TEMPE, ARIZ./ MARCH 13, 2019 (STL.News)
CPA, Tax-Free Wealth Author and CEO of WealthAbility Tom Wheelwright urges all business owners to file a business tax extension for 2018 returns for five reasons by the business filing tax deadline this Friday, March 15, 2019. As a result of mass confusion over the Tax Cuts and Jobs Act of 2017, Wheelwright recommends that CEOs, small business owners and entrepreneurs file later and re-evaluate a wealth strategy plan.
“The new tax law has so many more business incentives, and it’s a very different filing season. The complexities need attention since this is the first year that the Tax Cuts and Jobs Act applies to tax returns. We have a new law, new forms, and new software, so you don’t want your tax preparer to rush,” explains Wheelwright on a recent podcast episode of his podcast, The WealthAbility™ Show with Tom Wheelwright, CPA.
- Extensions are likely to mean extra savings – Business owners especially should not rush this tax filing process because of the significant potential impact on the bottom line that can mean the difference between a business thriving or closing shop. It’s very important to take extra time to get on the phone with a tax preparer and review the new law details for business returns this year.
New law is complex and requires more questions – There are many new elections with the new law that need to be carefully considered by business owners. Some of the top changes include the 20% pass-through deduction, automobile and real estate bonus depreciation deductions, new inventory deduction rules where you can deduct inventory during the year it was purchased, and new charity donation rules. The numbers are much bigger for potential deductions, and it’s worth spending the extra time. For example, the new bonus depreciation on a real estate investment of $100,000 could result in as much as a $150,000 deduction (and there are many options to discuss here to consider).
New Forms with news words with significant savings – There are many new forms based on the elections business owners must select, and every word is important. For example, it’s important for CEOs to determine if they run a “specified service trade or business” because it greatly impacts the eligibility and amount of the 20% pass-through deduction allowed. For a “specified service trade or business”, there are income maximums of $157,500 for individuals and $315,000 for married couples, which may have significant impacts on returns.
New Software is not complete for New Tax Law – Accountants always use software to determine the best tax elections, savings and bottom-line numbers for tax returns. While the software has been updated for the new tax law, developers have not kept up with all the changes in the 1,057-page tax plan and new regulations regularly published by the IRS. As a result, the software does not include the same level of checkpoints that it has in the past. So there is an even greater burden on the tax preparer to manually calculate numbers. By filing an extension, a tax preparer can avoid mistakes and/or have new software updates by a later date.
Personal Returns should be filed before Business Tax Returns – Another good reason for filing a business tax extension is that it is always better to file personal returns before a business tax return. While reviewing personal deductions, it may make more sense to deduct an expense on the business return instead. For this year more than ever, it’s much better to file a deduction on a business return versus a personal return. For example, investment expenses are no longer deductible on a personal return. However, a business owner may be able to deduct the cost if it is part of a “trade or business.”
Wheelwright emphasizes, “2019 is the year for filing business tax extensions for 2018 returns. Taxes are everyone’s single business expense. By having additional time to ask more questions, it can make a huge difference for the business, family and community.” Wheelwright adds, “Be prepared to spend more money on tax preparation this year too.” If done correctly, the majority of business owners should see significant savings.
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Tom Wheelwright is a CPA, CEO of WealthAbility, Best-Selling Author of Tax-Free Wealth (Rich Dad Advisors Series), Host of The WealthAbility Show with Tom Wheelwright CPA, Speaker and Entrepreneur Magazine Contributor. Tom is best known for making taxes fun, easy and understandable, and specializes in helping entrepreneurs and investors build wealth through practical and strategic ways that permanently reduce taxes. As a Rich Dad Advisor to Robert Kiyosaki (Rich Dad Poor Dad), Tom frequently speaks at conferences worldwide to entrepreneurs on these topics. His work has been featured in Accounting Today, The Wall Street Journal, Forbes, Investor’s Business Daily, Consumer Reports, FOX & Friends, ABC News Radio, Marketplace, and many more media. http://wealthability.com