How the Changes to Tax Laws Affect You – Gillian Giorgio
Re-gift Alert!! If our Holiday Gift is the Tax Cut and Jobs Act, I want a ‘do-over.’
As promised, the Republicans have finally released their massive proposed changes to the Tax Laws. At first glance, the cuts seem good in some areas and lacking in others. Here are some fundamentals about the plan. Decrease corporate tax rate from 35% to 20%; nearly doubles standard deductions (no personal deductions), keeps the highest individual tax rate at 39.6%, repeal the estate tax by 2024. Full passing into law of this particular bill would be very challenging to the country’s bottom line. After all, it’s just math.
Why do you care, you ask? How will this change my life? Well, it depends on what you do for work or career. If you are a home builder or in real estate, you may be unhappy if they eliminate the interest deduction for owning a home. Is there anything else you could offer your client now that they may not want to purchase a property? For most, the answer is ‘No.’
What if, because of this law people purchase less homes as their largest asset? How can one plan and save for the future and protect from worrying about a home and others parts of their portfolio?
What if you run a medical clinic or law practice or some other type of S Corp pass through business and you are losing your deductions. You may end up having to pay a higher amount in taxed regardless if rate may be be lower for your bracket. Based on these tax reform changes, the middle class of people will continue to be squeezed more and more…with their only option being to find more ways to increase revenue and utilize any tax deductions they have still available. Over 10 years ago, when I started in business with helping people better understand their money, I realized that my middle class family was not going to get ahead with just two incomes. We knew that in order to reach the dreams we wanted, we needed to understand how to properly save money and could help us earn more revenue.
Any solid business person will tell you to have multiple streams of income. It seems more streams of income are the only way people will survive in these economic times.
If Trump plans to eliminate deductions and potentially raise what we pay, while showcasing the tax cuts; the answer is we need to increase our income and save more money. No one survives without a side hustle anymore and many people have two and three of them. Seek out entrepreneurial opportunities that have low overhead and very high upside capabilities.
For reasonable costs and utilizing a simple system you can create the type of part-time or full-time income you could use to actually start saving to pay for the new taxes! Seriously, you could actually begin to grow the emergency fund you always wanted or take the extra vacation you have been dreaming of to Thailand. Wouldn’t it be nice to have a business that runs without your effort while you laid on the beach? It really does exist.
Your W2 job may be good for taking advantage of saving in the 401(k), but creating a business and ownership is the American way, it’s just been lost for about 60 years. Trump is giving huge advantages to large corporations, but all of those businesses started small. We cannot control how the laws change, but we can change what we do to make life easier for us now and in the future.
Written by Gillian Giorgio
LinkedIn: Gillian Giorgio