Tag Archive for Tax Cuts Jobs Act

How The New Tax Law Affects Small Business Owners

The Tax Cuts and Jobs Act (H.R. 1, “TCJA”) has is now law. The law contains many provisions affecting both individuals and small businesses. The main provisions affecting businesses are summarized below. Except where otherwise noted, these changes apply to after January 1, 2018. Thus, they do not apply to your 2017 taxes and your upcoming tax return.

What’s The New Corporate Tax Rate?

The cornerstone of the TCJA is a new lower rate for regular C corporations. C corporations are separate taxpaying entities with their own tax rates. Under the TCJA all C corporations are subject to single flat tax rate of 21 percent. The previous tax rates ranged from 15 percent to 35 percent. Read More

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US Tax Reform: 5 Things Americans Overseas Need To Know

What Are The Important Updates One Needs To Know About U.S. Tax Reform?

The New Tax Bill “Tax Cuts and Jobs Act” presents the first major overhaul of the United States federal income tax system in more than three decades. The major benefits will be mostly felt by the large and small businesses. But what’s about tax reform’s impact on Americans overseas?

What Has NOT Changed For Americans Overseas?

  1. You can still use Foreign Earned Income Exclusion or Foreign Tax Credit to lower your tax bill. In 2018 a U.S. expat can exclude up to $104,100 of foreign earned income.
  2. The reporting requirements for FBAR stay in place: you need to file FinCEN Form 114 if you have an aggregate value of over $10,000 in any foreign financial accounts you own or have a signature over.
  3. FATCA and Form 8938 also didn’t have any changes (unfortunately).

Read More

Written by | Posted in Expatriate Taxes • Tax Cuts Jobs Act • Tax Reform • TaxConnections

Consumer Spending Hits A 6-Year High Before TCJA

As savings decline and consumer debt increases, the likelihood of future reductions in consumer demand will send shock waves through the business economy as production will shrink, employment will decline, and recessionary impacts will further reduce consumer confidence. This will impact construction spending and manufacturing investments leading to a downward cycle until we hit a solid core and time allows an economic healing.

Looking ahead, we believe the Tax Cuts and Jobs Act will certainly modify people’s behaviors as companies determine how their revised cash flows will provide options. Ultimately tax cuts drive three behaviors. Read More

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Tax Cuts And Jobs Act Withholding Calculator And New W-4

The Internal Revenue Service this week released an updated withholding calculator and a new version of Form W-4. The calculator and new W-4 can be used to ensure 2018 individual tax withholding amounts are accurate in light of the recent tax law changes.

The Tax Cuts and Jobs Act made changes to the tax law, including increasing the standard deduction, removing personal exemptions, increasing the child tax credit, limiting or discontinuing certain deductions and changing the tax rates and brackets. Read More

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Deducting Your Mortgage Interest After The Tax Reform

This past week, the IRS offered guidance on its website on the new restrictions placed by the Tax Cuts and Jobs Act (“TCJA”) on the home mortgage interest deduction.

The guidance is noteworthy for the U.S. expat community, because when it comes to the home mortgage interest deduction, the tax code does not distinguish between a home in the U.S. and a home abroad. In appropriate circumstances, the mortgage interest deduction can be an important tax saving method for citizens living abroad.

The Home Mortgage Interest Deduction Read More

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Tax Cuts Jobs Act (TCJA) – Changes To Deductions For Meals, Entertainment, And Expenditures

The Tax Cuts and Jobs Act[1] (“TCJA”) made various changes to the deductibility of certain entertainment, amusement, recreation, meals, and fringe benefit expenditures[2]. The central theme of the items below was to close the gap where items were previously deductible by an employer and not includible in the income of the employee (i.e., permanent differences with the Treasury losing on both ends). Rather than attempt to tax the recipient, Treasury appears to have generally chosen to deny deductibility to the employer (while retaining non-inclusion by the recipient).

