It’s not exactly a news headline at this point, but as if tax filing isn’t stressful enough, we now also have new tax laws and codes to be thinking about. Even though most of the new tax implications don’t come into effect until next year and 2018 tax payments, you should be thinking about them as you make plans to pay 2017 taxes now.
Some areas such as standard deductions and tax credits will be noticeably different a year from now. Although most of the decisions and transactions that impact your 2017 tax obligations have already been made, it’s still a good idea to plan for the future. For example, if the new tax code is likely to make this year a better one for you financially, you might consider maxing out your IRA contributions for “2017.” By law, you are able to do so, right up to the tax filing deadline in April.
With all the changes in the air, consider hiring an IRS-registered Tax Return Preparation Firm for this tax season rather than risking errors, or overlooking important deductions and documents. Ask your firm to help you plan ahead, in order to minimize your tax liability for next year. Here are three examples of things you can do now to put yourself in optimal position for 2018 taxes.
Small business classification. Under the new tax law, many small business owners will qualify for a 20% income tax deduction as a pass through from the business to personal returns. It’s important to make sure the business is classified correctly, in order to qualify.
Employment status classification. Individuals who work in specific professions, such as sales representatives and members of the clergy may want to assess their employment status. In the case of pastors and faith leaders, Form 2106 for unreimbursed expenses goes away after the 2017 tax year. These individuals and their churches might consider moving from employee to contractor status, in order to retain access to unreimbursed expenses through their Schedule C form and qualify for the 20% deduction as a “business owner.”
Withholding amounts. If your financial circumstances have dramatically improved this year, or perhaps you have a new child, spouse or other dependent, check the number of withholdings you are claiming on your W-4 form. It may be time for an adjustment.
With less than 2 months remaining for the tax deadline — and all the new considerations to account for — it’s a good time to begin the tax filing process … for this year and next!