By Kay on Don’t Mess With Taxes
Tired of being a wage slave? Thanks to the Tax Cuts and Jobs Act (TCJA), some disgruntled salaried employees are looking into becoming independent contractors. But before you take the leap into a new way of working, you need to take tax and other matters into account.
“Congress flipped traditional tax-planning upside down” with the new tax law, noted the Tax Policy Center’s Steven M. Rosenthal in a TaxVox post soon after the new tax law took full effect earlier this year.
“Many moderate-income workers may be able to exploit a tax break that higher-income workers cannot. And by shifting their status from employee to contractor, workers potentially can reduce their taxes by thousands of dollars,” wrote Rosenthal.
Rosenthal is talking about the TCJA’s 20-percent individual income tax deduction for income from pass-through businesses such as sole proprietors and partnerships.
This tax law change effectively provides a lower income tax rate on a sole proprietor’s income than for an employee with similar income…Read More on Don’t Mess With Taxes