on form 1120, have been moved up to March 15 from the previous April 15.
Extensions on tax breaks
Some previously allowed tax breaks will be continued in the coming year, including several important deductions and credits that most businesses should take advantage of. For example, section 179 expensing of business equipment is broadened to include off-the-shelf computer software, and the existing deduction of $500,000 on equipment purchases of less than $2 million, has been made permanent.
Social Security taxes
The cap has been raised on taxable income from $118,500 to $127,200, so that the maximum amount of Social Security tax that any taxpayer would have to pay will rise to $7,886.40 in the coming year. Self-employed persons are still required to pay their normal taxpayer mount, in addition to a matching employer amount.
Corporate tax rate changes
One likely impact of the incoming administration will be to decrease the corporate tax rate, which is now at 35%, but is expected to be reduced to between 15 and 25% for C-Corporations. While this will not affect small businesses per se, it is expected to spur a shift from many small businesses over to the status of C-Corporations.
Affordable Care Act (ACA) changes
Another likely change might be the outright appeal of this act, which would have a significant impact on small business taxes. Because it is not yet clear what the new administration plans to do about the ACA, previous practices should remain in effect, although it is likely that business regulations will be significantly impacted in 2017.