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Tag Archive for TCJA

A Review Of Significant TCJA Provisions Affecting Small Businesses

Now that small businesses and their owners have filed their 2017 income tax returns (or filed for an extension), it’s a good time to review some of the provisions of the Tax Cuts and Jobs Act (TCJA) that may significantly impact their taxes for 2018 and beyond. Generally, the changes apply to tax years beginning after December 31, 2017, and are permanent, unless otherwise noted.

Corporate Taxation

  • Replacement of graduated corporate rates ranging from 15% to 35% with a flat corporate rate of 21%
  • Replacement of the flat personal service corporation (PSC) rate of 35% with a flat rate of 21%
  • Repeal of the 20% corporate alternative minimum tax (AMT)

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Many Corporations Will Pay A Blended Federal Income Tax This Year Under The New Tax Reform Law

WASHINGTON – Many U.S. corporations elect to use a fiscal year end and not a calendar year end for federal income tax reporting purposes.  Due to a provision in the recently enacted Tax Cuts and Jobs Act (TCJA), a corporation with a fiscal year that includes Jan. 1, 2018 will pay federal income tax using a blended tax rate and not the flat 21 percent tax rate under the TCJA that would generally apply to taxable years beginning after Dec. 31, 2017.

Corporations determine their federal income tax for fiscal years that include Jan. 1, 2018, by first calculating their tax for the entire taxable year using the tax rates in effect prior to TCJA and then calculating their tax using the new 21 percent rate, subsequently proportioning each tax amount based on the number of days in the taxable year when the different rates were in effect.  Read more

The Down And Dirty On The New Tax Rules And Estate Planning

Most articles about the passage of the Tax Cuts and Jobs Act in December buzz about the resulting income tax consequences for individuals and businesses.

But what about the intersection of the TCJA and estate planning?

In a report by Stefi Gascon Hafen, published by AccountingToday, she comes to some interesting conclusions about the TCJA’s significant impact on estate planning. Read more

Business Vehicle Trade-Ins Under The New Tax Law

The Tax Cuts and Jobs Act (“TCJA”) has resulted in many changes in the tax laws. One little-noticed change affects trade-ins of vehicles uses for business. Let’s go over the tax changes for business vehicle trade-ins.

Old Tax Law: Tax-Deferred Exchange of Trade-In Business Car

Until 2017, you could do a tax-deferred exchange of a business vehicle. This was also called a Section 1031 exchange. With such an exchange, there would be no tax due on the sale of your trade-in. Read more

Tax Reform And Cash Management Considerations For Clients

A recent interview style Q and A session appeared in Accounting Today featuring the expertise of author Iralma Pozo. In this series of questions, Pozo tackles some important aspects of the most significant change to the U.S. tax code since 1986. With such historic changes underway, it’s critical that you understand how the Tax Cuts and Job Act will affect cash flow issues for clients.

What’s particularly insightful is Pozo’s advice regarding parents and what they need to know about 529 plans. Her observations about developing a new strategy for charitable deductions and nonprofit organizations are also highlights:

With So Many Changes And Factors, Where Do Advisors Start? Read more

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).

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Dynasty Trusts Are More Valuable Than Ever

Dynasty Trusts Are More Valuable Than Ever

The Tax Cuts and Jobs Act (TCJA), signed into law this past December, affects more than just income taxes. It’s brought great changes to estate planning and, in doing so, bolstered the potential value of dynasty trusts.

Exemption Changes

Let’s start with the TCJA. It doesn’t repeal the estate tax, as had been discussed before its passage. The tax was retained in the final version of the law. For the estates of persons dying, and gifts made, after December 31, 2017, and before January 1, 2026, the gift and estate tax exemption and the generation-skipping transfer tax exemption amounts have been increased to an inflation-adjusted $10 million, or $20 million for married couples (expected to be $11.2 million and $22.4 million, respectively, for 2018). Read more

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

Some Taxpayers Eligible For A Refund And Do Not Even Know It

Taxpayers who are not required to file a tax return may want to do so. They might be eligible for a tax refund and don’t even know it. Some taxpayers might qualify for a tax credit that can result in money in their pocket. Taxpayers need to file a 2017 tax return to claim these credits.

Here is information about four tax credits that can mean a refund for eligible taxpayers:

  • Earned Income Tax Credit. A taxpayer who worked and earned less than $53,930 last year could receive the EITC as a tax refund. They must qualify for the credit, and may do so with or without a qualifying child. They may be eligible for up to $6,318. Taxpayers can use the 2017 EITC Assistant tool to find out if they qualify.

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Calculator Helps Taxpayers Review Withholding For New Tax Law

WASHINGTON –The Internal Revenue Service today released an updated Withholding Calculator on IRS.gov and a new version of Form W-4 to help taxpayers check their 2018 tax withholding following passage of the Tax Cuts and Jobs Act in December.

The IRS urges taxpayers to use these tools to make sure they have the right amount of tax taken out of their paychecks.

“Following the major changes in the tax law, the IRS encourages employees to check their paychecks to help ensure they’re having the right amount of tax withheld for their personal situation,” said Acting IRS Commissioner David Kautter. Read more

4 Ways The Federal Tax Overhaul Affects Commercial Real Estate

The 2017 “Tax Cuts and Jobs Act” is the most significant change to U.S. tax law in 30 years. It lowered the maximum federal corporate tax rate from 35 percent to 21 percent, as well as lowering rates for many individuals, though nearly all individual reductions sunset at the end of 2025.

Below are highlights of particular interest to commercial real estate owners and developers. In general, while the tax code changes will reduce taxes for many commercial real estate owners and developers, the long-term impact of these changes is difficult to predict. Fundamentals should remain the market driver for commercial real estate. Read more

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