4 Things to Do Now to Impact Your 2018 Taxes Most

Taxes are something we’re all familiar with in one form or another. By law, any income made as an employee or net income made as a business owner must be reported and taxed. If you’re a small business owner, you understand that tax planning happens year-round, not just in April. The last month of 2018 is here, and many small business owners have already approached us with questions about end-of-year tax planning. After the Tax Cuts and Jobs Act of 2017 (TCJA) was passed, there were provisions that affected business deductions and personal deductions.  For businesses, a couple big changes affect depreciation of assets, the qualified business income deduction, and meals and entertainment expenses. For individuals, changes to itemized deductions available and standard deduction amounts changed drastically. As many small businesses are taxed on a pass-through basis, the business changes may affect personal income tax returns, so we have included some strategies still available to the small business owner that can ultimately affect their personal tax return. [Related: A Comprehensive Guide to the Top 8 Provisions of the Tax Cuts and Jobs Act] 1. Invest in your employees and service. December is a popular time of year for business owners to purchase assets.  Businesses can take advantage of the 100% bonus depreciation, or full write-off of qualifying assets placed in service in 2018, both new and used, with tax lives of 20 years or less.  Expensing of asset placed in service under Section 179 is also available for businesses with less than $2.5 million of assets placed in service during 2018.  For these small businesses, up to $1 million...

Updates on U.S. Tax Law: The Qualified Business Income Deduction and the Holiday Party

With the recent changes to the U.S. tax code, we’ve had several small business owners ask us how this will affect them when they complete their 2018 taxes. They know that the Tax Cuts and Jobs Act (TCJA) has shaken things up, and they want to make sure they’re maximizing their deductions. In July, we covered the Top 8 Provisions of the Tax Cuts and Jobs Act, the latest revision to United States tax law. The question we’ve received most frequently since then is about Section 199A, which allows small business owners a new deduction. And in October 2018, the IRS made clarifications and updates to the TCJA, changing some of the details from the blog earlier this year. As such, we’ve put together an overview of the basics of Section 199A as well as the IRS’ clarifications regarding work meals and holiday parties. [Related: A Comprehensive Guide to the Top 8 Provisions of the Tax Cuts and Jobs Act] How Small Business Owners Can Use Section 199A to Save Money The TCJA contains a new deduction for business owners of entities taxed on a “pass-through” basis. It is called the Qualified Business Income Deduction (QBID), the deduction is included Section 199A of the TCJA. This deduction allows certain business owners to deduct up to 20% of their qualified business income (QBI) on their personal tax income tax return. So, for example, if you own a furniture store that qualifies for the deduction with QBI of $10,000 during the year, you will be able to claim up to a 20% of QBI, or $2,000 as a deduction on your...