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Tracy Byrnes: Ignorance is not bliss when it comes to taxes with so many changes, it's more important than ever to start preparing for tax season now. Hi, I'm Tracy Byrnes and welcome to our webinar, the ultimate guide to navigating tax reform. All right, you're feeling overwhelmed already? I know. I know. Me too. But don't worry we've got your back. Today Turbo Tax is partnering with The Street to provide you with this free exclusive event. Here's what we'll be discussing for the next hour, so pour a cup of coffee or stiff drink. We'll walk you through the key tax reform changes. We'll show you which deductions are going away and the steps you can take to maximize your refund. We'll talk about how the tax law impacts families, self-employed folks, and way more. Of course there are tons of free tools on Turbo Tax to help you navigate these new laws and to keep you from feeling overwhelmed while of course getting a full view of your total tax picture. We've got a lot to get to, and who better to guide us through this and to keep us calm.

Tracy: We got a CPA with way over 15 years of experience in tax preparation and advice. She's held positions as a public order to controller, operations management, you name it. She's of course a dear friend too and she was now a tax expert for Turbo Tax. We're talking about Lisa Greene-Lewis. She joins us now from Turbo Tax's headquarters in San Diego. Lisa, thank you so much for taking the time to do this. I am sure you are swamped.

Lisa Green-Lewis: Thank you for having me. Yeah, it's pretty busy right now.

Tracy: I'm sure. Probably busier than ever before considering the laws are just new and convoluted and crazy for most people.

Lisa: Yeah, it's busy. It is, but we're helping people. We've been helping people since the law passed actually since 2017, we've been providing tools and content and everything you need, so you need how tax perform impacts you.

Tracy: It does, because it's going to impact a lot of people, so before we get to your fantastic advice and tips on how the reform and the laws are going to impact our viewers, we have to set the scene for people. People need to understand why it's super important to be informed. Now, you guys at Turbo Tax did this survey. I know it was back in the summer but it's still fascinating to me that really says it all when it comes to Americans and their taxes, because let's face it. We'd all rather plan the next family vacation than even think about doing a tax return. Interestingly, 76% back then in August did not know about some of the changes. I'm sure that number's different now, but I also gotta believe that a lot of people are still really confused.

Lisa: Yeah, now what we're seeing, people are aware and as they're going through Turbo Tax, we have tax reform guidance, so we're letting our customers know how tax reform impacted their taxes as they're going through doing their taxes. Then also, people have probably heard out there about lower refunds or different refund expectations, and one thing we've been telling our customers and just notifying people of, you have to look at your overall tax picture. You can't think of it as a bigger refund. People have heard about tax rates being lower so they may see more money, but that doesn't necessarily translate into a tax refund. They could of seen more money in their paycheck all last year because of the lower tax rates. They could see a bigger refund, but it could also mean a lower taxes owed.

Tracy: I think that's a very important point. Bottom line in the story, you don't want a refund. You want to break even. You don't want the government holding your money this whole year, so that ooh, you get this extra pocket change come April. You want to take it home every week so that you can pay your family's bills, so you make a great point. I hope people realize that their paychecks are bigger and so what that their refund's a little smaller. That means that money was yours all year long. I think that's a great point. I love that your survey showed that 33% of people back in August would prefer to mow the grass. I don't know anyone that actually prefers to mow lawn ever, but rather do that than get a tax education. I think that's actually pretty funny.

Lisa: Yeah, and I think once people see and they're going through Turbo Tax, they're realizing that it's easy and we're letting them know how tax reform impacted them. Then also one thing to note, Turbo Tax estimates that about 90% of tax payers will claim the standard deduction instead of itemizing. That's up from 70% of people who claimed the standard deduction last tax season. For people who have never done their taxes before, this is the time to try, because they would probably just be claiming the standard deduction. Now we have the CPAs and enrolled agents live via one way video with turbo tax live, so they can ask their question.

Tracy: Which is huge actually because then you get like true honest guidance. I think that's so cool. But also too, to your point, while yes, you may be getting the standard on federal, that doesn't necessarily translate to the state, right? People still need to be aware that the state rules, your state rules however arcain and cumbersome they may be, may or may not have changed. The fed changed, but those are two different things.

Lisa: Right, exactly, and our products conform to whatever the state laws for the state product.

