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Meals and Entertainment Changes Under Tax Reform

 

The Tax Cuts and Job Act (TCJA) enacted extensive changes to the deductibility of meals and entertainment expenses for companies. If you are in the business of entertaining your clients and customers, you will want to know about these changes!

Prior to the TCJA, taxpayers generally could deduct 50% of expenses for business-related meals and entertainment. Further, meals provided to an employee for the convenience of the employer on the employer’s business premises were 100% deductible by the employer and tax-free to the recipient employee. Various other employer-provided fringe benefits were also deductible by the employer and tax-free to the recipient employee.

Under the new law, entertainment expenses paid or incurred after December 31, 2017 are no longer deductible. Employer-provided meals and meals provided for the convenience of the employer are limited to a 50% deduction. After 2025, the cost of meals provided on the employer’s premises will be nondeductible.

Summary of the changes made under the TCJA from 2017 to 2018

2017 Expenses (Old Rules) 2018 Expenses (New Rules)
Office Holiday Parties Summer Office Picnic 100% deductible 100% deductible
Entertaining Clients ~50% deductible ~ Even tickets, 50% deductible for face value of ticket; anything above face value is non-deductible ~ Tickets to qualified charitable events are 100% deductible ~ Meals - 50% deductible ~ No deduction for entertainment expenses
Employee Travel Meals 50% deductible 50% deductible
Meals Provided for Convenience of Employer 100% deductible provided they are excludible from employees’ gross income as de minimis fringe benefits; otherwise, 50% deductible 50% deductible (nondeductible after 2025)
Fringe Benefits ~ Business could deduct the cost of employee parking, transit passes and bike commuting reimbursements, and employees could exclude the benefit from income. ~ Employee achievement awards could consist of anything within a dollar limit of $400 per award and $1,600 for all awards to the employee for the year. ~ Businesses can no longer deduct the cost of employee parking and transit passes (bike commuting reimbursements are still deductible), but employees can still exclude the benefit from income, except bike commuting reimbursements. ~ Employees achievement awards must be tangible personal property and not cash, gift cards, coupons or certificates, nor tickets, meals, vacations, lodging or stocks and bonds. The dollar limits remain unchanged.

 

Updated 2018 Withholding Tables – Taxpayers Could See Paycheck Changes by February

The Internal Revenue Service released Notice 1036 on January 11, 2018. The notice updated the income-tax withholding tables for 2018 which reflects changes made by the tax reform legislation enacted last month. This is a first in a series of steps that the IRS will take to help improve the accuracy of withholding following major changes made by the new tax law.

Employers should begin using the 2018 withholding tables as soon as possible, but not later than February 15, 2018. The tables are designed to work with the existing W4s your employees have already filled out. The marital status chosen on the W4 will determine how much income tax will be withheld. Personal exemptions are no longer relevant. The IRS is working on a new W4 form which is scheduled to be released near the end of February. We will send out a notice when they are available.

Many employees will notice a change in their take home pay. Once the IRS releases the new W4, we encourage all employees to review their personal tax situation to see if they need to make any changes.

The IRS has posted a list of frequently asked questions to help explain the new withholding tables. Those FAQs can be accessed by clicking here.

A Healthy Start to the New Year!

Happy New Year! 

All of the guests have returned home, the holiday decorations are taken down and packed away, the hustle and bustle of the holiday season has passed, and you can finally take a breath! Whew! Another year gone and new one just begun. This year in business will be better than the last. This year will be healthier.

Healthier? How can this year be healthier in business?  Well, one way to start the new year off right is to focus on Key Performance Indicators or more commonly referred to as, KPIs.

How good of a job are you doing measuring the vital signs in your business? We all know we need to do it, but how many do? Just as you measure physical health by tracking a few important vital numbers, like, heart rate, blood pressure and body temperature, you can also measure the “vital signs” of your business. The nature of your business will determine which factors should be monitored…We can help with that!

Key Performance Indicators, or KPIs, are great measuring sticks for your business. The key is to figure out which ones are relevant for YOUR business; they are the relevant moving needles. KPIs are not the same for all businesses. A retailer or wholesaler is concerned with inventory turnover and product sales. A legal firm is interested in billable hours per employee/partner per month. A manufacturer is concerned with units produced or gross profit per unit sold. What KPIs are you looking at? Let us help you determine which KPIs you should be monitoring in your business!

