Tax talk dominated much of the end of 2017, and no matter how one feels about the final legislation that passed, it is now a reality. It seems fitting that this came at the end of a calendar year, when the nostalgic yearning to look back claims a strong hold on us all.

In a calendar year, tax reform went from a (clearly naïve) thought that a tax return would be done on the back of a postcard, to largely talking about the ACA and health care provisions of the tax world, to finally turning into a much more complete, and still complicated, package.

Just how this all turns out and what it means to you may not be fully understood and felt until we hit early 2019, for the new rules will not affect the 2017 tax returns that we shortly will begin preparing. So although it is a bit rarer at this time of year, we are looking ahead, too.

With it still being the holiday season, I do not want to take the time now to go through some of the stuff that changes under the new bill. I am sure that we will have plenty of opportunities to go through that deeper stuff over the next 18 months or so.

With it still being the holiday season, though, I did want to take this chance to express gratitude that we have been able to track this and take the trip together. If it were not for my clients, I would not get to make a career from this world, which I still love even during the maddening times.

In fact, it is during those maddening times when I feel that gratitude the most. For yes, this is not always an easy path, and it is littered with many numbers (some huge), and multiple pages of tax law that take a lot of time and effort to correctly parse and use to the best advantage.

Seeing how this all works out for your situation will take some time, but we look forward to helping you along that path, and are thankful for the opportunity to do so. Here then is a simple wish for 2018 to bring health and prosperity for everyone as we make the journey.

As promised last week, get ready for business talk! Come on, you know it’s your favorite part of the holiday season.

In that previous blog, I wrote about how the state of our economy is causing more and more individuals to act like a business. At some point, though, it ends up making more sense to become an actual business. So this time I wanted to talk about the different forms a business can take. Each of these come with different tax considerations (which is too in-depth, and most likely too boring, to fully go into here), so that is something we should talk about if you are thinking about setting up a new venture.

First, there is being a sole proprietor. This is when you are in business for yourself, but have not actually incorporated your business.

Then, there is a partnership, which is exactly like it sounds. This is a group where everyone involved contributes something to the business. This can be money, property, labor, skills, etc., with the key being that everyone expects to share in the profits and losses of the business. The partners are not employees, but the profits or losses from the venture are passed through onto their tax returns.

A corporation is what one tends to think when thinking of larger businesses. In this case, shareholders exchange money and/or property for stock in the corporation. The corporation then realizes net income or loss, pays taxes, and distributes profit to its shareholders.

S corporations are corporations that pass their income, losses, deductions, and credits through to their shareholders. Those shareholders report this on individual tax returns, and pay individual income tax rates on it.

Finally, a limited liability corporation is a business structure that has slightly different rules depending on what state it is in. Owners in an LLC are called “members,” and this can include anywhere from one owner to many. Within there, the LLC can be treated as a corporation, partnership, or as a part of the owner’s tax return by the IRS.

If that sounds like it can be a little all over the place, that’s because it can, but there are great benefits of forming an LLC.  The biggest of these is that it separates one’s personal assets from that of a business, making one not personally responsible for the debts and liabilities of the business.

In fact, all of these forms have benefits when used in the correct situations. Of course, that also means that there are drawbacks when not correctly used for a specific situation. This can also be intimidating because it is something that many do not even know they have to think about until it is time to think about it. When done correctly, though, it helps protect your interests and can put you in the best spot to have the biggest initial advantage when it comes to paying taxes. So when I said last week that it is good to sometimes think like a business, it is also good to sometimes become a business. And if you need some guidance with that, do not hesitate to reach out to us. 

As we jet through December, some people will start to gather information in preparation for filing their taxes next year. I don’t mean to say that this is something everyone needs to do, though. For example, if the only income you receive all year is from a regular job that will send you a W2 next month, that is going to handle a lot of numbers we have to fill in come filing time. More and more, however, that situation is covering less and less people.

Of course that one-W2 situation would never cover businesses (and I’ll return to them more next week), but many individuals are becoming more like a business in our current economy as they earn money in ways other than just through a paycheck, These extra bits of income can include a side business, freelance work, or even participating in the sharing economy. It is those people, who come with a slightly more complicated tax picture, to whom I want to speak to this week.

The society we live in makes it easy to become one of these people as the internet offers simple ways to make more money. Websites such as Fiverr and Upwork provide an arena for people to bring their skills to those who need them, making connections that could be impossible outside of the digital world. Many of these transactions are carried out for a nominal amount, but that still counts as income.

Possibly more prevalent are those getting money through the sharing economy. This ranges from Uber drivers to those offering up their home, or even exclusive properties, on Airbnb. So even if you have not technically made yourself a business, it is possible that you have been getting some money in a way that means you should start thinking like a business.

