Hank Hurst and Jaret Rice enjoy digesting bland tax data and spitting out tasty returns for their clients. They are exceptional at it, having done it for years.
The partners at The Hurst Company, Certified Public Accountants and Advisors have compiled a presentation about the new federal tax laws, what they've learned and how they've responded. They ran through the presentation last week at their office at the Gateway to Amelia complex.
The "Tax Cuts & Jobs Act" was heralded as the biggest of its kind in at least 30 years. So CPAs like Hurst and Rice spent countless hours studying and analyzing the new law to familiarize themselves.
Here is a concise summary of what they found. In summary of the summary, Hurst says, "It's just an exciting time to save money for taxpayers."
Most corporations have benefited tremendously from the new 21 percent corporate tax rate. This new rate
applies to corporations, and not most smaller companies that are typically S-corps (instead of C-corps). The previous corporate tax rate was significantly higher.
There is a saving grace for smaller companies, however. It's something called the "QBI," or the Qualified Business Income deduction. Here, many companies organized as S-corps, partnerships, sole proprietors, etc. can realize as much as a 20 percent deduction on their income. This strategy is more complicated than the flat 21 percent corporate tax rate, however (and it certainly won't fit on a postcard, as designed in the act).
Newly designated "Qualified Opportunity Zones" are being overlooked by many taxpayers.
Here, taxpayers can defer capital gains by rolling proceeds into these underdeveloped, tax-advantaged zones. An opportunity zone is located just off of Amelia Island, comprising much of Yulee. In simple terms, this strategy is like a "1031 exchange on steroids," Rice says.
There are other minor changes in the tax act, such as how to recognize operating losses, how to deduct business meals and how to handle itemized deductions. Hurst and Rice will gladly explain these to you, even if you don't find taxes as exciting as they do.
In case you haven't heard, another prominent billionaire is leaving New York City for the tax haven of Florida. There seems to be a steady stream of newcomers heading here, bolting from high-tax places.
The latest is none other than Donald Trump, the president of the U.S. Trump announced he is relocating his residence to Florida, where he owns a house at Mar-a-Lago resort (which he also owns).
The new limitations on deducting state and local taxes from your federal taxes are hurting residents of these states, as well as the states themselves since people (and businesses) are leaving in droves. As expected, the national media screamed about Trump's decision.
Over the years, he's certainly paid plenty of state and local taxes from his real estate activities, however. But like a lot of things in life, nothing lasts forever. Except taxes.
Steve Nicklas is a financial advisor and a chartered retirement planning counselor with a major U.S. firm who lives and works in Nassau County. He is also an award-winning columnist. Contact him at [email protected].