Tax reform changes the alimony game. This may or may not have any relevance to you, but if it does, you will want to move quickly. The Tax Cuts and Jobs Act (TCJA) eliminates tax deductions for alimony payments that are required under post-2018 divorce agreements. More specifically, the TCJA’s new denial of alimony tax…
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Tax Reform Update on Business Meals with Clients and Prospects
Note that in our previous announcements, we let you know that business meals with clients and prospects were no longer deductible based on the recent tax reform changes. But we now know that lawmakers plan to reinstate business meals with clients and prospects as 50% deductible. Here’s the updated strategy: deduct your client and business…
S Corporation Fringe Benefits after the Recent Tax Reform
Fringe benefits are usually a good thing—but there’s a catch when you own more than 2 percent of an S corporation. The good news? Federal tax law allows the cost of these fringes as deductible expenses for your S corporation. The bad news? You, the shareholder-employee who owns more than 2 percent, may suffer additional…
Good News: Tax Reform Lands a Blow to AMT
Tax reform made changes to the tax law that significantly impact the alternative minimum tax (AMT). The changes could mean more money in your pocket and less going to the government. If you own a C corporation, then you are the big AMT winner: Tax reform completely eliminated AMT for C corporations. C corporations are…
Tax Reform Makes Professional Gamblers Who Lose Money Suffer More
As a professional gambler, you know that tax law did you no favors before tax reform. But now, because of tax reform, tax law has you between a rock and a hard place for tax years 2018 through 2025, because during this eight-year period of darkness, you get no deduction for any part of your…
Tax Reform Increases the Tax Benefits of Employing Your Child
The recent tax reform eliminated personal exemptions for taxable years after December 31, 2017, and before January 1, 2026. This makes your child worth less to you on your Form 1040. But there is a way to get even or, perhaps, much more than even. Let’s set the stage first. For taxable years after December…
Proving Travel Expenses after Tax Reform
As you likely know by now, your travel meals continue under tax reform as tax-deductible meals subject to the 50 percent cut. And tax reform did not change the rules that apply to your other travel expense deductions. One beauty of being in business for yourself is the ability to pick your travel destinations and…
Tax Reform Punishes W-2 Employees—Get Even!
The recent tax reform added new tax code Section 67(g), which states, “No miscellaneous itemized deduction shall be allowed for any taxable year beginning after December 31, 2017, and before January 1, 2026.” Let’s say you are a W-2 mortgage banker paid on a commission basis, and during 2018, you will incur $27,000 of employee…
New Court-Approved Way to Defeat IRS Penalties
You hate IRS penalties, right? Everyone does! There are a lot of strategies we can use on your behalf to potentially defeat an IRS penalty. Thanks to the courts, though, we now have a brand-new way to beat an IRS penalty. It’s Section 6751(b) of the Internal Revenue Code. This provision can get you out…
Tax Reform Imposes a Penalty Tax on Transportation Fringe Benefits
The recent tax reform destroyed what was a win-win tax benefit for the employer and the employee. Transportation fringe benefits came into being in 1992 under the Energy Policy of 1992 (Pub. Law. 102-486). One difficulty was that the benefits expired often and worked their way into the group of tax provisions called extenders. No…
Tax Reform Attacks Home Mortgage Interest Deductions
The recent tax reform contains two big changes to how much you can deduct in mortgage interest for tax years 2018 through 2025: During this seven-year period, you may not deduct any interest on prior or current home equity debt, with certain exceptions. Also during this seven-year period, the maximum amount you may treat as…
Tax Reform Puts Screws to Hobbies
The tax law has mistreated hobbies for a long time. But the most recent tax reform brings the grim reaper to the party, and it’s not pleasant. This means you need to focus on making your activity a business and not a hobby. Under both prior law and the new law after the recent tax…
Chart of Meals and Entertainment after Tax Reform
Tax reform has had a significant impact on the tax deductions you can now claim for business entertainment and meals. The chart below shows you how the Tax Cuts and Jobs Act treats 12 meal and/or entertainment events. 100% Deductible for 2018 50% Deductible 0% Deductible Amount Deductible for Tax Year 2018 Description 100%…
Did Tax Reform Goof When Disallowing Deductions for Client Meals?
Tax professionals want tax deductions for business meals with clients and prospects. Business owners want those meals deductible, too. Add us to this list. We want that deduction for our clients (and, of course, for ourselves). In recent days, we learned that lawmakers did not intend to eliminate business meals with clients and prospects. We’re…
Does Tax Reform Dislike Your Reputation or Skill?
Here’s a troubling thought. Did lawmakers put you in the out-of-favor tax group that denies you the 20 percent Section 199A deduction because your business makes too much money, and does so thanks to the reputation or skill of one or more of the business’s owners or employees?
Tax Reform Creates Desire for the C Corporation
When you first see that 21 percent tax rate for the C corporation, you have to think that this could be the choice of entity for your business operation. Further, when you find yourself in the out-of-favor group for the 20 percent deduction authorized by new tax code Section 199A, you naturally gravitate to thinking…
Tax Reform Allows Bigger Vehicle Deductions
Finally, lawmakers did the right thing by increasing the luxury auto depreciation limits on business cars. The old luxury limits were unrealistic, punitive, unfair, and discriminatory against any car that cost more than $15,800. The new limits don’t create parity in all respects, but they are a big improvement.
Tax Reform Really Did Eliminate Prospect and Client Meal Deductions
You likely have heard conflicting information on the deductibility of business meals with clients and prospects. We have spent time researching this issue, and our conclusion is that tax reform eliminated tax deductions for business meals with clients and prospects.
Tax Reform Allows 100 Percent Deductions for Presentation Expenses
Tax reform did much damage to tax deductions for business entertainment and meal expenses. But meals served at business presentations survived the entertainment and prospect and client meal bloodletting. And not only did presentation expenses survive as deductions, but they also continue as 100 percent business expense deductions.
Tax Reform Cuts Business Tax Deductions for Charity Golf Outings
You likely know that the recent reform did away with business tax deductions for prospect and client golf. But did you know that charity golf is gone too? Buried in tax reform is the elimination of the 100 percent business deduction for charity golf and other special charitable sporting events.