Tracy: We're gonna talk about this more as we go on, but 51% say they never updated their W form in 2018. I don't know if that's so surprising, right? I think people forget that that form, that W4 is what they filled out when they first got their job who knows how many years ago, that yeah, now they may have to go change it.

Lisa: Right, yeah, and that's one thing with your overall tax picture. In light of the changes in the tax law, if you didn't adjust your W4, you may see less money in your refund, but you should always revisit your W4 year by year. You may be getting an increase in pay or bonuses, so you should visit your W4.

Tracy: Yeah, and for sure, after we walk you through your current tax return, if the numbers doesn't make you happy, go change your W4 today. Do not wait. Run to HR. All right, so let's get to this, Lisa, because a lot of people probably think it's too late. Did they miss the boat? Are there things they can do as they're sitting down now to start to prepare their tax return. Are there things they can do to maybe get a little bit more back? We have to get to the big tax reform changes. Now, one of the big parts of the story were the adjustments to the tax rates, right? This was one of the biggest changes under the law, and it will impact how much money is being withheld from your paycheck. Again, more people probably saw more money, but let's walk through what we know right now. To start, right, five of the seven tax rates are lower?

Lisa: Right, exactly.

Tracy: That means bigger paychecks in 2018 and it potentially translates to as we said, smaller refunds this April or October if you indeed extend your return.

Lisa: Right, especially if you have a more involved tax return. The IRS, they adjusted withholding tables, but they adjusted them in relation to people who probably just took the standard deduction before. But if you have a more involved situation, dependents, you claim some of the deductions that we'll talk about later that were eliminated, like miscellaneous itemized deductions, then you definitely needed to adjust your W4.

Tracy: Right, and if you didn't, don't panic. Just wrap your head around it and then well certainly take care of it for 2019. But back to your 2018 return, which is what you should be preparing right now, they wanted originally, didn't they, to decrease the number of tax brackets. That didn't happen, so what we got were just lower rates in the seven that were existing.

Lisa: Yes.  seven rate and they reduced five of the seven.

Tracy: Right, so people should understand that. Okay, so now let's move on to the big changes in these deductions. You had already alluded to the standard deduction, so more people probably than we've seen in a very long time will be taking the standard deduction this year because it doubled. Can you explain that to us?

Lisa: Right, yes, so for single tax payers it went up to $12,000. It was 6,350, and if you're married filing jointly, it doubled to $24,000 and it was $12,700, so almost double. Also, with certain eliminations of itemized deductions or the cap for instance if you're a homeowner, the cap on the amount of property taxes that you can now take. You may move over to standard deduction because your itemized deduction are not more than the standard.

Tracy: For people that really spend a lot of time on Schedule A and had a load of deductions, I think they're gonna see ... and this is why you and I talked about this before. I think everyone should take the time to do their returns themselves or at least try because then you really understand what's going on here. Otherwise, sometimes it sounds like you're learning a new language. But a bunch of the stuff on Schedule A is eliminated now, so I would think the form should look a little bit simpler?

Lisa: Well they did make a change to the tax forms, and so if you just claim standard deduction, it's the new 1040 form. They eliminated the 1040 A and 1040 EZ, but then they added six schedules depending on what you have. If you have a business, your business income would go on schedule one, or depending on if you have various deductions, your deductions would go on those different schedules, instead of 1040, so it's changed a little bit. But for people that have just standard deduction, probably W2 income, they would be on that new 1040 form only.

Tracy: This is why walking through products like yours, that you just prompt the questions. People just have to fill in the answers and the number just magically plop on the forms they belong, and that's huge help this year.

Lisa: Exactly. We don't make anything about forms or the tax laws, just ask you the simple questions and make the calculations on the backend, and put that information on the correct forms. Also, we were talking about people switching the standard deductions, so what we've done in the products, we ask those key questions up front about your, let's say your itemized deductions, if you're a homeowner or other itemized deductions like charitable contributions. We'll ask about those up front, and if they don't add up to more than the standard deduction, we give you the deduction that gives you the biggest benefit, the standard deduction, and we don't have you walk through a bunch of screens entering that information, so eliminating data entry.

Tracy: That's great. Cut to the chase. I'm all about that. All right, one of the things though that we have to talk about are the elimination of the personal exemptions, so that's right at the top of your 1040. We were in the past all getting these personal and dependent exemptions. Those are gone now, aren't they?

