Today TaxMama® wants to talk about things to consider now that your tax return is filed. It IS filed, isn’t it?
Dear Friends and Family,
I have good news and bad news for employees with job-related expenses.
The good news is Senator Casey introduced the “Tax Fairness for Workers Act” which returns to employees the right to deduct their job related expenses (which were lost in the Tax Cuts and Jobs Act). And it would give union members the right to claim a deduction for union dues even if they don’t itemize (above the line).
The bad news? According to someone Kelly Phillips Erb interviewed, the odds of this bill getting enacted are about 1%. In other words, while we really need this legislation. It’s just not going to happen.
What does this mean to you if you do have a lot of job-releated expenses you will no longer be able to deduct? Stop waiting for Congress to help you out. It’s time to talk to your employer about changing the way you are compensated, so you no longer pay your own expenses – they do. Here’s how to do it – http://taxmama.com/tax-quips/switching-from-employee-status-to-independent-contractor/ .
This doesn’t affect business owners – just employees.
More bad news for employers who treat workers as independent contractors, when they should be employees. The California Supreme Court just ruled that if someone looks and acts like an employee, they must be on payroll and get a W-2. No more gray areas. (The case involves drivers – but the definitions are clear. So employers, beware!) When laws are passed in California, or cases are decided here – other states take notice.
Moving on to other things to do in May
- Do a projection of your expected tax liability for 2018 under the new tax laws. Don’t wait for surprises at the last minute. You will have higher standard deductions, but no exemptions. You will have certain tax credits, but fewer deductions. Some people will come out ahead – others will be in trouble. Folks will still be hit with Obamacare penalties in 2018 – be careful!
Here are some tools to help you.
- Review your withholding. Now that the new withholding tables have been in place for a while, check to see if you are withholding enough to stay out of trouble when you file your tax return next April. Do a computation, based on the withholding in your current paycheck to see how much your total withholding will be for the year. Compare that to the total tax liability you computed above.
Here’s the IRS withholding calculator.
- Are you a business? This year you’re going to lose some deductions – like all entertainment expenses and some meals, as well as the special domestic activities deduction. But you might qualify to get some benefits – like the 20% Qualified Business Income deduction and a tax credit for providing paid family leave to your full or part-time employees. Please, please, meet with a tax professional to learn the details. At the very least – watch this video to learn more – http://iTaxMama.com/TrumpTaxWebinar_1
- The IRS has a series of webinars for businesses during Small Business Week – and they don’t cost a dime! https://www.irs.gov/newsroom/irs-announces-2018-national-small-business-week-webcasts
This year, it’s important to do some planning. Please. Don’t get faced with surprises next year when it’s too late.
To make comments and toss in your own ideas, please drop into the TaxQuips Forum.
And remember, you can find answers to all kinds of questions about tax and business issues, free. Where? Where else? At www.TaxMama.com.[Note: If you were subscribed to the e-mailed version of TaxQuips, you’d be getting other exciting news and tips by e-mail, that never appear on the site. Please click on the join TaxMama.com link – it’s free!]