Tax changes bring confusion, concern & tax pro popularity
Saturday, December 30, 2017
Tax pros are feeling all "Mean Girls" Gretchen Wieners right now thanks to the new tax law. (via Giphy.com)
When people ask what I do, I say I'm the most popular person in the world until April 16. After a few seconds of quizzical looks, I explain. I write about taxes.
Yep, everyone wants to be my best friend until they finish their tax returns. After the April filing deadline, though, it's "please, Kay, no more tax talk!"
But the Republican tax bill, originally known as the Tax Cuts and Jobs Act and set to take effect on Jan. 1, 2018, has changed that.
It jump-started my annual popularity back in November when the House first considered H.R. 1 and has continued the added attention through December.
January through mid-April 2018 is going to be sooooo much fun!
And I am definitely not alone.
Tax pro popularity surges: All my tax pals, a collection of tax journalists and bloggers, Enrolled Agents, CPAs, tax attorneys and myriad others in the wide-ranging tax world are reporting, if not reveling in, the new-found attention.
The situation is summed up nicely in this week's Saturday Shout Out to the Washington Post story on how the tax bill has turned America's accountants into very popular people. Yes, the term "rock star" is used.
The perennial joke is that all tax legislation should be subtitled the Tax Accountants Perpetual Employment Act.
The real joke is that the sentiment it true. Congress, abetted by lobbyists, just cannot bring itself to really simplify the tax code.
Massive and messy tax bill: And it's more applicable with this bill, now officially known as Public Law 115-97.
From its introduction as H.R. 1 in the House on Nov. 2, the bill went through multiple revisions (including literal last-minute changes by the Senate), 124 legislative steps including a hurried conference committee and encountered 124 amendments before landing on Donald Trump's Oval Office desk for enactment signature on Dec. 22.
Among the changes were keeping but tweaking temporarily seven tax brackets, increasing the standard deduction, eliminating personal exemptions and reducing and/or ending most itemized deductions. And that's just on the personal side.
For businesses, large corporations will see a dramatically lower tax rate (now a permanent 21 percent rate instead of the ending-in-2017 35 percent levy). They'll also now deal with a more territorial instead of worldwide tax system.
Pass-through entities, however, will encounter a more complicated tax methodology.
The new law also repeals or modifies several additional credits and deductions for individuals and businesses.
These changes are detailed in the 500-plus-page tax bill, which was accompanied by another 500-plus pages of explanations. You can find links to my analyses of some of the key provisions in this collection of tax reform posts.
Haste makes tax waste, or at least lots of questions: Still, the speed at which the massive measure was pushed through Congress, literally being rewritten in some parts on the very final day of passage, means there still are lots of questions, ambiguous passages and various interpretations.
We'll rely on the Internal Revenue Service to clarify some of the matters, like it did (or not) this week as to prepayment of 2018 property taxes, and issue more guidance as we get into the 2018 tax year that will be most affected by the Internal Revenue Code changes.
But we'll also, if we're smart, hire good tax professionals (like my Twitter friend and CPA Brian Stoner above) to help us sort through the implications, especially if we operate pass-through businesses.
Tax pro essentials: If you don't already have a rock star tax pro, put finding one at the top of your 2018 New Year's resolutions list.
My prior blog posts and stories offer some suggestions on how and where to do just that:
- Picking a tax pro
- Types of tax preparers from which to choose (Bankrate slideshow)
- Tax pro or tax software? (NerdWallet)
- Checking out your tax professional
- 5 things to check when hiring a tax preparer
- Where to find your perfect tax preparer
- Free, in-person tax help at VITA, TCE and military sites
The IRS also has an online directory of federal tax return preparers.
Choose wisely. And not based solely on what expert tax help will cost.
While any fee you'll pay for tax help in 2018 no longer will be tax deductible thanks to the new law, a good tax professional's guidance should offset all or much of that cost by saving you from making costly mistakes, as well as straight-out saving you tax dollars by finding tax breaks you can claim.
You also might find these items of interest:
- Would you trust your taxes to a robot?
- Stephen Colbert pranks H&R Block customers
- Millennials depend on mom and dad for tax filing help
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