The IRS law 2018 Tax Code have made some significant changes regarding small business. As a small business owner, you must regularly think about IRS law and taxes. Staying current on tax changes and adjusting your business model to reflect such tax changes is important. Compliance with tax laws can make or break a small business. Understanding how to maximize tax deductions can help your bottom line. Contact our Atlanta attorney today with tax business law questions.
New Business Income Deduction
Small businesses might be getting a tax break in 2018. If you own a pass-through company such asana LLC, S-Corp, partnership, or are a sole proprietor there are some new tax provisions that could provide tax breaks. Here are the basics of the new business deduction:
- Qualified business can receive a 20% deduction on “qualified” business income. However, the deduction is subject to some limitations.
- In order to qualify for the full deduction, taxable income must not exceed $157,500 (single) or $315,000 (if married). This means business partners may not be subject to the same deductions. In the event that one has a spouse that makes a significant amount, different tax deductions may apply.
How the new business deduction applies and under what circumstances can be confusing. It can be helpful to discuss the matter with an experienced Atlanta IRS law attorney.
Changes to Business Entertainment Deductions
The new tax lax makes some substantial changes to entertainment deductions. Prior to 2018, businesses could deduct 50% of expenses for both business-related entertainment and meals. Under the new law, entertainment expense deductions are no longer allowed. So, if you take a customer to a baseball game, the ticket is not deductible, but the food is. Inevitably, the entertainment deduction changes will affect how you do business and how you might entertain clients. Contact an IRS law Atlanta attorney for questions about whether an expense may be deductible.
Business Vehicle Deduction Changes
There are also some changes coming to the business vehicle deductions. Here are some highlights:
- For passenger vehicles vehicles (new or used) purchased and used between 9/28/2017 and 12/31/2022, the new law allows a first year depreciation deduction of $18,000 (in 2017 it was $10,000). The used vehicle must be new to your business. The additional $8,000 increase is slated to phase out in 2026 without further legislation.
- You can now take a 100% first-year bonus depreciation for heavy SUVs, pickups, and vans if they are used more than 50% of the time for your business.
- A heavy vehicle only qualifies if the manufacturer’s gross vehicle weight rating (GVWR) is over 6,000 pounds. Some examples include the Ford Explorer, Chevy Tahoe, Jeep Grand Cherokee, RAM 1500, and many other similar SUVs and other full-size trucks.
Find out How an Atlanta IRS law Attorney Can Help Your Business
Sorting through the new IRS law changes and how they can affect your business can be complicated. This is especially true in the first year these tax changes apply. Jeff Cohen Attorney At Law can assist with all your business law questions. Call today at 404-814-0000 to set up a consultation to discuss the details of tax implications and your business.