April 15 has safely passed, which means that tax season is officially over. This tax season was a little more exciting than usual because we finally got a chance to see how the Tax Cuts & Jobs Act plays out in each of our own personal lives.
What did you think? Were you impressed or did it leave a bad taste in your mouth?
If you feel like you ended up paying too much in taxes for 2018, you’re not alone. Many people were disappointed in their tax bills this year. Now that we’re a full year in, it’s time to give the Tax Cuts & Jobs Act a second look.
The Tax Cuts & Jobs Act is a major piece of legislation, so it contains a lot of opportunities for strategic tax planning. We have been working with each of our clients individually to see how to make the most of the new law in their own unique situation. If you want personalized advice, you can give us a call at 1.888.565.9887. Otherwise, here is an area that might be of benefit to you.
Qualified Business Income Deduction
One of the biggest opportunities for business owners is the Section 199A qualified business income (QBI) deduction. However, with the income limitations that come along with it, some strategic planning is often required to reap the full benefit.
Some thought that the QBI deduction would actually be a disincentive for business owners to save for retirement in a qualified plan. Calculations show that you are better off putting money into a tax-deferred account, even if it lowers your QBI.
Tax-deferred accounts, in fact, may be the key to your eligibility for the QBI. Whatever you set aside for retirement lowers your taxable income dollar for dollar. Some of our clients have found that their retirement contributions have made the difference between being eligible for the deduction and being ineligible. Getting your income low enough for eligibility can make a huge difference in your overall tax bill!
How We Can Help
These are just a few examples of ways to take advantage of the Tax Cuts & Jobs Act. There are many more, but we can’t know which apply to you unless we actually talk to you. Call us at 1.888.565.9887 to speak to one of our experienced professionals regarding your own personal situation.