10 Things You Should Be Doing NOW to Prepare for Tax Season
The Tax Cut and Jobs Act (TCJA) has brought about the largest change in the tax code in over 30 years. The changes will have a much greater impact on the coming tax season than most realize, so we recommend you take a proactive approach to tax preparation this year.
The following is a list of 10 things that you should be doing to prepare for the end of the year and the beginning of tax season:
Individuals
- Track Medical Expenses – Regardless of whether you plan to itemize your deductions, it’s important to retain the following medical expenses paid for with after-tax dollars. You may have a state deduction available to you even if you don’t itemize.
Be sure to retain the following, if paid for with after-tax dollars :
- Health insurance premiums
- Out of pocket medical, dental and eye exams
- Lab costs
- Hospital costs
- Prescription costs
- Don’t Bother Tracking Non-reimbursed employee business expenses – If you are an employee who has out-of-pocket expenses, for which you are not reimbursed by your employer, these expenses are no longer deductible. (This change does not apply to the self-employed, so continue to save receipts for business-related expenses.)
- Look into a Section 529 Education Plan – The rules related to 529 plans have changed. Historically used for post-secondary education; 529 Education plans can now be used for private elementary, secondary public, private or religious schools.
- Track What You’re Doing with Your Home Equity Line of Credit (HELOC) – If you take out a loan against your Home Equity Line of Credit (HELOC) make sure that you track your home improvement-related expenses. Without invoices and appropriate documentation, interest accrued on your HELOC loan may not be deductible.
- Talk to Your Tax Advisor! – Speak with your Zinner & Co. tax advisor so they can help determine if you need to make adjustments prior to paying your 4th Quarter estimated tax payment.
Businesses
- Is Your Business a Pass Through Entity? – Is your business a pass through entity such as an S-Corporation, Partnership or Limited Liability Company (LLC?) If so, you may be eligible for a deduction up to 20% of your business income under Code Section 199A.
- Consider if You Need New Equipment – If you need new equipment for your business, you can now deduct up to $1,000,000 in qualifying property purchases under Code Section 179.
- Review Your Entertainment Expenses – Deductions for all forms of entertainment, including tickets to sporting events, have been eliminated. You will, however, still be able to deduct up to 50% of all qualifying business meals.
- Need a New Car? – Do you need of a new car for your business? If so, the depreciation limits for luxury automobiles, weighing less than 6,000 lbs., have increased substantially. This may make buying a new car make sense!
- Are you Tax Planning? –Net Operating Losses generated after 2017 can only offset 80% of income in subsequent years. If you’re not sure what this means, speak with your Zinner & Co. tax advisor.
The changes to the tax code are substantial, but with proper planning and guidance we can help you minimize your tax burden and come out on top. If you haven’t spoken with your Zinner & Co. tax advisor about the changes in the law, now’s the perfect time.
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