What’s all the hype about this new tax law?
The Tax Cuts and Jobs Act of 2017 encompassed many federal tax law changes that will affect your 2018 tax filings.
A highlight of some changes include:
- Higher standard deductions
- Limitations or removal of some itemized deductions
- Removal of the personal exemption
- Changes to pass through entity revenue recognition and potential 20% deduction
- Disallowance of certain deductions
- Increases to Bonus Depreciation
- Changing amounts of credits
- Change to Net Operating Loss treatment
These are just a few of the sweeping changes to the federal tax filings this year.
To date, Minnesota has not conformed to these changes, thus they are operating under the pre-act tax rules. This lack of conformity stands to make the 2018 Minnesota tax filings significantly more cumbersome than past years. You might be taking the higher standard deduction for federal filings and still report the detail to itemize for Minnesota. You may also take higher depreciation deductions for your federal return and while having to maintain separate depreciation schedules for Minnesota with different depreciation rules. We anticipate an increase in tax preparation fees to account for the additional time needed to deal with these complexities. See the link of an article from the Minnesota Society of CPA’s outlining some of the challenges taxpayers and tax professionals will face for the upcoming tax filing season.