The 2018 Tax Cuts and Jobs Act What It Means for You and Your Practice
The 2018 Tax Cuts and Jobs Act
What It Means for You and Your Practice
You have undoubtedly heard about the new tax law that was just passed this week. So what does it mean for us holistic practitioners?
Below I am going to outline only the major impacts of the bill that will effect our business and personal taxes.. There are many smaller changes as well that I am not going to go into. Note: The following is informational only, please talk to your lawyer or tax professional for more clarity.
Most of us will fall into the category of Personal Services. We may be taxed as Sole-Proprietors, LLCs, or S-Corps. Note: If you are not an S-Corp I would recommend talking to your accountant about the benefits of being taxed as one!
Personal Services
Doctors, Lawyers, Acupuncturists, Accountants, Etc.
The Good Change
- You will only have to pay taxes on 80% of your net income. Meaning you get to deduct 20% off bottom line after expenses.
Example:
- You will only have to pay taxes on 80% of your net income. Meaning you get to deduct 20% off bottom line after expenses.
- You make $100K
- You have expenses of $20K
- Your Net is $80K
- You pay taxes on $80K-20% = $64K
The not so great changes
- The 20% deduction does not apply if you make more than $315,000 ($157,500 if single).
- We can no longer deduct meal/entertainment expenses.
- Food/catering for the office went from 100% to 50% deductible.
Personal Tax Rate Changes
new tax brackets:
Other Changes that impact us
- New standard deductions
- Single: raised from $6,350 to $12k
- Married: raised from $12,700 to $24K
- No Affordable Health Care Act Penalty
- No moving expense deductions
- Limited state and income tax deduction to 10K
Helpful things to do before the end of 2017
Pre-Pay
Think ahead and prepay as many of next year’s expenses as you are able. Examples: membership fees, rent, advertising, website fees, accountant fees, etc.
Delay your income
If you can afford it and if it is possible delay any further income until January. The big one here would be to hold off on depositing patient’s check until 2018.
I hope that helps! If you need any further advice or a would like a low-cost coaching session please feel free to reach out! (610) 203-3747 or bewell@villagewellness.net.
To an amazing, happy, healthy and successful 2018!
Lots of love,
Lance Isakov, LAc.
Lance is an acupuncturist and a heart-centered business coach. He helps fellow holistic practitioners evolve their practice and develop the skills necessary to run a thriving practice. Need a a hand with your practice? Send Lance an email.