What You Need To Know About Taxes 2018

The rollercoaster ride of the Trump Administration has bludgeoned our senses, but we have to talk taxes.

It’s always fun to squint at 11th-hour chicken scratch written on a life-impacting bill (by people who didn’t even bother to read the original text) to try to determine what it means for you.

In short, the new tax bill is a net positive for most freelancers and the self-employed. It’s nice when something like that happens. Before we get into it, the standard caveat applies: this is for entertainment value only; get real advice from a real lawyer or accountant.

As this Time article states, freelancers can take advantage of a pass-through deduction.

The new benefit, which allows taxpayers to shave their taxable income by roughly one-fifth, applies to so-called “pass-through” (or business) income, starting in 2018.

AND

The new benefit is designed to apply to “pass-through” business income. That doesn’t include dividends and interests if you own investments like stocks and bonds. But it does include partnerships, S corporations, and sole proprietorships — the default status you assume when you work for yourself.

The new benefit takes the form of a deduction, allowing you lop 20% off the income you report to the IRS. You are eligible even if you take the standard deduction — which, in another plus for middle-class taxpayers, was doubled to $12,000 from $6,500 for single filers ($24,000 from $13,000 for couples).

Newsweek posits that this change (which is set to expire in 2025) could expedite the drive towards more freelancers in the market.  I’m skeptical of that – people leaping off of a tax change, but something we’ll monitor.

Of course, few things are all-encompassingly good. The repeal of the individual mandate could lead to health care price increases, so make sure you keep an eye on that.

Despite the pass-through tax deduction, the healthcare situation could lead Americans to think twice before leaving their nine-to-five gigs to pursue freelance work.