Keith Boyer CPA's Blog

Topics and tips about accounting, taxes, business to personal finance and more!

Is the new tax plan beneficial for businesses?

We are optimistic the changes forthcoming to the tax code will be positive for the business owner. Much talk in the press and even in accountants forums, is that the advantage for "flow throughs" (funny, every time I write "flow-throughs" spell check comes up), is limited by thresholds of $315,000, married filing jointly, and $157,500 for other filers, We believe, and I think the Wall Street Journal confirms this morning, that those limitations apply only to Selected Services Businesses, (SSBs) Specified Service Business defined as a trade or business where the principal asset of such trade or business is the reputation or skill of one or more of its employees. (Architects do not fall into this description). Therefore most "flow-throughs will get the benefit of a 20% reduction in taxable income resulting in a reduced rate of 29.6% (assuming the taxpayer is in the maximum tax bracket) on that income....
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Topics not discussed in the weekend's papers included in the conference agreement

   The repeal of the Individual Mandate (requirement to purchase medical insurance) is effective for months beginning after December 31, 2018.  Therefore insurance will be required for 2018 without having to pay the penalty. The bill also retains the medical expense deduction, which allows taxpayers to deduct medical expenses that exceed 10% of their income.  The overhaul would for one year lower the threshold to 7.5%, where it used to be, and return it to 10% in 2019.   How will it affect my business deductions?   1.  Luxury automobiles (and all auto's for that matter)     Annual Depreciation- up significantly.                                      Current                    Proposed Year 1-              $3,160                     ...
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Tax Reform: The latest brewing at Capitol Hill

 Under the deal worked out by committee member of the House and Senate Top individual tax rate = 37%, Current top tax rate = 39.6% Deduction for SALT (state and local taxes) capped at $10,000 Alternative Minimum Tax on individuals would remain but the exemption would be increased to $500,000 for individual filers and $1,000,000 for those filing joint returns which would effectively eliminate the AMT for many filers. Top corporate rate would be 21% Negotiations are still under way for the “deduction” for pass-throughs. According to the WSJ a deduction of 20% is being discussed which equates to a rate of 29.6%. There has been some speculation regarding the child tax credit and increasing it to as high as $2,000.  As of now, it stands at $1,100.  Republican Senator Marco Rubio threatened to vote against the bill unless the "child tax credit is made more generous to help lower-income workers...
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Make the contribution now

--> If you are considering making a charitable contribution in the future, consideration should be given to accelerating that contribution into 2017 so as to secure the deduction thereby reducing current taxes. At this time we are unclear as to how charitable contributions will be treated under the tax bills currently making their way through Congress. Follow this scenario. If you lose your state and local tax deduction, your real estate tax deduction, you then are subject to the standard deduction of $24,000. Does that include your charitable contributions? If so, the contribution will not reduce your taxes to the extent the totality of your itemized deductions don't exceed $24,000. So make the charitable contribution now. -Keith Boyer, CPA