Lisa: That is gone. It was $4,050 in 2017 per dependent, per tax payer and if you had a spouse, so yeah, that is gone now. But they doubled the child tax credit, so that went from $1,000 to $2,000. You still get the credit for your kids under 17, but you no longer get the personal exemption of $4,050 for you and your spouse.

Tracy: Right, and so somehow this crazy math somehow works out. That although I'm not getting the personal exemption, because $4,000 sounds like a huge number that I just lost. Hopefully, because the child tax credit increases from $1,000 to $2,000 per child, plus this new credit of 500 for non-children dependents, just maybe it almost feels like it evens itself out a little.

Lisa: It could because credits are worth more than deductions, so credits are dollar for dollar against the taxes that you owe. For instance, say you add a $2,000 tax liability and then the $2,000 credit, that would totally wipe it out. But if you have a deduction of $2,000, that just reduces your income. If you had $50,000 and a $2,000 deduction, you now have $48,000 income in your tax on your tax rate.

Tracy: At the end of the day, a credit is better than a deduction all day long, right? Try to maximize for sure. The child tax credit, the rules surrounding the child tax credit are still the same, right? It's still the same age limitations and all the stuff that held in the past, so 14, right?

Lisa: Under 17 for child tax credit.

Tracy: Under 17, excuse me. That's all the same. The max now as a single parent, once you start making $200,000 it starts eliminate?

Lisa: Yes, but they did increase that max, so as you said 200,000, if you're single, 400,000 if you're married filing jointly which was a big increase, so more people are able to claim the child tax credit that were not able to claim it before.

Tracy: Yes, as someone who has claimed these credits for a lot of years now, it's a huge increase actually, because it the adjusted gross income number was really low on those.

Lisa: Yeah.

Tracy: Okay, this is where everyone starts to get the shakes and people start sweating, once you start talking about home ownership and the state and local tax deductions, and mortgage interests. Everyone thinks it all went away, so we need to clear the air on this, so let's start with, there's a $10,000 limit now for state/local property income sales tax all that. Previously it was basically fully deductible, so let's talk about what happened here.

Lisa: Yeah, so now as you said, the state and local income tax or your sales tax and your property taxes before you could claim all of that in aggregate, there was no limitation. But now the total can only be $10,000, and that's we were saying some people may move into standard deduction now because they will not have as big of an itemized deduction.

Tracy: Just to be clear, so for you and I who live in ridiculous high state tax states, it state local property, so that includes my real estate taxes?

Lisa: Yes, it includes your real estate taxes and then if you claim your state income tax withholding which that could be huge, it's that as well added together.

Tracy: It's all added together, and sales tax included, so if you happen to ... I don't know buy a high ticket item, a boat or something and you had this sales tax, that also goes in there.

Lisa: Right, you compare the two, because before so you could claim state income tax or sales tax. One or the other. It's one or the other plus your real estate, your property taxes.

Tracy: It's still separate one or the other, state, local, real estate and sales, those are still separate?

Lisa: Those separate. You choose one or the other.

Tracy: But either way, 10 grand?

Lisa: 10 grand total, that's it.

Tracy: That's making a lot of people, including myself sweat right now, and the air conditioner couldn't be hotter. But again, this is why everyone is hoping this higher standard deduction is gonna make up for that difference, right?

Lisa: Right. They're hoping the higher standard deduction, the lower tax rates. Also one thing that happened with itemized deductions, there's no more limitation based on your income. There was a limitation on how much itemized deductions you could take depending on your income. That went away.

Tracy: That's something. Because there used to be a limit on your adjusted gross income. Okay, now here's another that again makes people sweat, it's the mortgage interest, but I feel lik this one needs to be explained because if you have a previous mortgage, you're fine. You're completely fine.

Lisa: Yeah, and if you have a new mortgage or refinance, it's jut different limitations, so under the new law, your mortgage interest deduction is based on a loan amount of $750,000. That's if you purchased a home or have a new home loan after December 15, 2017. If it's prior to that, your grandfathered into the old law, so your home mortgage interest is based on a loan up a million dollars.

Tracy: If I have a loan of a million dollars of a home I bought in 2015, and let's just presume for argument sake I got 900,000 still outstanding, the interest on that 900,000 all of it, is all gonna be deductible for me?

