“You miss 100 percent of the shots you never take, and if you think it’s expensive to hire a professional to do the job, wait until you hire an amateur “ . ARE YOU READY TO SELL OR PURCHASE YOUR LAND OR COMMERCIAL BUILDING IN PHOENIX, SCOTTSDALE, MARICOPA COUNTY AND PINAL COUNTY, ARIZONA, CLICK HERE AND PLEASE CALL ME. 520-975-5207 or email me email@example.com. …. VIEW ALL OF WALTERS LISTINGS. Let me know if you are interested in Apartments: CLICK HERE FOR APARTMENTS FOR SALE
WHO’S AFFECTED – All individual taxpayers
Everyone has a general curiosity about what their taxable income will be. Will it be higher or lower than last year? And then there’s the natural follow-up question, will I owe more tax?
But with the passage of the Tax Cuts and Jobs Act last December, that general curiosity, for many individual taxpayers, should turn to more of a “need to know” item. Why? The new tax reform legislation made some changes that, if handled properly, will provide an opportunity to save or defer taxes, creating positive cash flow through the management of taxable income levels.
Learn more about how an active approach to managing taxable income can minimize tax burden and create positive cash flow in our recent insight.
Managing Taxable Income Levels for Cash Savings
June 20, 2018
Everyone has a general curiosity about what their taxable income will be. Will it be higher or lower than last year? And, then there’s the natural follow-up question, will I owe more tax?
But, with the passage of the Tax Cuts and Jobs Act last December, that general curiosity, for many individual taxpayers, should turn to more of a “need to know” item. Why? The new tax reform legislation made some changes that, if handled properly, will provide an opportunity to save, or defer, taxes, creating positive cash flow through the management of taxable income levels.
For example, Individual A, an independent health care consultant, is married and files a joint return. Based on last year’s return, Individual A anticipates the consulting business to be a little better, netting $450,000 for 2018. After allowable deductions, estimated taxable income would be $420,000. Based on that taxable income level and using the new 2018 tax brackets and rates, but assuming no other benefits from changes included in the tax reform legislation, Individual A will pay a little over $98,000 in federal tax, with the highest rate of tax being 35 percent. However, if Individual A did some planning and actively managed his taxable income level, things could pan out much better for Individual A.
New Internal Revenue Code section 199A provides a potential 20 percent deduction for small business owners like Individual A. The only problem is that Individual A’s consulting business may be considered a professional health service entity, which would be excluded from receiving the full benefits of section 199A. However, if Individual A could reduce his taxable income, Individual A could qualify for the section 199A deduction, even if only in part.
The 20 percent qualified business income deduction under section 199A is allowed on a taxpayer’s qualified business income, without limitation, when taxable income on a joint return is under $315,000 ($157,500 for other taxpayers). If taxable income is over $315,000, then a phase out of the 20 percent deduction can apply over the next $100,000 of taxable income. However, if taxable income exceeds $415,000 on a joint return, then there are various limitations that become fully effective and can further reduce or eliminate the deduction.
Now, with all this information in hand, Individual A starts to consider his options for reducing 2018 taxable income. Individual A could:
- purchase and depreciate needed equipment for his business
- make year-end allowable supplies and other pre-payments
- make a new or additional retirement plan payments, or many other similar payments that would reduce taxable income while benefitting his business operations.
Through the above efforts, let’s assume Individual A reduces the 2018 taxable and business income by $70,000. As a result, using the new 2018 tax brackets and rates, as well as the benefits of 199A that resulted from Individual A’s ability to reduce taxable income, Individual A will pay approximately $65,000 in federal tax, with the highest tax rate being 32 percent. This creates a $33,000 reduction in tax to be paid for 2018.
Some may point out that Individual A had to spend $70,000 to get the $33,000 reduction in tax. However, considering that it’s a 47 percent tax benefit even before any state income tax benefits are factored in, it’s not a bad trade off. And this way, Individual A still gets the direct benefit of the $70,000 spent.
To learn more about how an active approach to managing taxable income can minimize tax burden and create positive cash flow, contact your Eide Bailly professional.
ARE YOU READY TO SELL OR PURCHASE YOUR LAND OR COMMERCIAL BUILDING IN PHOENIX, SCOTTSDALE, MARICOPA COUNTY AND PINAL COUNTY, ARIZONA, CLICK HERE AND PLEASE CALL ME. 520-975-5207 or email me firstname.lastname@example.org. …. VIEW ALL OF WALTERS LISTINGS. Let me know if you are interested in Apartments: CLICK HERE FOR APARTMENTS FOR SALE
Phoenix Commercial Real Estate and Investment Real Estate: Investors and Owner / Users need to really know the market today before making a move in owner user Commercial Properties, Investment Properties and land in Phoenix / Maricopa County, Pinal County / Arizona, as the market has a lot of moving parts today. What is going on socio-economically, what is going on demographically, what is going on with location, with competing businesses, with public policy in general — all of these things affect the quality of selling or purchasing your Commercial Properties, Commercial Investment Properties and Commercial and large tracts of Residential Land Therefore, you need a broker, a CCIM (Certified Commercial Investment Member) who is a recognized expert in the commercial and investment real estate industry and who understands Commercial Properties and Investment Properties. I am marketing my listings on Costar, Loop-net CCIM, Kasten Long Commercial Group. I also sold hundreds millions of dollars’ worth of Investment Properties / Owner User Properties in Retail, Office Industrial, Multi-family and Land in Arizona and therefore I am working with brokers, Investors and Developers. I am also a CCIM and through this origination ( www.ccim.com ) I have access to marketing not only in the United States, but also internationalClick here to find out what is a CCIM: https://en.wikipedia.org/wiki/CCIM
PLEASE CALL ME 520-975-5207 OR E-MAIL ME email@example.com
ARE YOU READY TO SELL OR PURCHASE YOUR LAND OR COMMERCIAL BUILDING IN PHOENIX, SCOTTSDALE, MARICOPA COUNTY AND PINAL COUNTY, ARIZONA, CLICK HERE AND PLEASE CALL ME. 520-975-5207 or email me firstname.lastname@example.org
- DEMOGRAPHIC FACTS ABOUT MARICOPA COUNTY:
- The average age of the population is 34 years old.
- The health cost index score in this area is 102.1. (100 = national average)
- Here are some of the distributions of commute times for the area: <15 min (22.7%), 15-29 min (36.8%), 30-44 min (25.1%), 45-59 min (8.6%), >60 min (6.8%).
Feel free to contact Walter regarding any of these stories, the current market, distressed commercial real estate opportunities and needs, your property or your Investment Needs for Comercial Properties in Phoenix, Tucson, Arizona.
Kasten Long Commercial Group tracks all advertised apartment communities, including those advertised by other brokerages. The interactive map shows the location of each community (10+ units) and each location is color coded by the size (number of total units).
Walter Unger CCIM, CCSS, CCLS
I am a successful Commercial / Investment Real Estate Broker in Arizona now for 20 years. If you have any questions about Commercial / Investment Properties in Phoenix or Commercial / Investment Properties in Arizona, I will gladly sit down with you and share my expertise and my professional opinion with you. I am also in this to make money therefore it will be a win-win situation for all of us.
Please reply by e-mail email@example.com or call me on my cell 520-975-5207
Walter Unger CCIM
Senior Associate Broker
Kasten Long Commercial Group
5110 N 40th Street, Suite 110
Phoenix , AZ 85018
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Disclaimer of Liability
The information in this blog-newsletter is for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. Tax articles in this e-newsletter are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided “as is,” with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.