Below is a summary of the relevant provisions impacted by TCJA: Read More

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Unintended Consequences Of Tax Jobs And Cuts Act On Canadian Citizens And Others Abroad

“This legislation is being interpreted by a number of tax professionals to mean that individual U.S. citizens living outside the United States are required to simply “fork over” a percentage of the value of their small business corporations to the IRS. Although technically “CFCs” these companies are certainly NOT foreign to the people who use them to run businesses that are local to their country of residence. Furthermore, the “culture” of Canadian Controlled Private Corporations is that they are actually used as “private pension plans”. So, an unintended consequence of the Tax Cuts Jobs Act would be that individuals living in Canada are somehow required to collapse their pension plans and turn the proceeds over to the U.S. government” -John Richardson Read More

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5 IRS Penalties Changed Under The Tax Cuts And Jobs Act Of 2018

This post contains cocktail party killer one liners about how 5 IRS Penalties Changed Under the Tax Cut and Jobs Act of 2018.

My editor also quipped that reading this post helps with insomnia as well. So if you are looking to either kill a party and/or fall asleep faster please continue reading.

If you are a tax practitioner however, you better know this stuff and with all due respect – most do NOT.

The 5 big changes are summarized as follows: Read More

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Tax Cuts And Jobs Act: Impact On Businesses

The Tax Cuts and Jobs Act, a $1.5 trillion tax cut package, was signed into law on December 22, 2017. The centerpiece of the legislation is a permanent reduction of the corporate income tax rate. The corporate rate change and some of the other major provisions that affect businesses and business income are summarized below. Provisions take effect in tax year 2018 unless otherwise stated.

Corporate Tax Rates

  • Instead of the previous graduated corporate tax structure with four rate brackets (15%, 25%, 34%, and 35%), the new legislation establishes a single flat corporate rate of 21%.
  • The Act reduces the dividends-received deduction (corporations are allowed a deduction for dividends received from other domestic corporations) from 70% to 50%. If the corporation owns 20% or more of the company paying the dividend, the percentage is now 65%, down from 80%.
  • The Act permanently repeals the corporate alternative minimum tax (AMT).

Read More

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U.S. Impact Of Federal Tax Reform From Italy’s Perspective: Renewed Attention On Italy’s Anti Inversion Rules

As a result of the significant reduction of U.S. corporate income tax rates pursuant to the tax reform of the TCJA enacted on December 22, 2017, the Unites States now has a lower corporate tax rate than many of its trading partners, meaning that, in many instances, the profits of foreign owned or controlled-U.S. subsidiaries shall be taxed more favorably than the profits of their foreign parent companies or affiliates in their home jurisdictions. That creates an incentive for foreign companies to channel more profits through their U.S. subsidiaries, in order to benefit from lower U.S. income taxation compared to that applicable in the parent company’s home country. Read More

Written by | Posted in Italy Tax • Tax Cuts Jobs Act • Tax Reform • TaxConnections

U.S. Now A Black-Listed Country For Purpose Of Italy’s CFC Rules

Pursuant to the Tax Cuts and Jobs Act (“TCJA”) passed on Dec. 22, 2017, the U.S. will tax U.S. corporations with the following tax rates:

– 21 percent general corporate income tax rate,
– 13.125 effective tax rate on U.S. corporation’s foreign derived intangible income (“FDII”), for taxable years from 2018 through 2025;
– 10.5 percent effective tax rate on the U.S. corporation’s pro rata share of global intangible low taxed income (“GILTI”) of a controlled foreign corporation (“CFC”). Read More

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IRS Issues Guidance On Changes In Accounting Periods Related To The Transition Tax

WASHINGTON – The Treasury Department and the Internal Revenue Service (IRS) announced modifications to the procedures for changing the accounting period of foreign corporations owned by U.S. shareholders that are subject to the transition tax under the Tax Cuts and Jobs Act.

On Dec. 29, 2017, the Treasury Department and the IRS provided initial guidance on computing the transition tax in Notice 2018-07.  On Jan. 19, 2018, the Treasury Department and the IRS provided additional guidance in Notice 2018-13. Read More

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