Lisa: Right.

Tracy: No questions?

Lisa: No questions.

Tracy: I understand wealthy higher earners are a little nervous about this, but for the most part, anything that happened before December 15, 2017 should stand.

Lisa: Yeah, you're good. There was one other change with line of credit, in that there's a misconception around that. At first people thought that they can't deduct interest on home equity lines.

Tracy: Oh yeah.

Lisa: You can still deduct it, but it has to be related to building or improving your home. It can't be a home equity line of credit that you used to pay off like personal credit cards or things like that. Before you were able to deduct that interest related equity line that you got to pay off personal loans. You can't do that anymore.

Tracy: Right, because people would take out home equity lines to pay for college and things like that, right?

Lisa: Yeah.

Tracy: But if I did the [inaudible 00:19:27] or the home equity line of credit before ... again before December 15, 2017, I'm good?

Lisa: No. [crosstalk 00:19:38]. That totally changed.

Tracy: It did change?

Lisa: Yes.

Tracy: The rules around home equity lines of credit, the interest is still deductible?

Lisa: It's still deductible but only if you use the loan to build or improve your home.

Tracy: Then the full amount is deductible?

Lisa: For the interest.

Tracy: Right.

Lisa: Yeah.

Tracy: Well that's good news too. Are there limitations on the line of credit you can take going forward, or as long as ... if it's a two million dollar line of credit and I use it all to build and improve my house, I'm good?

Lisa: No, there are limitations on that.

Tracy: All right.

Lisa: It was at $100,000 line of credit.

Tracy: That makes way more sense than me deducting the interest on two million dollars. Okay, that's fair. But either way, people shouldn't be panicking about these home equity lines of credit, like I think of ton of people were. I think there was a lot of misconception on this, so I'm so glad we're doing this, because people now can understand that you don't have to totally panic, jut maybe if you happen to go buy a two million dollar condo on the beach going forward, you might have some limitations.

Lisa: Yes, exactly. Or maybe you might consider buying one cheaper or in a different area or putting more money down if you can.

Tracy: There you go. There's definitely some planning involved round that. Okay, now we've also mentioned that Schedule A had a ton of deductions that were eliminated, and one of the big ones was miscellaneous itemized deductions, and that's a big catch-all for a lot of people. That's where you threw a ton of stuff, like your un reimbursed work expenses, tax preparation fees, things like that. That's all gone though, right?

Lisa: Yes. It is gone. Things like job search expenses, or if you attended seminars that weren't reimbursed by your employer, or if you used your car to go to some seminar, or any traveling un reimbursed by your employer, that's all gone.

Tracy: Those were all limited by two percent of your adjusted gross income to begin with, right? That meant that number had to be greater than two percent of your adjusted gross income, so often times it was kind of hard to hit anyway for some people, I think?

Lisa: Yeah, but it is definitely gone.

Tracy: It's gone. Don't even bother trying to calculate it. It was a pain in the neck to begin with. Moving expenses we're gonna talk about in a little bit but those are gone, too, right?

Lisa: Yes, unless you're active duty military. Other than, before the new law if you moved for your job, you could deduct things like the storage, the moving van that you used, even moving your pet. But now that is gone.

Tracy: Right, I remember that. Even moving your pet. The logic I find fascinating with that, I wonder if it's because they think we're all like ... we can work from anywhere in the world now and we don't need it. I don't know.

Lisa: There's things you could do. You could just make sure that your employer does reimburse you. Talk to them about reimbursing you for all of your moving expenses, and then I guess just thinking about the bright side that you could deduct your home mortgage interest and your property taxes, so those are some things to think about.

Tracy: Right, as you're paying thousands of dollars to get your dog across the country. Make sure you negotiate before you move.

Lisa: Yes.

Tracy: We've talked about, and just as a reminder to people, we've talked about the difference between a deduction and a credit, but it's very ... again, you want to maximize your credits. Deductions are ... they're eligible expenses but they're not dollar for dollar at the end of the day, so we want to make sure we maximize our credits. With that, before we start moving forward and talking about how to maximize our credits going forward, just making sure I didn't miss anything along the way here, Lisa. If there's something that I missed, just scream.

Lisa: I think, yeah, we talked about a lot of the changes.

Tracy: Big ones, right?

Lisa: Self employed has some big changes, but we may get to that later or ...

