The recently passed federal Tax Cuts and Jobs Act is marked by sheer breadth and attendant complexities. Given that reality, it was widely anticipated in America’s business community that fully understanding the law and applying it for maximum benefit would take some time.
That process remains ongoing.
We noted the law and “it’s not going to be comprehended overnight” aspects in a recent blog post. We stressed in our May 4 entry that “most small and mid-sized company owners simply don’t grasp all the material details yet.”
Incoming media and business reports are now suggesting that their knowledge is progressively increasing, with increasingly more corporate actors seeing clear benefits they might exploit from the business-friendly legislation.
A recent Accounting Today article suggests that one avenue worth exploring for many entrepreneurs in New York and nationally is the opportunity to score financially by being self-employed. The new tax tweaks in the federal law are material, providing for a 20-percent pass-through deduction on earned income for freelance workers such as sole proprietors and independent contractors.
Business commentators think that the deduction and related benefits could signal a notable change for the American economy. The self-employed business sphere is “growing five times faster than traditional employment,” notes one technology provider who caters to independent professionals. He and others believe that the new income pass-through incentive unquestionably motivates more individuals to launch independent careers.
There are of course caveats and a few curve balls linked with doing so. There is a limit on how much can be deducted annually, and also a stipulation in the law that bars select professional firms/occupations from qualifying for tax aid if their income exceeds a stated threshold.
As we note above, the proverbial smoke surrounding the legislation continues to clear, with avenues potentially worth exploring becoming progressively clearer. Business entrepreneurs and managers with questions regarding legislation-linked challenges and opportunities might reasonably want to confer with attorneys from an established commercial law firm.