How Does the New Tax System Affect My Moving Business?

Author:

Publish Date:

Last Modified Date:

Category: Regulations

Tags: Tags: , , , , , , , ,

“You’ll be able to file your taxes on a postcard” was the claim made by more than one person during the final weeks of 2017 when the new tax bill was being wrangled out.

If you follow politics at all, then 2017 seems so long ago.

“[The] postcard concept is out the window,” says CPA and financial advisor Mark Kohler. “Tax advisers are going to be even more critical for the small business owner.”

Okay, so what’s going on now? We can offer all sorts of moving industry advice, but we’re less (see: “legally”) confident in our tax advisory expertise. But that caveat aside, here are a few key takeaways from the recent tax reform that a small moving company owner may find interesting.

Sole Proprietorships, Partnerships, LLCs and S-Corporations

This probably includes just about everyone in the HireAHelper mover community.

You do not get any sort of break in the form of reduced taxes. Instead, these “pass-through companies” – meaning companies where income passes through to the company owners who report said income on their individual tax returns – are now able to deduct 20% from that income. This may be of interest to you, depending on how your individual taxes pencil out. (The charts in this Investopedia piece may help.)

However, any earned wages from your business that you report are excluded from your “QBI (Qualified business income). In other words, if you pay yourself wages out of your business income (a scenario most likely if you are an S-Corporation), you can only deduct your 20% from the business income that passes through to you as an individual. (Yes, this sort of set-up is ripe for abuse, with people adjusting their wages or salary in order to reap the biggest tax break.)

Also, if you are pulling in more than $157,500 as a single filer or ($315,000 for joint filers) you may not be eligible for the full 20% deduction, depending on how your business is classified (i.e., personal service versus employee-based). If that is the case, your best bet here is to consult a tax expert.

Deducting Costs For Trucks

Easier to comprehend is the change in how businesses can deduct the costs of depreciable assets – like vehicles, hand trucks and four-wheelers.

Whereas before, deductions for capital expenses would be made over several years, now you can deduct the full cost of any and all equipment you purchase from your taxable income for that year (up to $1,000,000).

This is perhaps the biggest boon for small business owners, as it helps ease the financial burden of purchasing the equipment that can help those owners increase productivity and grow their businesses. If you have been putting off buying that truck or updating your equipment inventory, you may now find your procrastination rewarded!

Changers For Your Customers

But for us, the most significant change in the tax code might be one that is directed not at us, but at our potential customers: As part of the tax reform, individuals will no longer be able to write off their work-related relocation expenses.

Now, could this mean that fewer people will be moving for work? Possibly. But how many have that choice? The more likely effect is that this will encourage more people to look for ways to save on their move.

Which could benefit all of us in the HireAHelper community, no matter which tax bracket we’re in.

Have a prosperous year everyone! (And good luck on your taxes!)

Married and Moving In: What Does That Mean for My Money?

Author:

Publish Date:

Last Modified Date:

Category: Money Saving, Moving Advice

Tags: Tags: , , , , , , , , , , , , , , , , , , , , , , ,

Getting married and moving in with your partner is a significant turning point in both your lives. But in the process of packing up and combining all your worldly goods, things can get a little bit hectic. You may have found your dream home, but this is just the beginning – in the midst of all this excitement, you shouldn’t forget to keep a critical eye on your personal finances.

Things can get a little weird, so with that in mind, here are a few money protips to help you navigate life as a newlywed.

Clear the Air and Tell Eachother Your Debts

First things first: communication isn’t just crucial for your feelings! Openly communicating about finances is a massive step towards keeping tension out of your marriage.

Make no mistake: money is (perhaps unsurprisingly) one of the biggest causes of stress in relationships. So be honest and forthcoming with each other about your finances prior to moving in, so you can work on a plan to move forward together. That means laying all your cards out on the table. Make sure to discuss:

  • Your spending habits and priorities
  • What you each carry in terms of debt
  • Your credit standing
  • Current investments and income
  • Your goals are for the future

The more you communicate, the better you’ll be able to negotiate your financial landscape as a team.

Knowing What’s Mine and What’s Yours: What’s Separate in the Eyes of the Law

The distinction between separate and shared marital assets differs from state to state. In general, assets acquired before marriage, as well as gifts, inheritance and personal injury awards are considered separate.

