The Big Questions for Filing Taxes This Year

The Tax Cuts and Jobs Act (TCJA) coupled with the partial shutdown of the federal government may leave taxpayers feeling like they have more questions than answers at this point in the game. Here are some answers to help you navigate this ever-changing landscape:

How is the federal government’s partial shutdown going to impact how I file taxes?

Even with plans for the Internal Revenue Service to call back some of its workers on January 28, this year’s tax season will be more of a challenge than in years past, especially for business owners. The changes in the TCJA are massive and are requiring additional guidance, which was anticipated from the IRS in December. With the shutdown, some of this guidance has been delayed.

However, business owners and individuals should continue to prepare documentation as they normally would, with sooner rather than later being best practice. This will give as much time as possible for your tax advisors to review your specific situation to figure out how to best proceed once that additional IRS guidance becomes available.

Should I itemize my individual return or go with the standard deduction?

This year’s standard deduction is nearly double what is was in 2017 for every filing status, so many people will probably utilize the standard deduction. However, every person’s circumstance is different and itemizing could still be the way to go for some people. For example, single taxpayers are more than likely still better off to itemize if they own a house with debt and married filing jointly taxpayers would only likely itemize if they have a large amount of debt or made significant donations in 2018.

I own a business and keep hearing about new opportunities for me to save on my taxes. Where do I start?

Just like every person’s circumstance is different, the same holds true for business owners. Here is a list of things you should consider talking to your tax advisor about:

  • Entity type – C corporations may be taxed at higher rates than in prior years. Other issues to consider include whether you need or want to access cash personally, if you are transitioning/planning to sell the business and built-in gains considerations.
  • Maximizing 199A qualified business income – this allows for a 20% deduction on qualified business income and income from real estate trusts or publicly traded partnerships. However, there are limitations for service industry entities and wage limitations, along with sole proprietor and guaranteed payment limitations.
  • Using depreciation available – this deduction is now virtually unlimited, but still requires careful planning. Things like roofs, HVAC, security and alarm systems now may qualify for Sec. 179 and luxury vehicles are still limited but have substantially better depreciation available.
  • Qualified Opportunity Zones and Qualified Opportunity Funds – there are still a lot of unanswered questions but these present opportunities where capital gains taxes can be deferred. An Opportunity Zone is an economically-distressed community where new investments, under certain conditions, may be eligible for preferential tax treatment. A Qualified Opportunity Fund is an investment vehicle that is set up as either a partnership or corporation for investing in eligible property that is located in a Qualified Opportunity Zone.

Tax time is typically a stressful time for people, and with this year’s extra challenges, filing your 2018 taxes may seem daunting. Navigating the new legislation poses many questions and also many opportunities. Start here.

CATEGORIES: Featured | Tax, Audit & Accounting
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