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|Some Corporations to Pay Blended Tax Rate|
Corporations will pay different tax rates for 2018. Last year’s Tax Cuts and Jobs Act enacted a flat 21% corporate tax rate, which replaced a graduated tax structure.
The new tax rate took effect January 1, 2018, meaning corporations with a fiscal year that includes that date will pay the flat rate. However, corporations will not pay the flat rate for the part of the year preceding the January 1, 2018 date.
Follow these steps to pay the blended tax rate:
- Calculate taxes for the entire taxable year based on the rate preceding the tax act’s effective date.
- Make a second tax calculation based on the new flat rate of 21% for the entire taxable year.
- Proportion the taxes based on the days in each taxable year (prior to and after the January 1, 2018 effective date).
- Generate the sum of these two figures, which is the amount of taxes the corporation will owe for the fiscal year.
All corporations with fiscal years that include January 1, 2018 must use the blended tax rate calculation. The IRS advises corporations that already filed returns for portions of the fiscal year in 2017 to file amended returns.
For more information, go to https://www.irs.gov/forms-pubs/2017-fiscal-tax-year-filers-must-use-blended-corporate-tax-rates.* This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor, such as those at Oak Partners http://www.oakpartners.com.