Tracy: Yeah, we'll get to that for sure. Let's talk about the kids a little bit. How do we maximize the kids? I have three of them. Sadly, one of them is too old to get me anything back on my tax return, but what do we do? We still have this $2,000 child tax credit now, so that's huge. What else can we do with our kids?

Lisa: Yeah, and the ones that you said are too old, because I'm in that same situation. I have two that are too old for the child tax credit, but you can get the new credit of $500 per dependent that doesn't qualify as a child anymore, so that's under 17. You can still get the $500 credit. That credit is also good for any relatives that you support or even a friend or a boyfriend or girlfriend, if you've been supporting them and they meet the dependency rules.

Tracy: Oh, I didn't even realized that when you said that earlier. The 500 goes to my now 18 year old?

Lisa: Yes. Yes.

Tracy: Now, I love him again. Now, I get something back for the kid. God bless him. We didn't talk about the earned income tax credit much actually. That was increased as well, right?

Lisa: Yes, so that increases every year. There's like an inflation adjustment for earned income tax credit, and that is a huge credit that a lot of people do miss. The IRS reports that one out of five tax payers that are eligible actually miss that credit, and if you're a family with three kids, that credit can be up to $6,431, so that's huge.

Tracy: It's huge. Everyone should pay attention to that. The other thing is child care. I know many of us ... I don't have it anymore, but when they're little you think you're working, your whole paycheck just goes to child care. That's up too, isn't it?

Lisa: Yes, so the child care credit, that is up to $1,050 for one child and up to $2100 for two or more kids. You definitely want to look into getting that, if you're paying for child care.

Tracy: You definitely do, and make sure you get the tax identification numbers of the facilities that your kids are at. Even like summer camp counts, right? If you need to sendthem to go to work, include all that stuff.

Lisa: Right. I was gonna bring that up. Summer camp, even sports camp, if you're dropping them off so you can work, that definitely counts.

Tracy: It better count. That stuff is so expensive. I'm telling you some days ... there were years where I thought I only worked to entertain my kids. All right, let's get back to our older ones right now. College. The lifetime learning credit and the American Opportunity credit, those are all still intact.

Lisa: Those are still available. The American Opportunity tax credit is $2500 per dependent, and that's for the first four years of college. The Lifetime Learning credit, now that's available even if you're not working on a four year degree. It's a $2,000 credit per tax return. That one is even good for the tax payers. If you want to take a class just to improve your skills, get that promotion you wanted to get, you can take one class and possibly get that $2000 credit.

Tracy: Does that $2,000 apply to automotive schools, training schools like that as well? If a child decides he's not going the college route?

Lisa: It can be vocational schools for the Lifetime Learning credit.

Tracy: Right. Great. That 2500 for student loan interest still intact?

Lisa: That is still intact and I know a lot of people have those student loans, so you want to make sure that you look into that.

Tracy: This is gonna sound crazy but you and I have kids who are in sports and have been in sports all these years. All those showcases we paid for over the years to get our kids in front of college coaches and things like that, can any of that be included or am I just reaching here?

Lisa: Unfortunately not. The part of sports that could be, fundraisers or charitable opportunities that you paid for, those could be deductible as charitable contributions.

Tracy: That's super sad, by the way, because you and I know the amount of money we spend on showcases and combines and whatever these people have conjured up so we can pay, so that our kids can be showcased, crazy amounts of money, right?

Lisa: [inaudible 00:28:40] yeah.

Tracy: All right, no that we're talking about a family of four, let's talk about ... and we have this graphic that seems like a lot, but I think it makes a great point that even with all the changes, many families will still be taking home more money. We have this family of four. I'm just gonna set it up. Married, filing jointly, two kids, California residents and they have an annual salary of $165. If you want to talk a little bit about wat they're getting, what they're losing. I could throw it to you on that.

Lisa: Yeah, so on the graphic, they are able ... well first you'll see their tax rate was lowered to 22%. That's where we talked about, they probably started seeing more money in their paycheck, so when you get to the end of it, and you see what their overall tax picture is and how much money they're gonna be getting back, you have to think about, it could of been in their paycheck. It's not necessarily their tax refund. Then they have two kids. This family of four, they were able to take the dependent exemption and the personal exemption, so that went away. That's where you see the $16,000 going away and being eliminated. On the graph it now shows zero under that category. But then you do see the child tax credit for each child doubling and it's $2,000 each, so they're getting the total $4,000 credit. That does help them some.

