Year-End Tax-Planning Moves for Businesses

The Holidays are here, it’s the time to plan time with family and loved ones… it is also the time to consider tax-saving opportunities for your business before its tax year-end. Some of these opportunities may apply regardless of whether your business is conducted as a sole proprietorship, partnership, limited liability company, S corporation, or regular corporation 

Section 179 Deductions

Essentially, Section 179 of the IRS tax code allows businesses to deduct the full purchase price of qualifying equipment and/or software purchased or financed during the tax year (new or used equipment). That means that if you buy (or lease) a piece of qualifying equipment and place that equipment in service, you can deduct up to $510,000.00 in 2017, provided your company did not purchase more than $2,030,000.00 in qualifying equipment.  If your company did exceed that threshold, then the 179 deduction for your company begins to be reduced on a dollar for dollar basis until it there is no Section 179 deduction.

Why does my business need Workers Compensation Insurance?

2017 marks the 103rd anniversary of the enactment of New York’s Workers’ (then Workmens’) Compensation Law. The death of 123 Women and 23 Men on March 25, 1911 in the Triangle Shirtwaist Factory fire, one of the deadliest industrial disaster’s in the history of New York City, moved New York’s legislature and Governor John A. Dix to enact the first in the nation workers’ compensation statute in 1911.

Workers’ compensation is a form of insurance providing wage replacement and medical benefits to employees injured in the course of employment in exchange for mandatory relinquishment of the employee’s right to sue their employer for the “tort” of negligence. Workers may be able to file a lawsuit against an employer only if the employer does not carry the proper workers’ compensation insurance or if the employer intentionally causes harm to the worker.

The New Rules for business meals, entertainment and transportation expenses in 2018

The new tax law signed by the President has changed the way business must consider meals, entertainment and transportation expenses. Generally meal and entertainment expenses were 50% deductible. The changes made with the recent legislation (H.R. 1) entertainment expenses are now 100% NOT deductible for amounts paid or incurred after December 31, 2017.

If you currently track your expenditures for both meals and entertainment in a combined general ledger account you will want to consider setting up a new account in your system to track meals separately from entertainment expenses, as meals are generally still 50% deductible and entertainment expenses are not deductible at all. This could save you time and effort compiling the amount of business expenses incurred in 2018 for 50% deductible meal expenses and 100% nondeductible entertainment expenses.

New Law offers benefit to U.S. brewers, wine makers and distillers

You’ve probably heard by now that the craft beverage industry — the business of making alcoholic beverages — is booming across New York State. It seems every day or so brings news of a new brewery, winery, distillery or even hard cider maker. In 2011, there were a little more than 300 makers of wine, beer, distilled spirits and hard cider operating in New York. As of this past December there were more than 186 regional craft breweries, 3,132 micro-breweries, 1,916 brew pub, wineries top 400, even distilleries stand at over 100.

Real Estate Investors build on New Tax Law

The final tax bill agreed to by the House and Senate conferees and signed into law by President Trump on Friday December 22, 2017, makes several significant changes for real estate investors.

A summary of the key provisions are below, if we assume an individual tax payer in the highest marginal rate.

Today, net income from rents is taxed at 39.6 percent, plus a 3.8 percent Affordable Care Act (ACA) tax for passive investors. All in that is 43.4 percent for passive investors (folks that have jobs other than real-estate) and 39.6 percent for active investors (folks that work full time in their-real estate businesses).

Business Interest may not be deductible in 2018 and beyond…

The new tax law has many changes for Individuals and Business.  One important change that may require some time to plan for is the deductibility of Interest expense for a business.

Interest deduction limitation: Under the act, the deduction for business interest is limited to the sum of (1) business interest income; (2) 30% of the taxpayer’s adjusted taxable income for the tax year; and (3) the taxpayer’s floor plan financing interest for the tax year. Any disallowed business interest deduction can be carried forward indefinitely (with certain restrictions for partnerships).

Trump’s New Tax Reform Proposal

On Wednesday, September 27, 2017, President Donald Trump proposed tax cuts that will affect both individuals and businesses. If passed, these tax cuts will make up the most drastic changes the United States tax code has seen in a long time.

Here’s what taxpayers need to know.

This tax plan is designed to fulfill President Trump’s promise to lower taxes, provide better jobs and implement higher wages.

President Trump stated, “This is a revolutionary change, and the biggest winners will be the everyday American workers as jobs start pouring into our country, companies start competing for American labor, and wages start going up at levels that you haven’t seen in many years.”

Significant Progress for New York State’s Tax Reform — but Still a Long Way to Go

High taxes in New York State have long been vexing residents, particularly those at retirement age. In nearly every category – real estate taxes, income tax, and even health insurance – New York residents regularly shell out more cash than those who live in other states. Desperate for some relief from the financial squeeze, many residents are choosing to spend their retirement years in more tax-friendly locales. In fact, between 2000 and 2010, 3.4 million residents left the Empire State making it the largest migration exodus of any state, according to the Tax Foundation.

To stem the damage, New York lawmakers have been making slow but steady progress on the issue of tax reform – but the state still has a long way to go if it wants to remain competitive with other states. Here are some of the most significant recent changes to date.

The ABCs of Higher Education Tax Breaks

Nationwide, students shoulder the burden of ever-increasing higher education costs. Fortunately, the Federal Government offers several tax breaks to defray those expenses. Here are the tax breaks available to current higher education students.

The American Opportunity Tax Credit

This tax break offers up to $2,500 per year, per student. Up to 40% of the credit is refundable. The AOTC can only be used for the first four years of a student’s post-secondary education. Students must be working toward a degree or credential at a qualifying institution, for at least half-time attendance.

Tax Planning for a Home During a Divorce

Couples who intend to divorce will have to approach their tax planning in an entirely different way. Whether you have already dissolved the marriage or plan on doing so, here is what to expect for the tax implications.

Transfer of Marital Home

If one individual is transferring property to the ex-spouse, it is treated as a gift – and the transaction may need to be reported on a gift tax return. The person receiving the property won’t be taxed, but whoever sells it will incur taxes.

This is when the valuable federal home sale gain exclusion comes into play. You’ll want to look at the potential capital gains on the house. If the person has owned and lived in the house for at least two years during the five-year period leading up to the date of sale, he or she may be able to exclude up to $250,000 in gains. The $250,000 exclusion is for each owner of the house.