As a tax prep professional in San Diego, I’ve been doing my homework to understand the new tax reform changes and how it will affect my clients. I’ve come to the conclusion that 2018 is going to be a whole new ballgame for every American taxpayer. Overall, it would seem most of us will be paying lower taxes.
There is very little that will impact your 2017 tax return, with the exception of slightly better allowances for medical deductions for those who itemize.
Keep in mind that the final word isn’t out. The IRS is scrambling to understand how to implement all the new rules.
The big changes will be for your 2018 tax return.
Many popular deductions have been cut from the tax code. However, many deductions that you claim now will be grandfathered in. So if you have a big mortgage interest deduction or pay alimony now, you should be able to continue deducting it.
If you own your own business, the new changes may be a terrific windfall for you. Many businesses owners will receive a 20% deduction for business income! There is a complicated formula to claim the deduction. Taking time now for a planning meeting with me will help you understand how to take advantage of this beneficial clause in the new rules.
Deducting job related expenses is a thing of the past. Now is the time to speak with your employer if you use your car for work or have other unreimbursed employee expenses. I have done calculations for clients showing the actual money they were saving in taxes. In some cases they have been able to work with their employers to make up the difference on their paycheck.
If you have questions about how these new rules will hit your bottom line schedule an appointment. We have updated tax planning software to help you.