The Tax Cuts and Jobs Act snuck up on many of us. Suddenly in January 2018 tens of millions of Americans are denied a range of tax deductions that have been part of our personal and business financial culture for more than a lifetime. While most taxpayers will see a decrease in taxes, some of us are paying more as a result of the law. Most taxpayers, we suppose, have not yet even calculated the impact of the change on their taxes for this year so we recommend a tax planning consultation as soon as possible.
In any case, the new tax law leaves us with options to reduce 2018 taxes. In another job post I covered “Top 7 Easy Tax Saving Strategies for 2018” that includes, among the strategies, a plan to replace tax deductions lost for home office expense deduction in 2018 with an ‘accountable plan’. The same strategy can be used to reduce employer and employee taxes on a range of other normal expenses.
The tax savings is achieved by simply changing the way we account for common expenses: home office expenses, travel expenses, parking and commuting expenses, meals and entertainment, tools, equipment and work clothing. The concept can be extended to include employee legal expenses, tax preparation and investment advisory expenses for retirement plans.
An accountable plan is typically integrated with the business accounting and payroll administration. It does incur some cost for the employer but this cost is more than offset by the savings in taxes achieved by the employer.
For an example and estimate of tax savings available through an accountable plan, call to schedule a discussion. I am pleased to present a custom-designed plan with the appropriate documentation and accounting administration.