Dear valued client:
As the holidays approach and 2018 draws to a close, I want to thank you for your business over the last year. I hope that it has been a good year for you and your loved ones.
To help understand the recent changes regarding to State and Federal tax matters for 2018, I may be able to identify some opportunities with my best wishes for 2018 so that you can anticipate what may affect you in conducting your business.
Briefly addressing the changes, the State of Washington will require you to pay sick leave for your employees, who are eligible, based on their work hours. In this morning, President Trump has signed on the new tax reform bill, which will effective for the new year. The main change anticipated is the change of tax rate, not merely for corporation, but it will affect to also that of individual. I will articulate more details of the most applicable changes in next page.
Be sure to keep me informed about any changes so that I can help minimize your federal and state income tax and set up a payment schedule that best meets your needs.
During 2017, it has been blessed for us to serve you while establishing more reliable and deeper relationships. We could not have come this far without the encouragement and backing of your support.
Once again, thank you for choosing us as your financial and tax advisor. If you have any questions, please don’t hesitate to contact us.
My very best wishes for a happy holiday season and for health and happiness in 2018.
Min Won, CPA
Min Won & Associates
Changes for 2018 – State of Washington
The applicable minimum hourly wage in 2018 – Starting January 1, 2018:
- State of Washington in 2018 is $11.50.
- City of Seattle in 2018 is $14.00.
- City of Tacoma in 2018 is $12.00.
Paid Sick Leave Requirements – Employers will be required to provide their employees with paid sick leave.
- Most employees must accrue paid sick leave at a minimum rate of 1 hour of paid sick leave for every 40 hours worked. This includes part-time and seasonal workers.
- Paid sick leave must be paid to employees at their normal hourly compensation.
- Employees are entitled to use accrued paid sick leave beginning on the 90th calendar day after the start of their employment.
- Unused paid sick leave of 40 hours or less must be carried over to the following year.
- If an employee carries over unused paid sick leave to the following year, accrual of paid sick leave in the subsequent year would be in addition to the hours accrued in the previous year and carried over.
- Employers are allowed to provide employees with more generous carry over and accrual policies.
Usage – Employees may use paid sick leave:
- To care for themselves or their family members.
- When the employees’ workplace or their child’s school or place of care has been closed by a public official for any health-related reason.
- For absences that qualify for leave under the state’s Domestic Violence Leave Act.
- Employers may allow employees to use paid sick leave for additional purposes.
Reimbursement for Sick Leave Upon Separation of an Employee
- An employer may choose whether to provide a financial or other reimbursement to the employee for accrued, unused paid sick leave balances available at the time of separation.
- If an employer chooses to reimburse an employee for any portion of their accrued, unused paid sick leave at the time the employee separates from employment, any such terms for reimbursement must be mutually agreed upon in writing by both the employer and the employee, unless the right to such reimbursement is set forth elsewhere in state law or through a collective bargaining agreement.
Changes for 2018 – United States
Individual Income Taxes
- The number of tax brackets will be remained, but its income thresholds are somewhat reduced. Most Americans are likely to see a small reduction in taxes under the plan while People who make in the high hundreds of thousands of dollars a year or just over $1 million a year could see the biggest benefits.
- The Standard deduction will be nearly double from $12,000 (MFJ) to $24,000.
- The current personal exemption, which is $4,050-per-household-member, will be eliminated.
- State and local tax deduction will be limited to $10,000.
- New cap on the mortgage interest deduction for newly purchased homes should be up to $750,000 in loan debt.
- The current child tax credit is worth up to $1,000 per child, and will increase to $2,000 per child under the plan.
- Individual mandate provision for medical insurance will be eliminated in 2019.
- The lifetime exemption on the estate tax, that is currently top rate of 40% on estates above $5.6 million, will be increased to on estates above $11.2 million.
Corporate Income Taxes
- The current highest corporate income tax rates at 35 percent will be reduced to the flat rate at 21 percent.
- 20 percent of the income pass-through businesses (S-corporations and partnership) earn will have 20% deduction, phasing out starting at $315,000 of income for couples.
- The new investment purchase will be allowed to have Five years of full expensing, then phased out over five more years.
- The Section 179 expensing will be increased from $500,000 limitation to $1 million limitation.