Tracy: Right, and I think that's why sometimes it's a little jarring, especially when you look at a graphic like this, that I just lost a $16,000 exemption. I feel like I'm getting the shakes just thinking about that, because this is not far off my situation, even though I'm in Jersey and not married, but to know that at least you're gonna get it back for the kids, even the older ones, to know to your point that at least the tax rate is lower overall. Like you said, many of us are gonna end up falling in that standard deduction. All these years of collecting receipts and things like that, at least for the federal, you may not need to do that.

Lisa: Right.

Tracy: Again though, I do think and I'm sure California is the same as New Jersey, you might need it for them. We do still have to keep track of all this stuff, because many of the states do not follow the federal return.

Lisa: Exactly, yeah. You should still keep your receipts but like I was saying with Turbo Tax, we'll let you know upfront on your federal whether you still need to go through and fill out all of the different screens.

Tracy: Right, which is a huge, huge, huge help. Again, this is why I think it's an exercise so many people should do, because you get a sense and at least you understand. The beauty now, right, is you can get someone live on the phone to ask if you have questions.

Lisa: Yeah, they're actually through video with Turbo Tax live, so you could connect live with them. You can see them. They can't see you. You can be in your pajamas. You could be drinking wine and just talk to them about your taxes. They'll guide you through. You can ask as many questions as you want, and they can also review, sign and file your return if that makes you feel more confident.

Tracy: The TV commercials are really funny of the kid pretending he's on the yacht. I don't know if anyone's seen it. Can I ask, is there an extra fee for that, to get someone live via video?

Lisa: What we've done this year is no matter what your situation, so if you have a simple tax return or you have a more involved situation and maybe you're self employed, you can talk to someone. You can talk to the CPA or enrolled agent and it's a product for each situation. Simple situation, they can talk to a CPA or enrolled agent for as low as $49.99.

Tracy: Yeah, so it's included in the package.

Lisa: Yes, and also one thing to note, it's year round, so once you use Turbo Tax live, you can connect with them and talk to them about your tax situation year round, especially self-employed. They come up with questions year round, or anyone. "I made more money this year, what should I do with my tax situation," or "I'm taking care of my nephew, how does that impact my taxes?" They can do this without extra charge year round.

Tracy: That's pretty actually great, because stuff happens all the time. You brought up self employed, and I feel like we should spend some time talking about this, because this whole, between Uber and contractors, and online jobs, the whole freelance economy is totally taking off, especially around tax time. It gets really complicated because these people now have to fill out a Schedule C which many people haven't done before. Introduce yourself to the new form. Congratulations on being self-employed. I think it's really cool, but there are some big changes, so maybe we can address some of them. The first one, do you want to start with the qualified business income deduction.

Lisa: Yeah, so self employed, they're gonna see a benefit from the new tax law. There's a new deduction. It's 20% qualified business income deduction. That's on their qualified business income. In general, self employed will get this deduction if they're under 157,500, if they're single. Then 315,000 married filing jointly. There are some limitations. If you're in certain service industries where you're considered a professional. When it goes over these income limits, some of your deductions can be phased out.

Tracy: It's 20% right off your income. That's huge.

Lisa: It's off of our net business income. After you take your expenses from your income, and then also after if you claimed the standard deduction, that would come off. Then it's calculated. It's not, we just want people to be clear. Let's say you made a gross amount.

Tracy: Right, you $50,000 on ETSY. You're not taking it off the 50,000.

Lisa: The 10 grand yes, so you have to take your net.

Tracy: Right, but still that's new and that's pretty fabulous, 20%.

Lisa: Yeah, because it's in addition to your other business expenses that you're able to deduct, so self employed has so many expenses that they can deduct, like their advertising, their marketing, their mileage. All of that is deducted and then you'll also get this 20%.

Tracy: Another huge thing I think is this qualified business equipment. Now you can expense up to one million dollars, and that basically means you just can write it off the year you buy it, right?

Lisa: Right, exactly. Your computer equipment, printer, any equipment that you need, you would be able to just write it off.

Tracy: It's too late for 2018, right? No one could go buy things and try to put it on your 2018 tax return, but that being said, for 2019, if indeed you are gonna go shopping for your business, save your receipts and you have up to two million dollars. I mean that's like a shopping spree to me.

