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.