When the new tax plan was signed into law January 2018 by President Trump, there were some happy and a lot of people upset about the changes.
But really, it is just change. It means that you need to change what you’re doing, how you expense items so you still keep your deductions and how you make your money. The people that this will hurt the most are the ones who are unable or unwilling to make the needed changes.
First, if you don’t yet have a business, start one. The sooner, the better. You need a business in order to take advantage of the itemized deductions you’re going to lose
Secondly, look at cutting some of the excess expenses you have that may no longer be deductible. For example, can you turn your vacation home into a deductible rental? Can you write off a home office now?
Third, do you have the right business structure? This actually will be the biggest conversation I’ll have with my clients this year. The new pass-through tax reduction helps, but mainly only if your taxable income is below the threshold amount. If you have a service business over the threshold, you won’t get any deduction. If your non-service business is over the threshold, you will be limited by wages and/or a combination of wages paid and depreciable assets. C Corps now have a flat rate of 21%. Personal service companies now have the same ability for write off.
In March 2018, we launch the brand new “Taxmaggedon 2018” book with over 75 strategies to help you gear up to pay less tax with the new tax act. Don’t miss out!