Most other assets, specifically those acquired during a marriage, are seen as shared. This includes retirement accounts (like IRAs or 401(k)s), businesses, properties, income and investments. However, remember that some of these assets will be assessed differently depending on whether you live in one of these common law or community property states:

  • Arizona
  • California
  • Idaho
  • Louisiana
  • Nevada
  • New Mexico
  • Texas
  • Washington
  • Wisconsin

This can totally affect how you handle those assets, so read the links and be prepared!

Do You Share Debts Too?

In common law states, assets owned by only one spouse are legally considered separate, which can provide what’s sometimes called an asset protection advantage.

Those community property/common law states I talked about earlier, on the other hand, treat both spouses as equal contributors to the family unit, regardless of individual income level, which means they divide all assets 50/50. This includes everything earned or purchased during the marriage years, no matter if the deed, title or account registration is only in one person’s name. This also means that here, debt or liabilities acquired by one spouse are shared equally by both.

Yep, that means in the event that you want to override your state’s property laws, you’ll need to hire a lawyer to draft a prenuptial agreement. This will stand in court even if you move between states that apply different property laws.

‘Till Death (and Taxes) Do Us Part

Tax laws can be complicated, so make sure to do some research to determine whether you should file jointly or separately as a married couple. It will highly depend on factors such as children, rate of income and even nationality.

Filing jointly means your tax liability will likely change, pushing you into a lower or higher bracket. However, even with a higher tax rate, there are benefits. Married-filing-jointly couples receive exemptions, deductions and credits not available under other statuses. Adjusting your W-4 to the married rate or claiming the additional allowance also reduces the taxes withheld from your paycheck. Plus, spouses are also allowed unlimited tax free gifts to each other, which can affect how you handle larger assets.

Add it All Up – Together

One of the most proactive steps you’ll need to take is to – for real – sit down and make a mutual budget. This will keep both of you accountable to the shared responsibilities you’ll now have, so you don’t fall into debt.

Even if you decide to put one of you in charge of the finances, it’s still important to create a plan together. List all of your expenses, most of all including:

  • Rent or mortgage payments
  • Utilities
  • Food and entertainment
  • Car expenses
  • Loan and credit card payments
  • Savings and retirement contributions

Discuss individual needs or preferences and make sure you come to a compromise in areas where you disagree. You’ll also need to decide whether you’ll split everything equally, or have each person contribute a percentage to the household based on their earnings.

Save for a Rainy Day

Finally, build an emergency fund! This is critical in keeping your marriage stable when life gets rocky, and is severely lacking on most people’s ledger. It is guaranteed to come in handy when the car breaks down, the basement floods or a family emergency occurs. It will also protect you during job losses, serious accidents and extended illnesses.

There’s no way to predict what or when these events will crop up, but one thing is for sure: something always does. Make this a priority so an unexpected life event doesn’t end up driving your marriage into the ground.

Moving into a new home together as newlyweds can get a bit daunting as you’ll have to do things a bit differently. Make sure you take the previous tips into consideration when planning out your finances for your new life together – it’ll make many of your future issues a lot easier to deal with so that you can focus on each other and your marriage.


Beth Kotz is a contributing writer to Credit.com. She specializes in covering financial advice for female entrepreneurs, college students and recent graduates. She earned a BA in Communications and Media from DePaul University in Chicago, where she continues to live and work.

The Best DIY Methods for Sorting Important Stuff

Author:

Publish Date:

Last Modified Date:

Category: Organization

Tags: Tags: , , , , , , , , , , , , , , , , , , , , , ,

When it’s time to get our personal taxes done, we stress out at how much we wish we had organized last year. Extra receipts, mortgage payments, escrow account status, business expenses … yikes! But this year is going be different.

Seriously.

For the first time ever, we organized. Now we’re finally heading into tax season with a whole new perspective. And it feels great.

(more…)

×

I'm Moving

Moving? Thinking about moving? Whether your move is off in the distance or you already have one foot out the door, you'll learn about everything you should expect through our useful how-to's, cool articles and much more. It's all specially curated for you in our "I'm Moving" section.
Explore
×

I'm a Mover

For rookies or veterans alike, our "I'm a Mover" section is filled with extensive industry news, crucial protips and in-depth guides written by industry professionals. Sharing our decade of moving knowledge is just one way we help keep our professional movers at the top of their game.
Explore