Save Yourself From Tax Headaches
We are halfway through tax season. Hopefully there were no tax surprises for you. As tax reform approaches there are a few areas that will impact business owners and individuals (some which can be a huge part of your daily operations). I am going to list a few big ticket items that you should be aware of
Entertainment expenses to entertain clients has been eliminated. However 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 reform. And not only did presentation expenses survive as deductions, but they also continue as 100 percent business expense deductions. The IRS will allow 100% entertainment expense if you provide an open invitation to the public at your event. If that occurs, the cost of food/supplies will be considered presentation expense and will be fully deductible.
There is a buzz going around via other tax professionals that the IRS is really cracking down on business record keeping and keeping accurate records. Since the IRS has revised rules and made it a better environment for business owners, now is the time for the IRS to really scrutinize tax payer deductions and expenses. If you haven't started already now is the time to get your business records in order.
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 acquisition debt for homes purchased after December 15, 2017, is $750,000.
Tax Reform Punishes W-2 Employees 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.”
These are just a few items to be aware of for of next years taxes and to plan for future years.
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