Photography For Real Estate

Last week before the new tax bill was even passed, Gary in Southern California asked:

I was wondering if you’d be able to explain this new tax cut and how it’s going to affect us? Do we just get to add a 20% deduction on top of our normal expenses? Would love some clarity on this subject!

First of all, let me say this subject is way beyond my competence. I have managed to avoid the subject of taxes and accounting most of my life because my wife has a 5-year degree in accounting and I am happy to let her and our professional tax preparer handle our taxes. That said, there are a number of articles out there on this subject because Gary is not the only one asking these questions. Remember that all the information out there is preliminary because the IRS hasn’t translated it into tax code yet. The ink is barely dry on the bill!

Here are a couple of articles I recommend that go into this subject in detail:

1. New York Times, Dec 20, 2017
2. Forbes, Dec 22, 2017

The above articles suggest the following answer to Gary’s question:

• This bill does NOT affect your 2017 taxes. It affects your 2018 taxes.
• The pass-through deduction applies sole proprietorships and partnerships as well as corporations.
• If your taxable income is below the threshold amount ($157,500 for individuals and $315,000 for married taxpayers filing jointly), the deductible amount for each of your businesses is simply 20% of your qualified business income with respect to each business.

Depending on where you live and your particular situation, there will be other ways this new tax bill may affect your business but the pass-through deduction is the most obvious impact.