VBJ February 19

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THE VALLEY BUSINESS JOURNAL 12 www.TheValleyBusinessJournal.com February 2019 How Will Tax Reform Impact Your Deductions and Credits This Tax Season? MONEY by Esther Phahla, CPA, CTC, MST With tax season here, chances are you are probably asking yourself which tax deductions and tax credits will you be able to claim for your 2018 tax return, unless of course you did some tax planning before the end of 2018 and you have an idea of what to expect this tax season. Tax credits and tax deductions are said to be the most satisfying part of preparing your tax return, because they reduce your tax bill, and put money into your pockets. But they do this in different ways. First, let’s review the difference between a deduction and a credit. A Tax deduction: is used to decrease taxable income, thereby decreasing the amount of tax owed. They are calculated using your marginal tax bracket. For example, if Rose is in the 24% tax bracket, a $1,000 tax deduction will save her $240. A Tax Credit: is subtracted not from taxable income but directly from a person’s tax liability; thus it reduces taxes dollar for dollar. It could be refundable or non-refundable. Looking at the example with Rose above, a tax credit of $1,000 will lower her tax bill by $1,000. There are 2 types of Tax Deductions: Standard Deduction and Itemized Deductions. You can use one or the other but not both. It is generally recommended that you take the greater of the two unless special circumstances apply. Many taxpayers who itemized in the past will face a big question this year: whether is it still worth itemizing given the new higher standard deduction? 1. Standard Deduction: is a set amount that ensures all taxpayers have at least some income that is not subject to federal tax (i.e., tax-free). Even if you have no other qualifying deductions, the IRS lets you take this deduction and no-question about it. It varies according to your filing status. For 2018 tax returns the standard deduction has nearly doubled ($12,000 for Single filers and Married filing separate, $24,000 for Married filing jointly, $18,000 for Head of household). 2. Itemized Deductions: allow you to list qualified expenses on your tax return, the sum of which is used to lower your adjusted gross income, such as home mortgage interest on up to $750,000 of new home acquisition debt, state and local taxes up to $10,000, medical expenses over 7.5% of your adjusted gross income and charitable donations. Let’s recap a few of the common credits and deductions for 2018: 1. Child tax credit: increased to $2,000 and a new credit of $500 for non-children dependents was introduced. 2. Credit for child care: up to $1,050 for one child and $2,100 for 2+ children. 3. Earned Income Credit: up to $6,431 with 3+ children. 4. Education credits: up to $2,500 for the American Opportunity Credit, up to $2,000 per return Lifetime Learning credit, up to $2,500 Student loan interest deduction. The following are eliminated: 1. Exemptions: With the increase of the standard deduction, came the elimination of the exemptions. 2. Unreimbursed employee expenses. 3. Moving expenses: except for active duty military. Consult your Tax Advisor to make sure you are taking advantage of all the tax deductions and credits that are available to you. Esther Phahla is a Certified Public Accountant and Certified Tax Strategist in Temecula. She is the Best-Selling Author of tax planning books, “Why Didn’t My CPA Tell Me That” and “10 Most Expensive Tax Mistakes That Cost Business Owners Thousands”. She also holds a Masters of Science in Taxation. She can be reached at (951) 514-2652 or visit www.estherphahlacpa.com “ Tax credits and tax deductions are said to be the most satisfying part of preparing your tax return, because they reduce your tax bill, and put money into your pockets.
February 2019 THE VALLEY BUSINESS JOURNAL www.TheValleyBusinessJournal.com 13 EXECUTIVE PROFILE | Monique deGroot Through Monique deGroots’s hard work, enthusiastic personality, and creativity she has put her own indelible touch on the business once owned by her parents, Ronald and Michelle deGroot. She attributes the foundation of her success to their positive influence and love. Monique has given the City of Murrieta, Los Angeles, Orange County, San Diego and Riverside County, a place to escape and relax from the fast pace world for over 30 years. Affiliations I belong to the Murrieta and Temecula Chamber of Commerce, Local 706 Make-up, I.A.T.S.E, and Hair Union of Los Angeles, the International Spa Associates, and contributes articles to a variety of Beauty and Hair Magazines. In addition to owning and managing the Murrieta Day Spa, Monique is active in the community and donates to Camp Del Corazon, Boys and Girls Club, Michelle’s Place and Charity for Charity to mention a few. Monique does as much for the community as she can, through giving Spa services, packages and products for fundraising auctions. Goals To teach people the art of relaxing, exercise, and nutrition. It must be learned and practiced on a regular basic, by doing this I believe it would improve the quality of life. “I love being able to make people look and feel their best” says Monique, “Beauty starts from the inside out. I think feeling good, being kind, and loving yourself is the key to happiness.” Industry Accolades Meeting Oprah Winfrey and having the opportunity to be on “The Oprah Winfrey Show” for a makeover segment was one of the highlights of my life. Also working with Aaron Spelling on his show “Melrose Place” as the ‘Head Hairstylist’ for three seasons was an amazing experience. In addition to working on many television show like ‘Buffy the Vampire Slayer’ and ‘Desperate Housewives’, I had a chance to do some amazing commercials for IBM, NIKE, Pepsi, Taco Bell and Disney. Mentors My Mom and Dad have always worked really hard and are great role models for me with their love and persistence. I always felt like I could achieve or accomplish anything I put my mind to. Jeffery Hamilton, an extraordinary make-up artist who has worked on some of the biggest names in show business; Cher, Heather Locklear, Jessica Beal (just to name a few). Jeffery took me under his wing and showed me the tips and tricks of working with celebrities. He inspired and taught me so much. He was very instrumental in getting me into this film industry. We worked together for years until he passed. I miss him very much! I know he would be very proud of where I am today. Favorite Reading Autobiographies/Biographies, anything to do with Fashion, Beauty, and Health. Spa magazines and the good old fashioned newspaper. Favorite Activity Cooking, golfing, camping and traveling for “spa research” of course. Greatest Business Achievement Murrieta Day Spa and Hair Studio is celebrating 30 years in business in 2019! Creating a business culture of kind, creative and loyal women. I am proud to say I have a staff of over forty employees and some have been with me for over 20 years. We all share a close bond, becoming close friends not only in the work place but also outside of the spa. Birthplace Santa Monica, California Monique deGroot
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VBJ February 19

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