Not only is it important to determine which KPIs you are monitoring, but determining how often you look at those KPIs is equally important! Are you looking at them yearly, quarterly, monthly, weekly, possibly even, daily? How many KPIs are you looking at? Did you know that there is such a thing as monitoring too many KPIs?

You see, here’s the biggest thing…we all know we need to measure the important vital signs in our business, but how many do? That’s the thing about business ownership–no one is going to make you! In other words, to whom are you accountable? If it’s you…how good of a job are you doing and how often are you measuring? We stress the importance of this with all of our clients! Let us help you determine which KPIs to measure and how often you should be measuring them. Not only will the health of your business improve, but I guarantee your personal health will as well. You will “feel good” knowing you have the relevant moving needles to move your business forward.

Let’s talk specific strategies that will ultimately increase the health of your business for 2018!

Lake County Victims May Qualify for a Flood Tax Credit

Many home and business owners are still struggling to restore their property after suffering through the historic flooding in summer of 2017. Fortunately, there is some relief on the way. Homeowners and small businesses in Lake and 17 other counties impacted by the historic flooding in July may be eligible for a state tax credit up to $750.

The flooding that occurred this summer caused thousands of dollars in property damage to Lake County homes and businesses. This tax credit will provide relief to flood victims who are still trying to pick up the pieces, and rebuild their homes and businesses.

In order to qualify for the grant, homeowners must have reported the damage in July to the Lake County Emergency Management agency. In addition, homeowners who received the Natural Disaster Reassessment are not eligible.

Homeowners seeking the credit must attach a letter from their township assessor’s office to the tax form.

In addition to the tax credit, the Small Business Administration will provide low interest loans to homeowners and business owners in Lake County. More information about the loan program can be found by contacting SBA’s Disaster Assistance Customer Service Center at (800) 659-2955 or going online to sba.gov/disaster.

Newly Revised Employment Verification Form

In December of 2016 we learned the United States Citizenship and Immigration Services (“USCIS”) announced the release of a newly revised Employment Verification Form, Form 1-9. Employers were asked to begin using the newly revised Form I-9 as of January 22, 2017. See previous blog post New Form I-9 for 2017.

On JULY 7th, the USCIS released another revision of Form I-9. Either the December or the July version can be used for the next few weeks. On September 18, 2017, employers MUST use only the newly-revised July form. The old and new versions can be identified by looking at the date at the bottom left side of any page of the document (NOT THE EXPIRATION DATE AT THE TOP RIGHT SIDE OF EACH PAGE). The old version says “Form I-9 12/14/2016N”. The new version says “Form I-9 7/7/17 N”.

Revisions that were made are related to the Instructions and to the list of Acceptable Documents.  For detailed information please visit USCIS.gov.

To download the newly revised Form I-9 click here or you can access it among other forms on our Tax Forms page of our website.

 

Tax Payment Options to the IRS

If you owe taxes to the IRS, your payment must be received by the due date, even if you apply for more time to file.  Failure to pay on-time will result in penalties and interest.  This year, the tax deadline to file personal tax returns falls on April 18, 2017 and the extended deadline is October 16, 2017.  Estimated tax payments (Form 1040ES) are due:

  • April 18, 2017
  • June 15, 2017
  • September 15, 2017
  • October 16, 2017

Thankfully, the IRS offers easy electronic payment options so you never have to miss a deadline.  Paying electronically is convenient and secure.  The IRS uses the latest encryption technology and does not store your banking information.  You can make electronic payments online, by phone or from a mobile device.  When you use any of the IRS ePay options, it puts you in control of paying  your tax bill and gives you peace of mind.  You determine the payment date, plus you’ll receive an immediate confirmation from the IRS.  It’s much quicker than mailing a check or money order.  For more information, visit IRS.gov/payments.

