By Susan E. Campbell
December is good time for business people to meet with investment, accounting and tax professionals to look at the year behind and the one ahead.
At Paul Dowen’s office, Whittemore Dowen and Riccaiardelli, LLP in Queensbury, the team is working to manage retirement accounts in a way that maximizes deductions and minimizes tax liabilities under the new rules.
Even though all individual tax brackets, except the 10 percent bracket, are lower because of the Tax Cuts and Jobs Act, the experts can offer some tried-and-true tips for managing the tax burden.
“The biggest jump in the new tax tables is from the 12 percent bracket to 22 percent, so the challenge is how we keep more income at the 12 percent rate,” said Dowen. “The first step is to make sure the maximum amount allowed has been contributed to the company’s 401(k) plan.”
These plans must be funded by salary deductions before year-end, so time is running out to play catch-up.
“The new tax laws mean a tax cut or a break-even for retirees,” said Don Tenne of Tenne Financial Group in Glens Falls. But for small proprietors and the self-employed who file a Schedule C, there are two hefty tax breaks now in the code.
“Starting in 2018 there is up to a 20 percent deduction in taxable income for those businesses,” said Tenne. “If net profit is $200,000, for example, $40,000 is not taxed, a savings of $12-13,000 or more. That’s huge.”