If you pay quarterly U.S. taxes, the April IRS deadline is a double whammy -- you have to file your 2017 return and you have to pay the first portion of your taxes due for the current year.
Good luck with that in the next few weeks, especially if you qualify as a sole proprietor or other type of freelancer claiming new deductions.
Professional software and calculators are available online to help you estimate your 2018 taxes; however, the IRS has not finalized the details.
And without that information, it will be hard for some freelancers to calculate the new 20 percent deduction for sole proprietors, known as Section 199A. The new deduction pertains to pass-through income, which is business income that counts as personal income on a tax return, for anyone from freelance ride-share drivers to plumbers to lawyers.
Some of the key details that still need to be sorted out are who exactly gets the pass-through deduction, how much of it they can claim and also where it fits into the final 1040 form for 2018.
Uncertainty is inspiring a lot of speculation among financial professionals and shrugging emojis on social media.
The new deduction should apply to virtually all solo freelancers, who will qualify as "Specified Service" businesses, according to financial planner Michael Kitces, partner and director of research for the Maryland-based Pinnacle Advisory Group, says that
That means their income will determine how much of the deduction they get to claim. Those making more than $157,000 as an individual or $315,000 as a married couple will start to phase out of the tax break, which gets complicated quickly.
Taxpayers also need to be mindful about who qualifies as a solo proprietor and who really should be characterized as an employee, said Gene Zaino, CEO of MBO Partners, a financial firm specializing in independent workers. If you receive income from only one source and have no control over hours or no real business stake, you might raise a red flag for an audit.