One of the big “selling points” (to use the term very loosely) of the new tax act was that it would make tax filing simpler for the vast majority of people. Oh, but if that were true.
Put it this way, if you are currently paying over $500 for tax preparation you will likely still need to see a professional to ensure that you are in compliance with tax law. Your taxes are not simpler to calculate and you are likely faced with a monstrous number of choices that some professional guidance is warranted.
As discussed previously, if you are in business for yourself and live in a high tax state, It is unlikely that you can easily file your own taxes. I mean, except for those engineers and frustrated accountants out there who think that the real magic is in dropping numbers into boxes and creating an Excel spreadsheet to do the calculations. That is the easy part.
You are facing a daunting array of choices and options – from filing as a C Corporation to the amount of wages you should pay. Do you take bonus depreciation or regular? Each decision has current and future ramifications that can benefit or hurt you.
Will you need a tax preparer? Most likely. Oh, not if you are a W-2 employee for a company and have a modest lifestyle. Let’s face it, $12,000 of itemized deductions is hard to get over as a single person. Property taxes, state taxes and mortgage interest will likely be only about $10,000 at best. Your taxable income will be higher but your bracket will likely be lower – which is the tax reduction you were promised.
If you are a sales professional who used to have a fairly outsized unreimbursed employee expense deduction you will likely no longer need an accountant to prepare your taxes. You may want to talk with one though to help you renegotiate your compensation package because the loss of those deductions is going to sting. Unless you can make it work as an independent distributor of the companies products – in which case, yes, you may want to work with a tax preparer.
You will adapt to the new tax law just like tax preparers will adapt. I doubt that 2019 will see a dramatic reduction in the number of returns filed by paid tax preparers; perhaps by 2021. Of course, that assumes we are not whipsawed by a change in congress which decides to change the tax code again.
In the meantime, use your resources to engage the best professionals available. If you are interested in starting a business then I suggest talking with a professional who can help you plan and grow your business profitably. Too much of an emphasis on taxes minimizes your potential. Trust me, there are lots of ways to use profits to improve your business but you have to make the money first. The easiest tax planning is based on zero. It is the absolute worst for planning your life though.
Time for the plug. If you are looking for some solid planning feel free to contact me. I enjoy working with small business owners who have dreams of making a ton of money and who want great advice for getting their business to the next level. I am here to be of service to you. Feel free to contact me anytime.
Have an awesome Tuesday.