Wednesday, March 20, 2019

Tax Reform Change and the Self-Employed

Recently, there have been some tax reform changes. These changes have caused a great deal of confusion and worry for many people, especially the self-employed.  

If you are self-employed, it’s a good idea to sit down with your accountant and to ensure that you understand the changes and how they affect you. This can help to else your mind and can also ensure you don’t get hit with any unwelcome surprises.

Chances are, however, that the change is going to affect you a lot less and a lot less negatively than you may have been led to believe.

Deductions are Not Going Away

One thing many self-employed people have been concerned about is losing their deductions under the new tax laws.

If you’ve had this fear, go ahead and cast it aside! You can still enjoy your deductions. In fact, when you’re self-employed, you enjoy, for the most part, the same deductions as a corporation.

There’s a New Deduction in Town

Not only are you not at risk of losing your deductions, there may even be a new deduction that you could qualify for.

This deduction is known as the qualified business income deduction, and it’s a nice 20% deduction. Most solo-owned businesses will qualify, but you can find out for sure if yours does by checking with a professional tax adviser.

You Can Buy a New Car

Something else to appreciate- instead of fear- about the tax reform is that you may be able to finally buy that new car for your business.

In many cases, you can now get a depreciation deduction within the first four years of buying the vehicle. Check with your accountant for details and to see if you can take advantage of this deduction.

As you can see, the tax reform changes don’t spell disaster for the self-employed as many have wrongly speculated. Instead, they can actually be quite helpful and beneficial when utilized properly.