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How to Protect Yourself From the Coming Tax Increase

Two major tax increases are about to crush middle class Americans. The first tax increase has already been passed into law and will soon go into effect. The second massive tax increase is more sinister. The amount of the increase has yet to be determined, but we can get a good idea how much will be pried from your wallet if you don’t take steps to defend your wealth.

The Tax Cuts and Jobs Act of 2017 (TCJA) lowered taxes for the vast majority of individuals and regular corporations. There were a few losers. Taxpayers with high state and local taxes (SALT) found their deductions declining faster than rates fell causing a sharp pain behind their left eye on April 15th.

Other taxpayers feeling the pain of a tax increase include truckers, sales people, artists and others with work related expenses. Unreimbursed employee business expenses were eliminated. Truckers (and others) no longer can deduct their work expenses. The TCJA hurt a large number of hard working Americans. Even the mortgage interest deduction was slightly curtailed. Not as many felt that sting, but all the same, the TCJA was uneven in reducing taxpayer liabilities.

Regular corporations saw the biggest benefit. Corporations now have a flat 21% tax rate. Except for corporations with less than $50,000 in profits, this was a tax cut.

Earn Money Reading Financial Statements

Since most roofers are good at roofing and poor at keeping accurate records, you have a powerful side gig opportunity to make a difference in your community while earning above average income. 

All business eventually need funding. Your ability to read financial statements allows you to consult with clients at a higher level and to gain desired result. You can handle the raw data entry if you want or farm it out to a bookkeeper. Regardless, you lead and give directions. 

Done right, you and your clients will profit.

How the IRS Chooses You for an Audit

Now that tax season is under way it is time to consider audit proofing your tax return. Small steps you take today can save you time, money and headaches later. 

First, the good news. Audit rates have been falling the past decade by a substantial amount. For 2018, the IRS audited .45% of individual returns, down from .59% in 2017. IRS funding cuts between 2011 and 2017 cost the IRS 27% of its enforcement staff (an 18% decline in tax examiners and a 40% reduction in revenue officers), according to the Government Accountability Office. 

The reduction in IRS enforcement efforts does not mean the IRS doesn’t have the authority to aggressively deal with tax scofflaws. The IRS still carries a big stick and focuses on certain problem areas. Taxpayers claiming the earned income credit faced an audit rate in excess of 1% in 2018, compared to the overall audit rate of individual tax returns the same year.

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