Tax Cuts and Jobs Act Impacts for You and/or Your Business

We have sent several emails that impact you personally and professionally, relating to the new tax brackets, standard deduction, new kiddie tax, etc. Below we have highlighted a few areas that may impact you as a business owner:

Moving Expenses Deduction Suspended

Starting in 2018 the personal deduction for moving expenses is suspended, as well as the Exclusion for qualified moving expense reimbursements. Any moving expense reimbursements paid by a business will be considered a taxable fringe benefit and added as additional compensation to the recipient.

Meals

Beginning in 2018, all meals are a 50% deductible no matter what the nature of the meal, even at the employer’s convenience.

Entertainment

All entertainment facilities and activities, even if associated with the active conduct of a trade or business is nondeductible. This includes tickets to the theater, tickets to sporting events, golfing, etc. If the company is a sponsor for an event, the cost could be considered advertising.

Depreciation

  • Section 179 – Beginning in 2018, the maximum deduction for full depreciation on assets purchased in the year is $1,000,000 (there is a phase-out of the allowed deduction which is completely eliminated when asset purchases total $2,500,000)
  • The following are now eligible for the Section 179 deduction for non-residential properties: roofs, heating, ventilation, air-conditioning, fire protection and alarm systems, and security systems.
  • 100% Bonus Depreciation – The allowed depreciation deduction increased to 100% from 50% of the costs for any items (new or used property) placed in service after September 27, 2017.
  • Vehicles – Larger depreciation limits on vehicle purchases for luxury cars and SUV’s.

Qualified Business Income Deduction (QBI)

Beginning in 2018, taxpayers may be eligible to receive a deduction for “Qualified Business Income” from pass-through entities (sole-proprietors, partnership and s-corporations). The deduction is generally equal to 20% of your “qualified business income” (QBI), defined as the net amount of items of income, gain, deduction, and loss with respect to your trade or business. Except for the overall limitation listed below, the deduction for taxpayers with taxable income less than $315,000 (MFJ) or $157,500 (S) is not limited. If taxpayers have taxable income over the threshold there are various limitations & phase outs that may apply.

  • Wage limitations
  • Prohibition against specified service businesses
  • Basis of depreciable property limitation

If you have a business pass through entity and your income exceeds the thresholds, please consult us for additional specific information and computations and planning relating to the limitations pertaining directly to you or your business. In addition to the limitations listed above, there is an overall limitation in which the QBI deduction cannot exceed 20% of taxable income in excess of capital gains.

Miscellaneous Itemized Deductions

Beginning in 2018, these deductions are suspended. This includes: investment expenses and fees, tax preparation fees, home office expenses, unreimbursed business expenses, etc.

Please contact us at 239.433.5554 if you have any questions, or, if you’re interested in our tax service offerings, visit our page here.