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Philip Perkins

Effect of new tax bill on freelance soundies?

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This article looks helpful and is most likely well informed. I've know Chris and Trish for close to 25 years and they've always been wise and thorough with financial matters. Trish (who wrote this article; she and Chris share bylines) isn't an accountant, she's a motion-graphic designer. But that's fairly close to our sort of work, tax-wise...

 

The Accidental CFO: The Section 199A Deduction

Understanding the Qualified Business Income tax deduction for pass-through businesses

 

What was Congress thinking, passing major tax reform a week before the holidays when there was still some serious shopping days left? Even if you did take time away from the festivities to read a few details of the Tax Cuts and Jobs Act of 2017, the media were so focused on the reduced rate for large corporations (now 21%, down from 35%), that you might have missed the fact that some rewards trickled down to small businesses as well. So without getting into the politics of the bill (tis what it is…), let’s focus on the new 20% deduction for qualified business income of pass-thru entities.

 

First, don’t panic. All the changes apply to 2018 income. When filing your taxes this April for the 2017 tax year, you’ll be following the same rules as for 2016. So even though the tax reform bill was passed hastily (with amendments scribbled in the margins in the dead of night), the IRS will have some time to clarify the details. However, if you like to file accurate estimated taxes for the first quarter of 2018 (deadline is April 16), then you’ll want to include this deduction (if you qualify) as well as take into account the lower rates and expanded tax brackets.

 

Second, I (Trish here) am not a financial or tax professional; I researched this deduction for our own situation (Crish Design is a Partnership, filing married jointly). For this article, I’m going to assume that you are a self-employed freelancer or small business (not an employee who receives W-2 wages) and that you provide professional services (the rules are a bit different if you manufacture widgets).

 

Third, you might want to make a nice cup of tea before you dive in. (And yes, reading about taxes means you also deserve a nice choccy biccy…)

 

Rest of the article:

https://www.provideocoalition.com/accidental-cfo-section-199a-deduction/

 

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