I went to a seminar a few weeks ago, put on by a tax accountant, and even as he explained a lot of the upcoming changes, he was very honest in that even he is still learning. These changes are complicated, will make a really big impact and we are just a few months shy of the end of the year.

I am a CPA, however, NOT a tax accountant, I am an operational accountant, and so my advice to the points I share below is to talk to the experts about your specific needs.

A few things to note as an individual:

1. Look at your employer withholdings in your paycheck. One of two things is going to happen this year. You will see they are taking too much and you will get a big refund OR they won’t be taking anywhere near enough and you will owe money. The IRS offers a withholding calculator on their website and you can fill out a revised W-4, as you see fit.
2. New limits on home mortgage interest deductions. This may affect you if you have a home equity loan or the 2018 itemized deductions may not exceed the standard deduction, even with the home mortgage interest. Here is a great article breaking down the changes.
3. There is a new limitation of State and Local Taxes. This may affect you if you live in a state with high income taxes, high sales tax or high local (real estate taxes) such as NY, NJ, PA, or CA. Individuals can now deduct a maximum $10,000 (Married, less for other filing) of personal state and local property taxes, even if they deduct nothing for personal state and local income taxes or general sales taxes. Here is an article with more detail.
4. Standard itemized deduction for married filing jointly more than doubled. Previously, the standard deduction was $12,700 and this was fairly easy to reach if you had mortgage interest or any employer withholdings. Now it sits at $24,000, which means things like charitable gifts or contributions are deductible only if total itemized deductions exceed that minimum. And some itemized deductions went away completely like tax prep fees and fees paid to an investment advisor. Here is an article explaining more about what you can no longer claim.
5. The child tax credit doubled. Parents, this is a big one. The credit jumped from $1,000 to $2,000 per child. Because this is a credit, this reduces the amount you owe to the IRS. View eligibility requirements and more information here.

A few things to note if you own a business:

1. Section 199A is going to be very important. The tax rates for corporations was lowered to 21% (previously varied between 15%-35%), but sole proprietors and owners of pass-through businesses are to get a 20% deduction since their individual rates went up. Pass-through businesses do not pay corporate income tax at the entity level; instead it goes through the owners. How do you know if you qualify for the 20%? This article explores details and exceptions.
2. There is still a 15.3% self-employment tax. Always pay your estimated taxes or you could be hit with really big penalties. If you haven’t filed your 2017 return yet, the final extension date is 10-15, so time is running out. Apply now.
3. Meals and entertainment deductions are very different. Previously, you could pretty much deduct 50% of any kind of business meal or entertainment expense. Now, some may be and some may not be accepted. Here is an excellent breakdown of all the deductions. As you keep track of all of this, I suggest keeping the expenses in categories: entertainment, celebratory meals, meals off-site and meals on-site. For example, meals off-site might include a business meeting at a restaurant and meals on-site would include providing food for your employees during a workshop or event.

Typing all of this reminds me why I don’t do my own taxes.

Instead, I love focusing on how I can help businesses save money. I just saved someone 5 figures because I found an issue in their financial records!! They were overstating their income for three years and paying way more tax than they needed to. They were able to amend their returns and get back what was rightfully theirs.

I’m offering CFO reviews and spots are filling up quickly, so book your time here. This is an in-depth 2-4 hour consultation for your business to determine the current financial health.