Support for QuickBooks 2014 Ends May 31, 2017

If you haven’t heard, on May 31, 2017, support for QuickBooks 2014 products will end.  This includes all versions of QuickBooks 2013 (Pro, Premier, Enterprise Solutions, Accountant Edition, and Mac).  If you are using payroll, merchant services, technical support or other QuickBooks add-on services, this is a VERY big deal.  We encourage you to upgrade as soon as possible to retain access to add-on services and live support.

To see which 2014 services will be discontinued and how they will affect you, visit Intuit QuickBooks.

If you need help considering your upgrade options, contact us today.  We have QuickBooks Advisors on staff that can help walk you through the process so you can make the best informed decisions for you and your business.

Standard Mileage Rates and Deductions for 2017

2017 Standard Mileage Rates

Whenever you drive for business, medical purposes, a charitable organization or move for work, you may be able to get a mileage deduction and save money on your taxes.

Beginning on January 1, 2017, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) decreased to 53.5 cents per mile for business miles driven and 17 cents per mile for medical or moving purposes.

Standard Mileage Rates 2017 2016
Business Miles 53.5 cents/mile 54 cents/mile
Medical or Moving Miles 17 cents/mile 19 cents/mile

The standard mileage rate for charitable service miles remains at 14 cents per mile.

The standard mileage rate for a business, as well as medical and moving purposes, is based on an annual study of the fixed and variable costs of operating an automobile.  There are various factors that influence the standard mileage rates, including:

  • Gas and oil prices
  • Insurance costs
  • The state of the economy
  • The expected cost of normal wear and tear on a vehicle
Taxpayers always have the option to claim deductions based on the actual costs of using a vehicle as an alternative to using the standard mileage rates.

The rate for using an automobile while performing services for a charitable organization can only be changed by congressional action. The current rate at 14 cents per mile has not been changed for over 15 years.

There’s an App for That!

Whether you are in charge of your own business, managing multiple vehicles for a company or tracking mileage for personal use, there are many useful mileage tracking apps available for download.  Many of the mileage tracking apps are 100% free and deliver some great features.  Here are just a few with 4+ star ratings:

  • Everlance: Mileage Log, Expense Tracker, & Deduction Tracking for Taxes
  • MileIQ: Automatic Mileage Log
  • MileWiz: Automatic Mileage Tracker & Digital Driver Log

Of course there are many other apps that are just as good as these.  Finding one that works for you can help you to accurately track your journey and simplify the way you run your business and personal traveling experience.  Check out your preferred app store to download the mileage tracking app that works best for you.

 

What are Your Plans for Your Tax Refund?

What are you planning to do with your tax refund this year?

Tax Refund

Pay down debt, put it in savings, use it for everyday expenses or a major purchase; how about a vacation?  Whatever it is, be careful not to count on getting a refund by a certain date. This is especially true when making a major purchase or paying other financial obligations.  According to the IRS, some refunds must be held until February 15 for tax returns that claim the Earned Income Tax Credit or the Additional Child Tax Credit.  This applies to the entire refund, even the portion not associated with these credits.  This does not mean that you have to wait to file your tax return.  It just means that the IRS will not begin releasing refunds until February 15; they will begin processing your tax return once the filing season starts.

The IRS cautions taxpayers that these refunds likely won’t arrive in bank accounts until the week of February 27.  Once your refund has been processed, you can go to Where’s My Refund? to check on its status.  You will need your social security number, filing status and the exact refund amount.  The IRS also offers a mobile friendly app should you choose to check the status of your refund that way.  Click here to download the app IRS2Go.

 

 

New Form I-9 for 2017

On November 14, 2016, the United States Citizenship and Immigration Services (“USCIS”) announced the release of a newly revised Employment Verification Form, Form I-9.  Employers are required to use the Form I-9 to verify the identity and employment authorization eligibility of their employees.  On January 22, 2017, employers must use only the new version.  Until then, they can continue to use the version dated 03/08/2013 or the new version.  The good news is the form went from nine pages down to three pages in length and users are able to fill it out more easily electronically.

Newly Revised Form I-9

Other Changes Include:

  • The addition of prompts to ensure information is entered correctly.
  • The ability to enter multiple preparers and translators.
  • A dedicated area for including additional information rather than having to add it in the margins.
  • A supplemental page for the preparer/translator.

 

For more information about USCIS and its programs, please visit uscis.gov