Given the pending changes in the tax code, I'm wondering if I could legally structure myself as a pass-through corporation in order to decrease my income tax bill. How would I go about doing this? How can I calculate whether this would decrease my tax? Would I need to incorporate before the end of 2017 in order to save money on this year's taxes?
Previously I included information here about my personal tax situation, but actually I am more interested in the general answer to this question. What sort of worker would benefit from declaring themselves pass-through, assuming they have the option to do so?
I've read several articles in the NY Times about this strategy. The tone of the articles suggest that the writers view this as a tax dodge which would mainly suit highly-paid professional workers who can choose to report their income as freelance/contractor (on a 1099-MISC form).
- "Hacking the Tax Plan: Ways to Profit Off the Republican Tax Bill"
- "Tax Plans May Give Your Co-worker a Better Deal Than You"
- "Under the Trump Tax Plan, We Might All Want to Become Corporations"
The articles also suggest that this strategy requires an expensive accountant because the paperwork is beyond the ability of the average person to figure out on their own.
The closest I could find to a tutorial-style article on this topic is this Vox article:
It makes it sound pretty easy: Form a sole proprietorship, report all your income on a 1099-MISC, calculate the amount extra you have to pay in health insurance, and you're done.
My issue with these articles is that I wonder if they are editorializing and making this sound easier than it is, in order to implicitly criticize the tax bill. I am hoping to hear from tax experts on this forum about whether this strategy is viable, and if so, which kinds of workers would benefit most.