The first thing I want to make you aware of in these situations is the self-employment tax. I could spin off into too many paragraphs about how this works, but will try to keep it simple. This boils down to the government ensuring you still contribute to social security and Medicare out of income earned through self-employment. This is something that many are unaware of until they have to pay it.

On the other side, though, many types of self-employment will also come with expenses that become tax deductible when they are incurred by doing this type of business. Just what is an allowable deduction (or how much of it is deductible) will vary depending on what it is you are doing, but chances are really good that there is something you can deduct.

And there we loop back around to where it can pay to be conscientious and think about these things before it is time to file your taxes. Thinking like a business will only result in better numbers at the end of the process, and the best businesses stay on top of things. So please be aware that we are open for planning meetings now to help you get the most out of this and all coming years.

Tax reform has moved closer to becoming fact, so there is at least a middling chance that there could be big changes coming before the end of the year that may affect how much we owe in taxes when it comes to file them in early 2018.

Now just what those changes may be is still far from certain, and may not be completely clear until we get down to putting pen to paper (or fingers to keyboard) and actually entering information into tax forms.

Even in this time of uncertainty, though, one should not hide from taxes, or throw up our hands and decide that there is nothing we can do. As always, there are advantages to handling these things straight-on, and tackling them as early as possible.

And yes, that can mean starting now. So here are my top five reasons to start preparing for tax season now:

1.      Choice of appointment time.

All the procrastination that happens come tax time means that we get VERY busy in April as everyone tries to finish up in days what they had months to do. I like to think that we do a good job of accommodating everyone, but that means you may need to take an appointment time that’s not ideal. I assure you, however, that many of those ideal times are open in January and February.

2.      Staring early equals more time

And let’s be honest, the vast majority of us do not keep a folder through the year where we can slide in pertinent tax documents that we have gone over and collated chronologically. A little mindfulness now means there less chance that you’ll forget about something you need in the future.

3.      More time equals more opportunity

Also, when the time crunch is not on, you have more of a chance to gather information that you may not have even known would help you. One of my favorite things during tax season is making people aware of deductions they did not know about. But when it’s April 15^th, tracking down a receipt to save yourself $20 pales in comparison to just getting things filed on time.  If it’s February 15^th, though, going home and spending the 15 minutes it may take to get some another documents  turns out to be a much more manageable proposition. And when it only takes five minutes, most of us are okay with working at a $240 an hour clip, right?

4.      Decrease your stress

We’ve all waited into April at some point to do our taxes, right? We also all spent the weeks before that thinking of how we should get moving, how we’re going to spend the weekend getting everything together, and then feeling the stress build as it doesn’t happen, right? Why not make yourself a promise now to not feel that pressure this year.

5.      Moves can still be made

And this is because you don’t even have to wait until the calendar changes to start this work. I’m not going to pretend that there is some secret magic move that we can do in these final weeks to remove your tax bill or even decrease it by 50 percent. We can, however, do some smaller things like making charitable donations or putting money into retirement funds that could decrease your final bill. 

There are few things I can think of that have grown in popularity as quickly as Cyber Monday. Well, there was the rise of internet culture … hmm, maybe there’s a connection there or something. It may be no coincidence then that this week is also National Tax Security Week and Thursday, November 30 is Computer Security Day.

Contrary to how this may sound, I am not coming in this week with tales of doom and gloom as I try to push you away from joining the virtual world or shopping online. After all, it takes zero argument to convince me that taking advantage of Cyber Monday deals makes much more sense, and is much less maddening, than waiting in lines before the sun rises on Black Friday. I’m clearly not alone in this, as this past Monday set a record mark for online shopping.

I do, however, think that there are certain easy, common-sense acts that we can all take to help ensure that we stay safe while enjoying the conveniences this new technological world has brought us. This is an arena where we can talk about one of those things that the IRS does well, and that is stay on top of security issues and pass along good advice when it comes to the subject. They do, after all, handle a rather large amount of critical information.

So if this is something that interests you, visit their tax tips web page this week as they, er, celebrate Tax Security Week.

For those who don’t care that much, or remain too weighed down by Thanksgiving leftovers to put that much effort into extra clicks, I wanted to highlight a few of the tips that are on the simpler side, but that some may not know, and everyone could benefit from a reminder.

So when it comes to online shopping, pay attention to where you are shopping. Use retailers that you trust, or do a quick Google search to research one if using it for the first time. And even when using a retailer that you do trust, give an extra look at your browser. Many sites exist to look like the popular sites you enjoy, but exist solely to gather information from you. An extra peek at the URL bar ensures that the website address is the site that you believe you are on. Also give an extra look to the beginning of the address. Sites that start with an “https” are usually secure. Any sites that do not carry that “s” at the end are ones you want to avoid when it comes to transactions.

