8 Top Tax Law Changes and How They’ll Affect You

6. The Most Welcomed 20 Percent Pass-Through Business Deduction
Taxpayers who own sole proprietorships, LLCs, partnerships, and S corporations might qualify for a 20 percent deduction of their pass-through income from these businesses.

Pass-through income refers to non-W-2 income generated from the business. For example, if your business generates $50,000 in profits after subtracting all expenses (including your W-2 salary), this $50,000 is treated as pass-through income in your tax return.

That money is eligible for the 20 percent deduction. But there are income limits on this deduction for professional services firms.

Seek the guidance of a tax professional for assistance with this particular aspect of your tax return. You might also want to use tax software from companies such as H&R Block and TaxAct.

7. Bye-Bye, Miscellaneous Deductions
If you, like me, took advantage of the moving and unreimbursed employee expense deductions in prior years, you will need to do some planning next time you consider moving for work or spending your own money to benefit your employer.

Starting in 2018, the following expenses are no longer deductible: casualty and theft losses, unreimbursed employee expenses, tax preparation expenses, moving expenses.

8. Calculator, Please!
Many of us will need to brush up our math skills. I love numbers, but this is a little more than what I asked for. First, with the increased standard deduction and the decrease in allowed itemized deductions (hint: SALT), many of us will find ourselves trying to figure out whether to even bother gathering and calculating itemizable deductions.

Second, we can get into the game of planning when to incur those itemizable expenses in an attempt to bulk more of them into a given year and reduce them in another. This will give us the ability to claim the standard deduction one year, but potentially benefit from itemizing deductions in another.

Lastly, for the professional services firms with phaseout income threshold for the 20 percent deductions, I expect we will look for strategies to legally push income to future years in order to fall within the threshold for the deduction.

The Bottom Line on the Tax Law Changes
This will definitely be an interesting tax season. I can already picture the many tax conversations I will be having over dinner and other gatherings with family, friends, and especially my CPA colleagues.

Disclosure: I am an individual taxpayer (surprise!), a small-business owner, and in the middle-class income level. Although these categories might cover a significant percentage of the population, they might also create a biased perspective in this article.

This article was originally published on Centsai.com. Click here to read the original piece.