Let’s project your 2018 tax liability and make adjustments – before it’s too late.
In the middle of 2018 holiday-palooza, our thoughts are focused on happy things like family, giving, and time off. 2018 tax returns are probably not very high on your list, and less appealing than fruitcake. Unless you give your taxes a little thought and attention now, you may find that you have less money available next December for all those gifts and vacations. You really should meet with your CPA before year-end.
How did the tax cuts impact you?
The 2018 Tax Cut and Jobs Act was the most sweeping tax code update in 30+ years. All of us are impacted in some way, either positively or negatively. While your paycheck tax withholdings were automatically adjusted, there are many other impacts of the Act that may not have been factored in. By meeting with your CPA now, we can make adjustments before time runs out on the year and you’re potentially stuck paying unexpected taxes.
Let’s run a projection
Our tax software has already been updated to reflect 2018 tax code changes, so we can quickly take all variables into account, project your tax liability, and make 2018 adjustments if needed. Here are some of the things we’ll review:
- Itemized vs. standard deduction. Thanks to changes in state and local tax, mortgage interest, and other expense deductions, you may no longer be able to claim itemized deductions. That may be a good or bad thing, but we need to run the numbers first.
- Capital gains. After this year’s stock market roller coaster, you might owe more capital gains taxes than you expected. These taxes aren’t reflected on your paycheck tax withholdings, and may even impact your tax bracket.
- Contributions and credits. Whether made to charitable organizations or your retirement account, contributions may reduce your tax liability more than you think. Tax credits are still available, including Georgia film tax credits.
- Qualified business income. Certain professional services business owners may deduct up to 20% of their qualified business income (QBI), but there a number of exemptions, limitations, and phase-ins/outs that could impact your deduction if you’re not careful.
- Taxes paid vs. owed. If you do owe more taxes than expected, you can pay now to limit penalties next year. We can also recommend adjustments to 2019 tax withholdings and estimated tax payments to more accurately project tax liability going forward.
We can’t do much after December 31
Our options for adjusting income and expenses become very limited after year-end, plus we quickly become very busy with the thousands of tax forms that need to be filed by the March 15 (business) and April 15 (personal) deadlines.
So, before you shell out $500 for those European designer pajamas you’ve always wanted, consider investing a little money in personal and business tax planning. We’re here to help, and we’ve got fruitcake.
Neal Bach, CPA