Ready for next year?
It’s 5pm and dark in Seattle, which means it’s time to reflect on the year with an eye on your taxes. 2018 is more daunting than usual, as we’re dealing with the biggest overhaul of tax code in thirty years.
The good news is, the majority of us won’t see a substantial change in the records to keep or expenses to track. That is because most of the overhaul came in the form of lower tax rates for the super-rich folks.
The bad news is, most of the overhaul came in the form of lower tax rates for the super-rich folks. But that’s a topic for another day.
Key issues for those of us that are “less than pimpin”:
1.) Standard deduction. These amounts will be substantially higher, which means less income is taxable.
2.) Exemptions. No longer apply. This somewhat negates the benefits from #1.
3.) No longer deductible. Home equity loan interest and moving expenses are no longer deductible. Military members are still allowed to deduct moving expenses.
4.) Business Income Deduction. A bright spot for self-employment, 20% of Schedule C or E income will not be taxed.
5.) Meals and Entertainment Expenses. Business meals are still deductible for the self-employed, but entertainment expenses are not. That means buying the cheap Mariners seats while still impressing clients and employees with the $20 lobster roll washed down with a $9 beer at the stadium.
6.) Local tax deductions limited. Local tax deductions are now limited to $10K. Seattleites and other West Coasters are likely to feel this one, as we tend to have high real estate, vehicle and sales taxes.
7.) Employee expenses. Other than a special exception for commercial sales people, employee expenses are no longer deductible.
As with everything IRS, there are plenty of other fine-print details to discuss with your tax preparer.
But these, my friends, are the key BattleTax Facts.