I have a friend who’s a tax attorney. He loves to chat. Whether by phone, email, Skype or smoke signals, he’s usually good for three to four calls a week.
I haven’t heard from him since late November.
I called his office in the first week of January to see how he was. His secretary said he was at a tax planning conference. I tried again last week. Same thing. Another meeting of tax lawyers. I finally texted him that I had a lead on an urgent tax opinion request. That got me a return call.
The opinion request was mine. He’s on the case.
You see, since the beginning of this year, it seems like all I’ve done is study the Tax Cuts and Jobs Act, the new law governing our tax code. There’s a good reason for my urgency … you’re losing money every day of 2018 that goes by that you don’t find out about and act on the new opportunities and threats on the tax front.
If you act now, you stand to save potentially thousands of dollars in federal tax this year. The sooner you act, the more you’ll save.
Here are the top things to watch out for.
Tax Savings for Pass-Through Entities
Pass-throughs are business entities that pay no tax … they “pass-through” their profit or loss to their owners for tax purposes. They include traditional Bauman Letter topics such as limited liability companies (LLCs), partnerships and S corporations.
Starting on January 1, many owners of pass-throughs will pay no federal income tax on 20% of the profit from their businesses. That’s right, zip, nada. For many people, this could mean a big drop in their effective federal income tax rate.
The rules for this giveaway to pass-through owners are straightforward for people whose taxable income is well into the low six figures. After that, they get more complicated.
No matter how you slice it, however, the new tax law creates opportunities for huge tax savings.
