Tax Law Changes and Year-end Tax Planning
Wanted to remind you of the need to do 2018 year-end tax planning so we might avoid surprises as well as keep your tax bill as low as legally possible. Please forward your year-to-date data and a forecast for the rest of 2018 so we might update your tax planning accordingly.
Keep in mind this year’s taxes will be very different from prior years as the IRS has doubled the exemption amount making it less likely for taxpayers to be able to itemize, lowered tax rates, did away with exemptions but increased child tax credits, the total deduction on your personal returns for the total of state income and property taxes combined are limited to $10,000.
2018 Deduction for Pass Through Entities for Small Business Owners, In President Trumps most recent tax law changes there is a 20% deduction for Pass Through Entities for Small Business Owners. Be sure in addition to the tax rate deductions available to all personal returns your CPA considers this in your 2018 tax planning. The change was added by Congress to “bridge the gap” between the reduction in the greatly reduced corporate rates and the marginally reduced personal rates for America’s Small Business Owners. Plan Early & Plan Often!
Effective January 1, 2018 the IRS has dramatically changed the way business owners record and deduct Meals and Entertainment. Entertainment expense is no longer deductible. Business meals remain 50% deductible. Items benefiting employees (not the owners) such as recreational/social activities (i.e., Christmas parties) are deductible at 100%. Accordingly I suggest setting up in your chart of accounts effective 1-1-18 three new charts of accounts: -Entertainment Expense (not deductible).
-Business Meals (50% deductible)
-Recreational/Social Employee Expense (100% deductible)
Georgia Tax Law Changes for Georgia Business Taxpayers & Entrepreneurs. Georgia Governor Nathan Deal signed House Bill 918 reflecting changes in Georgia law to reflect IRS Tax law updates. Effective January 1, 2019 Georgia reduced the personal and corporate tax rates to 5.75%. Georgia did not adopt the 20% qualified business income deduction that was included in the Tax Cuts and Jobs Act/TCJA giving business owners and entrepreneurs a 20% deduction of their K-1 business income on their federal return. This was passed by the IRS for business owners to bridge the gap between reduced corporate tax rates and those for individuals.
Georgia also doubled the standard deduction for all individual taxpayers to $6,000 for married tax payers filing jointly/$3,000 for married taxpayers filing separately and to $4,600 for single tax payers. Stay abreast for more tax news as it affects each and every one of our pockets!
