Every year I sit to write this pre tax season letter, I feel like I just finished last year’s version. Yet here I sit and, incredibly, 2018 is over and now comes everyone’s favorite task of complying with state and federal requirements. This year’s filings will look a bit different and will certainly be different in presentation. Here are a few thoughts as we head into this busy period:
Not the Same Old Same Old
As I have detailed since the Tax Cut and Jobs Act (TCJA) was enacted, this year’s filings require a mindset shift. Many clients will no longer itemize deductions and personal exemptions are no longer relevant on the returns (at least federal returns). The following items are no longer needed:
- Unreimbursed Business Expenses-these items are no longer deductible
- Other Miscellaneous Deduction-investment fees, tax prep fees, union/professional dues, etc. are all eliminated as deductions
- Home Equity Loan Interest-this interest is no longer deductible unless the equity loan principal was used for improvements to your home
- Moving Expenses-no longer deductible
Of course, there are some favorable items too that have changed:
- Very few clients will be subjected to the Alternative Minimum Tax (AMT)
- Expansion of Child Tax Credit and Education Credit will mean that more clients qualify for these valuable tax credits
- Many business owners and rental owners will benefit from the newly instituted Qualified Business Income (QBI) deduction
- Tax rates are lowered and the associated brackets are widened
Because of the complexity surrounding the changes, we have to be more conscious of the calendar. As such, if we do not have all material necessary for your personal return by April 1, 2019, there is a strong chance we will have to put that return on extension. We have had this rule in place for many years but I don’t expect us to have the time to complete as many late arriving returns. I know receipt of the materials seems to get later every year but PLEASE get your information to us as soon as possible. Similarly, we will need all entity return information by March 1, 2019 in order to meet the March 15 filing date.
We have, from time-to-time, increased our pricing over the years. My expectation is that prices will increase more this year than in past years. There is no question that compliance with the new law will require a lot more detail and work from our end. This is especially true for self employed individuals, partners and shareholders in small businesses and rental property owners. I don’t wish to surprise anyone with a larger than expected bill from us. If you would like to discuss your specific tax situation and how the increased compliance requirements will impact your preparation fees, please don’t hesitate to reach out to me.
As many of you know, we have a new client portal that can be accessed from our website www.woodscpa.net. The previous portal platform we utilized was a bit clunky and not as customizable as we desired. This new platform should provide all of the customization we sought with a more user friendly client interface. The portal should be used to share sensitive documents securely with us. Please do not send us unencrypted documents via email. This method simply doesn’t secure your sensitive financial information (i.e. social security and account numbers).
That should do it. As mentioned, if you have any questions or would like to talk about the coming tax filing, please do not hesitate to contact us. As always, we appreciate your business and look forward to seeing everyone soon.