It’s 2019! And with the start of the New Year, comes a new tax season!

 

With the newly enacted Tax Cuts and Jobs Act, or TCJA, nearly every business’s bottom line will be affected differently from previous years.  

1.Deductions

New provisions and hefty changes define this section of the new tax law.

Depending on the income and type of business, you may now be able to deduct up to 20 percent of qualified business income.

There’s also a change in limits of deductions for meals and entertainment. You can continue to deduct 50 percent of a business meal, but with stricter requirements. Entertainment must be billed separately from food or drinks.  The entertainment expense deduction is eliminated.

2. Depreciation

From now until 2023, TCJA allows 100 percent bonus depreciation for qualified property acquired and placed in service after 9/27/17 and before 1/1/2023. Section 179 election for depreciable business assets increased to the maximum deduction of $1 million and the phase-out threshold to $2.5 million.

3. Changes to fringe benefits  

TCJA has prohibited cash, gift cards and other non-tangible personal property as an employee achievement award, but it is awarding employers that offer paid family and medical leave a credit.   The qualified bicycle commuting reimbursement is included in gross income and wages for commuting reimbursements. Moving expense reimbursement are also to be included in employees’ wages.

4. Business structure and accounting methods

In the past, if your business had an average annual gross receipt of $5 million or less, you could use the cash method of accounting. Now, the TCJA has expanded this to $25 million.

5. Opportunities for investments

The TCJA offered benefits to investors in specific opportunity zones as well as a 20 percent credit for rehabilitating certified historic structures.

The new tax code can be a bit confusing for those outside of the accounting industry, but with help from an experienced accountant, you might find that your business will greatly benefit from these new laws. With the Bean Team, we can help you get your business’s finances in order for tax season and help ensure you’re compliant with the new laws.

For more information on the new tax laws, visit https://www.irs.gov or contact us today!