Three 2018 Tax Changes and What They Mean
Trump's 2018 tax plan comes with plenty of questions, including how it will affect truckers. We talked to Tara Thompson, a tax preparer who regularly works with truckers to get her thoughts on three of the most talked about or confusing changes and how they may affect your taxes over the next year.
The Per Diem Deduction Change
There has been a lot of talk on our blog about what the 2018 per diem changes really mean for company drivers. We have a blog explaining the changes, as well another blog explaining why some companies are choosing to offer a per diem benefit to company drivers and others are not. However, Thompson thought it was important to note that while company drivers may notice the change in their 2018 taxes, most individual employee's taxes will not change all that much. In fact, they may actually be simpler because of the increased standard deduction. This means less record keeping for drivers; and less record keeping in the trucking industry is almost always good news!
Was Obamacare actually repealed? Am I still required to carry health insurance?
The answer is yes, and no. Trump's tax plan eliminated the individual mandate penalty, but did not eliminate other aspects of Obamacare. And while the individual mandate—fine for not carrying personal medical insurance—is eliminated, this portion of his tax plan won't be effective until the 2019 tax year. So if you fail to carry personal medical insurance during 2018 you will still see a penalty. Yes, it stinks, and no, there’s sadly nothing anyone can do about it.
The Qualified Business Income Deduction
The Qualified Business Income Deduction applies to owner-operators, not company drivers. For all self-employed taxpayers (sole proprietors, s-corporation shareholders, general partners in partnerships) there is a 20% qualified business income deduction beginning in tax year 2018 (starting January 1, 2018).
How is it figured? Qualified business income is regular, non-investment business income, or business revenue minus your expenses. After arriving at the base threshold, ($157,500 for individual filing, $315,000 for joint filings), you are allowed a deduction of 20% of your self-employed business income before taxes are figured. This change doesn’t affect self-employment taxes, but reduces your federal taxes. This is a lot of tax-talk, but the bottom line is, it is pretty cool and could definitely benefit your business as a sole proprietor if you meet the conditions!
But Wait, There's More
We wish these were the only changes to get used to, but there are quite a few more that may or may not have an impact on your personal or business finances. If you don't already have a great tax preparer, this is a great time of year to start asking for recommendation! Here is our guide to finding a great tax preparer.
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