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Tag Archive for Brian Stoner

Tax Reform Allows Bigger, Faster Business Car 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.

If you bought a car in 2017 and paid more than $15,800, you were driving a luxury car that lawmakers punished you for by putting a lid on your depreciation.

For example, say in 2017 you bought a $40,000 car and drove it 100 percent for business. Your maximum depreciation deductions for the first five years would total only $15,060. To fully depreciate this car under the old rules would have taken 19 years.

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How Home And Security Ownership Is Affected By Tax Reform

In 2018, The Tax Cuts and Jobs Act of 2017 will create tax changes to home and securities ownership by changes to itemized deductions on Schedule A. If you own or are buying a residence and/or second home, you may have the following limitations on your itemized deductions:

1. The combination of real estate and state income or sales taxes paid each year will be limited to a maximum deduction of $10,000.  This will be a killer in high state and local tax states. State and local taxes (SALT) normally include state income taxes or state sales taxes (usually the higher of the two) and state and local property taxes, which can include real estate and personal property tax.

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What Entities Qualify For The New Section 199A Business Write-off?

In 2018, a new tax write-off has been created for qualifying businesses – the Section 199A Business Deduction.

This deduction equates to 20% of Qualified Business Income assuming you meet income and salary limitations.  Also, shareholder reasonable compensation, interest, dividends and capital gains and losses don’t qualify. But if you meet these requirements, exactly what entities and businesses have Qualified Business Income?  Based on my research, here are the qualifying businesses:

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Tax Reform Creates Desire For The C Corporation

When you first see a 21 percent tax rate for the C corporation, you have to think 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 about the C corporation, perhaps as a means of getting even.

The table below gives you a good look at how you would pay taxes on your profits, depending on your Form 1040 tax bracket. In the S corporation column, we listed the tax rates by the brackets that apply to individuals. To see exactly how this table works, let’s say that you are in the 34 percent tax bracket and have $100,000 in profits.

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Do You Really Like Loaning The Government Money?

This is a reprint of a blog I wrote over three years ago, but it still makes sense today.This is a reprint of a blog I wrote over three years ago, but it still makes sense today.

So, you have filed your income tax return with the IRS and your state, and are now waiting for the refund the government(s) owe you. You are thinking of all the things you can do with that money when you get it. Here are some things to think about as you wait:

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Tax Musings Of A Burbank CPA: How Tax Reform Will Change Some Industries And Professions

Well, the House of Representatives and the Senate have passed their Tax Reform packages, and now we will wait for the reconciliation to find out what tax laws we will have for 2018 onward.

Now let me say that the top 1% of the tax population (over approximately $465,000 a year in income) should be very happy – it seems they and large corporations are going to be getting a lot of the tax savings in this bill, whether it be reduced rates, reduction or repeal of the AMT (Alternative Minimum Tax) and reduction of the Estate Tax.  Lower income people will also get some additional tax savings.  Read more