Urgent – Schedule Your 2018 Year-End Tax Planning Meeting Now!

“With the new tax law, using the right tax advisor is more important than ever. While most businesses only talk to an advisor once or twice a year, great tax advisors have regular strategy meetings with clients to discuss goals and approach. They are passionate about both the tax laws and the client’s future. While most accountants think in a straight line, a really good accountant finds creative (and legal) ways to use the law to save the taxpayer money. The best tax professionals are always CPAs, or certified public accountants. Most business owners should use a CPA because these professionals are the most knowledgeable and passionate about reducing taxes. Only a thorough diagnosis by a tax professional will lead to major tax savings,” recommends Entrepreneur.com.

Year-End Tax Meeting

2018 is closing out quickly with us being in the fourth quarter already. Time really does fly! Have you scheduled your year-end tax meeting with your CPA yet? A meeting is necessary to be proactive about discussing these items and more:

• The 130 new tax provisions
• Your financial needs and wants
• How to take advantage of all the tax deductions available
• Best ways to lower your tax bill
• Itemized deductions versus the standard deduction
• Tax Cuts and Jobs Act
• Income and expenses
• Health insurance information
• Corporate retirement plans
• IRA Contributions
• Converting from a traditional IRA to a Roth IRA
• Stocks
• Gifting to family members

Itemized deductions vs. the standard deduction

“The Tax Cuts and Jobs Act roughly doubles the standard deduction. This means that for 2018, joint filers can enjoy a standard deduction of $24,000. However, the new law suspends personal exemption deductions and eliminates or limits many of the itemized deductions. For example, the state and local tax deduction is now capped at $10,000 per year, or $5,000 for a married taxpayer filing separately. Also, the Tax Cuts and Jobs Act temporarily eliminates miscellaneous itemized deductions subject to the 2 percent floor (like tax preparation fees and employee business expenses) and limits the home mortgage interest deduction to home acquisition debt of up to $750,000, or $375,000 for a married taxpayer filing separately.

So, what does this mean for you? For those who typically claim the standard deduction, chances are their tax bill will decrease for 2018. Although personal exemption deductions are no longer available, a larger standard deduction, combined with lower tax rates and an increased child tax credit, may result in less tax. Also, you may find that those who itemized last year won’t itemize this year, or they may be able to itemize for state income tax purposes but not for federal. You will need to run the numbers to assess the impact for each client. Depending on the results, you may need to adjust your clients’ estimated quarterly tax payments or encourage them to turn in a new Form W-4 to their employers,” explains Accounting Today.

Qualified business income deduction

“Perhaps the hottest topic of the Tax Cuts and Jobs Act is the new qualified business income deduction under Section 199A. Individuals who own interests in a sole proprietorship, partnership, LLC, or S corporation may be able to deduct up to 20 percent of their qualified business income. However, the deduction is subject to various rules and limitations. Although the final official guidance is lacking on this new deduction, there are some planning strategies that can be considered now. For example, clients can adjust their business’s W-2 wages to maximize the deduction. Also, it may be beneficial for clients to convert their independent contractors to employees where possible, but make sure the benefit of the deduction outweighs the increased payroll tax burden and cost of providing employee benefits. Other planning strategies include investing in short-lived depreciable assets, restructuring the business, leasing and selling property between businesses, and, yes, even getting married,” reports Accounting Today.

As we approach 2019, it would be a great time to get the help you need to be proactive about organizing and filing your 2018 taxes on time. Contact a full-service public accounting firm that can help you with this goal.

Joshua Wilson, CPA, PC is a full-service public accounting firm that specializes in accounting, tax preparation, tax planning, & business development for small businesses in Winder, GA and the surrounding areas. Give Joshua a call today to set up a consultation at 770-856-1309 or email him at josh@joshuawilsoncpa.com.