Tax Planning for the New Tax Law
Now that I have finished posting most of the relevant provisions of the new tax law, I thought I would do a series on tax planning for the new law.
Tax Planning for the New Tax Law: Part 1
Start a Small Business or a Home Based Business
As you have read in my posts, most of the new tax benefits accrue to business people. You would have to be brain dead not to realize how much better businesses have fared vs that of an employee under this new tax law.
For example, property tax deductions are limited to $10,000 and interest on home mortgages are limited to up to $750,000 of debt. However, if you have a qualified home office resulting from a home based business, you can get around these limitations and deduct part of the taxes and interest as a business deduction in addition to the limitations noted above.
Businesses also only get taxed on 80% of their net income due to the 20% pass through deduction while employees are taxed on all of their income.
Moreover, businesses can achieve higher income, more time freedom, and you don’t have to put up with a boss.
Bottom line: Taking advantage of the new tax law by setting up a new small business would be very smart. Learning as much as possible about the new law in order to maximize your benefits would also be smart.
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