And finally, be careful about info into a site if you are using an unprotected Wi-Fi network. If you can access a public hotspot, that means anyone else can also use that hotspot and that makes it much easier for those who want to track what is happening through those connections. Chances are waiting until you get somewhere more secure is going to be easier to deal with than what you will have to do if someone nabs your personal info.

So don’t so fearful as to keep yourself from enjoying what technology brings us, but a little vigilance is always worth the effort.

There are moments when I still cannot quite believe it is already November. We are rapidly moving toward the holiday season, and soon thereafter we can start to celebrate the tax season.

Granted, no one else really celebrates that, and I don’t fault anyone who completely hides from it. Heck, even those who expect a refund enjoy the endpoint, but are not huge fans of the paperwork and reporting before that money hits the bank. And clearly, those who will have to pay to satisfy their tax obligation look toward it even less.

The fact that no one looks forward to it means that many do not think about taxes until they have to.  Unfortunately, this avoidance of the subject could mean that the eventual tax hit is worse than it needs to be. A little more mindfulness, and a little more planning, helps one keep a tax bill as low as possible. At this point, though, there are less than two months left in the year, meaning one’s options are getting more limited, but it’s not too late to still make a difference.

So to start, if you are worried about how things may look come next year, please don’t hesitate to contact us and make an appointment for planning purposes. We can look at some numbers, make some estimates, and do what we can to prepare you for filing season.

For those who aren’t worried, though, and just want to start putting the picture together, the IRS has some tools you can use to do that. A good place to start for all is Form 1040-ES, which you can use to figure out what you should be making in estimated tax payments, and then carry through and pay some, as well. This could be an especially important piece for self-employed individuals, who not only have to pay their income tax, but the self-employment tax.

For those who receive a regular paycheck, though, you may want to visit the IRS’s withholding calculator There you can find out if you’re withholding enough from your paychecks to have your tax bill taken care of.  And if it’s not (or if you find out you’re getting much more taken out of your check than you need), you can fill out a new Form W-4, submit it to the appropriate payroll people at your job and have the proper adjustments made.

Such actions may be (or I suppose, should be) more prevalent than in past years, for as more people start to participate in the sharing economy, there will be more people receiving income that is not being taxed. It could serve you well to start addressing that before actually filling out a tax return.

Overall, if you were happy with how things turned out when you filed taxes last year and nothing significant has happened to change your personal or financial pictures, you can let these things go and all should remain pretty similar when the calendar turns and it is time to file again. I know there are some of you, however, who were not happy, absorbed the blow, and then forgot about it. So why not make things a little easier on yourself this time while you still can?

When Donald Trump was elected almost a year ago now, there were immediate questions about how that could affect the upcoming tax season. That turned out to be all for naught, as we learned that nothing happens that quickly. Then the questions turned to how his handling of health insurance would affect taxes. And well, we’re still not sure about all those answers. And now we are even more focused on what a more extensive tax reform package could mean, but we have hit November without a clear picture there, too.

And now with guilty pleas and indictments affecting associates of the president, who knows where anything is going to end up.

I can’t remember a time when so many things in so many different areas felt so much in flux.  So often in this space I like to write and offer some direction, or at least some tips to point you in possible directions about difficult issues. This time, though, I feel like all I can do is shrug.

This doesn’t mean that all is bad, though. Many economic indicators are good, consumer spending is growing, and the stock market is strong. Even if we don’t know all the answers on where things are going, we do not appear to be on the verge of any collapse.

Sometimes, though, it feels like we may be perched on a precipice, but I think that comes from the divide between sides where middle ground no longer seems tenable. This dynamic has been happening for nearly two decades, and now that we have probably the most polarizing president in history, it has only been exacerbated.

So yes, I am mostly shrugging this week about any specific issue, but I wanted to take the chance to speak up about the political divide.

First, it doesn’t matter what side of any debate you are on. It does, however, matter that you have thought out your position. Don’t blindly follow anyone. These debates are over important issues and chances are really good that their outcome will affect you. So look into them, make your choices, take your stand, but do it with knowledge.

Second, once you have done that, don’t be afraid to speak up. It is okay to share what you believe and it is a good thing (at a base level) that social media has given so many people a voice who did not have one before. But remember to do it with tact and to do it with respect. These are beliefs and outlooks we are talking about, so there is no one final answer.

So finally, have these debates with respect and an open mind. You don’t have to change everyone’s mind, and you won’t, but that does not make them evil. In turn, they also don’t have to change your mind. We should, however, always be open to having our minds changed. Granted, in some cases it may take a lot to accomplish it, but be open enough to listen to others and allow it as possibility.

For only then can we ever rediscover compromise.