Recent tax reforms are not going to bring tax cuts for many typical households across California. Many in San Diego will pay more taxes this year as the majority of deductions and write-offs of the past have been eliminated. A recent article in the Sacramento Bee noted “about 751,000 households with incomes under $250,000 probably will owe more tax.” The new tax law has brought significant changes to the preparation of income taxes, the nature of income as well the ability to reduce the amount of taxes owed through losses and deductions.
In some cases, families may see a reduction in their federal tax bill. For example, the new federal tax law doubles the standard deduction for each taxpayer and substantially increases deductions for child related expenses such as day care. The new tax reform has significantly reduced the corporate tax rate as well.
While the details are still far from completion, it is becoming more and more evident that business owners, especially those with an interest in an LLC or S-Corporation, should seek immediate insight into the nature and structure of their income and the best strategies to limit tax exposure under the new laws. This is also true for those who are used to substantial Schedule A deductions (gone under the new tax laws) or who have used form 2106 or other employment related expenses in the past (also gone). Many who used to reduce their tax bill with itemized deductions may be surprised by limitations imposed by the new tax reform.
Janathan Allen has been in high demand recently speaking before groups of investors, real estate agents and accountants as well as civic and business organizations. Allen Barron’s integrated tax, business, legal and accounting services provide insight and sound advice for those who are concerned about changes in the new federal tax code. Many in San Diego will pay more taxes this year and will be surprised when they discover the loss of classic itemized deductions. If you or your spouse own your own business, have rental or investment income or even simply own a second house / rental property we invite you to contact Allen Barron or call 866-631-3470 for a free consultation. It is time to reconsider the nature of income, losses and deductions and how you and your family are positioned for the future.