This is the time of year when somewhere in between the holiday parties you worry about taxes (maybe).
Uh oh, what now?
There are some general things you can do, even at the last minute.
- If you don’t have a business, start one. (Yes, I say that every year. It’s never been easier, though. You can start an online business this weekend. Do it!)
- If you have a business, is a service business under the “specified service trade or business” (SSTB) designation? Don’t assume you know what that means. These are brand new definitions.
- Is your taxable income over the income threshold? ($315K married, filing jointly or $157.5K single)
If you have a SSTB, you need to additionally check whether your taxable income is over the second income threshold ($415K married, filing jointly or $207.5K single). If it is, you can’t take the 20% income deduction for pass through income. Between the first and second threshold, the amount you can deduct phases out.
If your non-SSTB business is over the income threshold, you are limited based on the wage limitation rules. That limitation is the greater of 50% of W-2 wages or 25% of W-2 wages plus 2.5% of qualifying depreciable assets.
It’s a whole lot more complicated than that and there are dozens and dozens of possible strategies depending on your answers to (2) and (3) above.
For now, though, at this late date, check where you are. If you’re close to the limitation, it’s time to pull out the stops and get deductions to get under the income threshold. Life is a whole lot easier.
And if you waited too long, just make the plan that 2019 is going to be a whole lot better!
Is one of your New Year’s Resolutions to pay off debt and get your finances under control? If that’s the case, then you will definitely want to pick up “The Three Secret Ways to Pay Off Debt FAST.” I’ll announce it in January 2019 and it’ll be available through Amazon.