By: Mary Barnett, Enrolled Agent
They say that nothing is ever certain except death and taxes, but that doesn’t quite hold true for 2018. The massive GOP tax cut finally will be going into effect – and causing major changes along the way. Just a little bit of planning, however, can help you come out on top.
One of the biggest shifts to prepare for is the loss of unreimbursed business expenses. Previously, taxpayers could deduct business expenses for which they were not reimbursed by their employer: i.e., auto expenses, travel, lodging, supplies, mandatory continuing education and training, and more. Under the new tax plan, those deductions are no longer possible.
Other deductions have also been slashed, including educator expenses that exceed the initial $250 deduction, and required expenses for our first responders and service employees, such as dues, range expenses, van pool and uniform maintenance.
In addition, taxpayers that pay fees for the management of their portfolio will also lose out on future deductions. Several other expenses – such as investment expenses, union dues, tax preparation fees, safe deposit box fees and more – have simply gone away.
Affected taxpayers will need to rethink the way these expenses are handled with their employers or within their larger financial plan.
If these changes will impact you, it is imperative that you plan for 2018. Talk to your CPA or tax advisor about what you can do to minimize the tax impact for 2018 when you meet with them to complete your 2017 tax return. Being proactive is the key to reducing your tax liability and eliminating unnecessary surprises at tax time next year.
Your tax professional will be able to help you plan your 2018 tax liability, considering the loss of these business deductions. Taking the time to prepare for 2018 will help you make solid decisions, such as investing more in a retirement account, increasing your federal withholding, making estimated tax payments, or even talking to your employers to see if they might be interested in partnering with you on covering business-related expenses. (Remember, all of the expenses incurred while conducting business can be fully deductible by the employer.)
Above all, communication is vital, and minimizing tax within the limits of the law is important. Keeping your hard-earned money in your pocket helps everyone, and working together and partnering with your tax professional will help you achieve your goals.
For more information call Osborne Rincon CPAs at 760-777-9805 or www.OsborneRincon.com