Lisa: Yes. Of course you have to earn that amount of income before you can deduct that much.

Tracy: That's a great point. We should make that very clear. You can't just deduct a million dollars of income if you only made 20 grand.

Lisa: That's a huge loss, yes.

Tracy: Go make a million dollars and then expense a million dollars worth of equipment and there you go. All right, so your depreciation deduction also too increased.

Lisa: Yes, that increased on ... if you put a car in the place for your business and started using it in 2018, the amount of depreciation deduction that you can take, that increased to $40,000 over four years. It's tiered. There's different amounts per year but it's up to 40,000 over four years.

Tracy: It's still great. I think there's some great perks for self employed folks these days, especially because as we said, this gig economy and this whole notion of freelancing and working for yourself is on fire, and this is what runs our economy these days, so I love that we're giving them a little extra help.

Lisa: Yeah, I mean we have that into a survey that we did a couple years, where one in five tax payers become self employed every year.

Tracy: Wow.

Lisa: It's booming and we see a lot of people doing a W2 job and having a side gig. It's very common.

Tracy: It sure is. I had an Uber driver the other day who had a full time and he just Ubers when he has free time, and I think it's great. I know there's a ton of myths that surrounds self employed people and we've been touching on some of them, but I think again, a lot of self employed people are thinking their deductions are going to be reduced or eliminated and kind of not true, right?

Lisa: It's not true. Yeah, a lot of them, I think when they first heard about the law passing, they just heard about the corporate benefits and didn't hear about the self employed benefits, so as we talked about ... they still get basically the same type of deductions as corporations. They can still deduct their business expenses and then they have this new 20% qualified business income deduction.

Tracy: Which is fantastic. Speaking of corporations, I think many maybe getting big enough to switch over and become a C-Corp, again worried that they're gonna have bigger deductions. That might not necessarily be true either.

Lisa: Yeah, there's some myths around that and we want to educate our customers and tax payers that just because you started a business, you don't necessarily need to jump into incorporating. There's some things you need to know about that. First of all, we talked about you're able to get some of the same deductions as corporations. Also, there's some expenses when you incorporate. When you incorporate, you may now have payroll taxes because you need to actually pay yourself out if you're involved in the business. There's some state level taxes when you're a corporation. Some states, the state income tax for a coporation is $800, so you really just need to look at those other expenses and see if it's even worth it for you.

Tracy: Right, of course, and as you get bigger, being a corporation, you give dividends to your shareholders. They're taxed again so there's the whole double taxation issue as well. You alluded to it a little bit that incorporating though does provide a little bit of limited liability, right?

Lisa: Yes, it does. It does provide limited liability, but you're still liable for neglect, as far as liability goes. You just need to be aware of that.

Tracy: Right, so total myth that you're completely ... elimination free, not true.

Lisa: Exactly.

Tracy: Nothing is, quite frankly, right? All right, if we could now ... there's all this stuff. There's all this new stuff. We've already said that it's super easy to sit with Turbo Tax and plop your numbers in and wala, they show up where they're supposed to go, but maybe we could talk about some of the things like the self employed products that Turbo Tax has, since so many people are self employed now.

Lisa: Yeah, so with our Turbo Tax self employed, it also has industry specific deduction finder. As we talked about so many people are entering these new types of professions, so it uses artificial intelligence and machine learning, and it's actually getting smarter. It's seeing all these types of industries that are coming in and then it gets smarter and it serves up these deductions that you may not even have realized you're eligible for. If you're a graphic designer, it will serve out your video equipment or any type of software that you needed, so it will definitely serve those up so you don't miss anything.

Tracy: That's really cool actually because there's always stuff you don't think about. I love that the blog now is in English and Spanish. That's just super helpful, especially for so many self employed folks and people who are working hard to have all these questions answered in Spanish as well. That's huge.

Lisa: Yes, we have so much content that's translated, and you can just search and you will probably find answers to the questions you're looking for as well, in Spanish. One thing I didn't mention about our Turbo Tax self employed, we talked a little bit about our Turbo Tax live, but we have our Turbo Tax self employed live. You could connect live via one way video to our CPA and enrolled agent and they can help you find these industry specific deductions as well. Then we talked about we don't close on April 15th, the tax deadline. They are available year round, which is great for self employed, because they come up with questions about how do I estimate my taxes or things like that. They're able to talk to these CPAs and enrolled agents, and by the way they have an average of 15 years experience, so they're able to talk to them and get their questions answered. They're available in Spanish and English as well.

