By John Mark Warren
Jan. 31, 2018 11:45a.m. C.S.T.
Recently passed tax reform could mean more money in your pocket. The Tax Cuts and Jobs Act, passed by Congress and signed by President Trump in December, may significantly reduce the taxes paid by independent contractors, starting in 2018. Specifically, one of the provisions of the new law was to provide a 20% tax deduction to small business owners. This includes many of the independent contractors that use Workrise, both as sole proprietors or as LLCs.
The savings can be very significant. As an example, if you make $150,000 in 2018, 20% of this, or $30,000, could be tax deductible. That means, instead of paying taxes on $150,000, you only have to pay taxes on $120,000. At a 24% tax rate (the tax rate for a single individual making $150,000 in 2018) this could save you $7,200 ($150,000 x 20% x 24%).
In most cases, this benefit is phased out gradually as income rises and there are limitations for certain types of services. As with any tax matter, the devil is in the details and everyone’s tax situation is unique. We recommend you seek advice from a qualified tax professional, but we wanted to highlight how significant this benefit could be for a lot of the folks in the Workrise contractor community.
Workrise empowers the men and women who power the world, and we are excited to learn that many of you can keep more of your hard-earned money because of this new law.