According to Democrat Sen. Ron Wyden, the Ranking Member of the Senate Finance Committee, ever since the introduction of the new Republican tax law, small businesses are predicted to spend more on their accountant fees this year than on growing their own business.
Placing the blame firmly on the complexity of the bill, Wyden reasons that small business owners will be needing the assistance of their tax professionals now, more than ever, just to learn how to comply with their 2018 taxes – claiming that “Main Street job creators will be lucky if they figure out how to calculate their deduction any time soon”.
According to the new tax law, there’s a 20% deduction to be had, but only for certain professionals falling within specific income brackets.
For instance, engineers, architects, and bakers qualify, but only receive the full deduction if their net income falls below $157,500 for singles, and $315,000 for joint filers. Eligibility ceases altogether when a single taxpayer earns $207,500, or $415,000 for married couples.
“Republicans claim to want less government intervention, but with their new tax law they picked winners and losers—architects are in, accountants are out; engineers made the cut, doctors did not—leaving business owners wondering whether or not they were blacklisted,” says Wyden. “What good is a deduction if money spent in annual fees to your accountant far exceed the tax break?”
A report done by the Businesses for Responsible Tax Reform found that recent polls place small businesses under apprehension regarding whether or not the tax code will actually help them. When asked:
- 69% of business owners said they would not hire a new employee this year, while 25% said they would.
- 59% said that they would not give their employees a raise, and only 31% said yes.
- 54% of small business hold that the bill favors large corporations; 40% disagreeing.
- 50% believe that the tax law benefits the wealthy more, while only 20% think it sways in favor of the middle class.
- 55% of taxpayers think that small businesses remain at an unfair disadvantage, with only 31% disagreeing.
Either way you look at it, any time there’s a change in tax law it’s always a good idea to consult with your accountant on how to move forward – though quite possibly now, more than ever.
Don’t yet have a CPA assisting with your taxes? We are happy to refer one we trust to you. Call us at (310) 534-5577, or send an e-mail to [email protected].