Tracy: That's really great. That's awesome. All right, so everyone should be sitting down preparing their tax returns. Before we give them three just total takeaways, things they should do right now, based on all this ... all we've been talking about is how people are going to see ... their taxes come down. Are there going to be situations you think, where people will see an increase in their tax bills?

Lisa: There may be some situations that people we talked about that had the more involved tax situations that had some things eliminated, people that live in the high property state that we've talked about and they may have a combination of things that were eliminating, so the cap on their property taxes and maybe their kid are over 17, that group of people may see that they owe more, but it also depends on maybe they adjusted their W4.

Tracy: Right, and if they didn't that's perfect, because if they didn't you should go do that right now. Doing your tax return is a great tax planning tool for 2019, because if you are gonna end up owing money because all of the changes Lisa just mentioned, prepare yourself for 2019 so you're not out of pocket again when you go prepare in 2020. All right, ton of stuff here, Lisa. What should I be doing right now?

Lisa: If you haven't filed yet, the first thing you should do, gather all your documents in one place. That's the first thing. Turbo Tax walks you through but it's great to have everything all in one place. Don't panic. We'll guide you through and then if you have questions you can connect live via one way video to our Turbo Tax live CPAs and enrolled agents and they can answer all your questions or they can review, sign, and file your return. Also another thing to remember that millions of tax payers are eligible to file their taxes for free with our Turbo Tax free edition, so if you just have a W2 and can claim a standard deduction and even claim the credits for kids like the earned income tax credit and the child tax credit, you can file your federal and state taxes for free with Turbo Tax.

Tracy: Which is amazing to every college kid that has a job and things like that. Just file it. Get it done. You don't have to pay a dime. You do it on your phone and be done.

Lisa: Yup, exactly. Then also remember, if you go through your taxes and you see your tax liability is more than you expected, you can still make some smart moves. You can contribute to your IRA. If you're self employed, to your sub IRA by April 15th and you may be able to deduct your contributions.

Tracy: That's actually a great point too. People should know that the date you file your tax return is the last date you can make the contributions to those, so your IRA, your SEP IRA, certainly not your 401K. That ended on December 31st, but if you had iether of the two, get on that and you'll certainly appreciate that in [inaudible 00:47:00].

Lisa: You may be able to get the saver's credit just by contributing to your retirement, so the saver's credit can be up to $1,000 if you're single, $2,000 if you're married filing jointly, and you're just getting that automatically for contributing.

Tracy: Lisa, I can't even thank you enough for all this, because there's a ton of terrific advice here. I hope people watch this over and over again. Lisa and I could talk taxes all day long, just we can. That's what we could do, but we're not gonna. Just to make sure our viewers get all the tax deductions and credits they deserve, Lisa was here to help, and of course you know where to find them. Keep your hard earned cash yourself. Remember up to date minute tips and advice. You gotta get them. Head over to TurboTax.com. File them of course at Turbo Tax on Twitter. Lisa Greene-Lewis, you are the best. Thank you for always joining us and helping us and helping our viewers.

Lisa: Thank you.

Tracy: For The Street, I'm Tracy Byrnes. Good luck out there.

Got married? Had a baby? Bought a home? Tax reform top of mind? 

Understandable. 

The new tax reform law is the largest piece of tax legislation in nearly 30 years, It passed December 2017 and changed a number of key items for tax payers.

That's why TheStreet is partnering with the premiere tax expert in America, TurboTax, for an exclusive free webinar. TurboTax's Lisa Greene-Lewis joined our Tracy Byrnes and help you navigate all of the changes to the tax code in our free webinar,The Ultimate Guide to Navigating Tax Reform: Watch Our Free Webinar.

Here's what you can expect in our webinar:

  • Key tax reform changes

  • Eliminated deductions

  • How to maximize your refund

  • How the tax law impacts families, self-employed, small businesses 

  • Free tools to help you file your taxes

Need more tax advice? Head over to our Tax Hub or get more expert advice from TurboTax.

Tax Tips: Videos to help you prepare for tax season