The Rotary Club of Cape Coral Sunset invited us to speak during their Vocational Service Month on Empowerment Works programs and how they impact vocational training. We had a good time with great discussion and friends!
Author: John Reed, CPA
I wanted to look into some real life examples of how the new tax law will effect small business owners and others so I computed several different tax scenarios and compared the tax results under the old law with what they would have been under the new plan just passed into law.
Here is what I generally found.
If you are a small business owner, the 20% deduction for pass through income should reduce the amount of tax you pay significantly, particularly if your business makes you a higher income tax payer. This is should be an incentive for anyone who is thinking of starting their own small business.
If you are not a business owner and are not a high income tax payer; AND you currently do NOT itemize your deductions, you will probably pay a little less tax under the new plan.
If you are not a business owner and are not a high income tax payer; AND you currently DO itemize deductions, it is POSSIBLE that you may actually pay MORE tax under the new plan.
These calculations were just examples based on prior tax returns. I found a tax calculator online that will do a comparison of how the tax cuts will effect YOUR situation.
Click here to go to the tax law comparison calculator
Get out your 2016 tax return and use the following link to do your comparison. Use the “Create Your Own Scenario” link to customize it to your 2016 return or enter your estimates for 2017 and 2018.
I found it to give very close to the same results to my analysis above, but much easier than what I went through to compute it.
You should check with your tax advisor about your situation.
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