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4 Key Changes To Depreciation Under The TCJA

As the Tax Cuts and Job Act (TCJA) continues to be unraveled by tax professionals, it’s important to review the changes and their implications on business operations and tax strategies. In this article, we’ll highlight TCJA’s changes to first-year bonus depreciation,...

3 Ways A CPA Can Make Your Business Successful

It can often seem unnecessary to hire a certified public accountant (CPA) since bookkeepers and accountants are frequently believed to be the be-all-end-all for a business’ finances. However, there are certain advantages to having a CPA by your side. While we...

3 Myths You Shouldn’t Believe About Accountants

To a business owner, an accountant that helps make sense of business finances can seem like a godsend. Whether you’re just starting your business or are already established, having a great accountant by your side is a sure way to keep your business running smoothly....

3 Ways QuickBooks Apps Can Improve Your Business’ Efficiency

Over 5.6 million businesses use QuickBooks to streamline their business’ accounting. The eye-pleasing interface, streamlined workflows, and powerful automation that QuickBooks provides to these business owners are invaluable, saving them time and money. While...

Client Spotlight: Fresno County Economic Development Corporation (EDC)

We’re excited to highlight Fresno County’s Economic Development Corporation (EDC) as our spotlighted partner this month! For over 30 years, the EDC has promoted business success within Fresno County through strategic partnerships at both the local and national level....

How To Calculate The Pass-Through Deduction For 2018

Formally known as the Section 199A deduction, the “pass-through” deduction allows many sole proprietorships, partnerships, S corporations, trusts, or estates to deduct up to 20 percent of their qualified business income. Taxpayers who are eligible can also deduct up...

Don’t Overlook These 5 Business Deductions As You File for 2018

As the old saying goes, “you gotta spend money to make money”. The topic of expenses and deductions is likely a major part of your meetings and discussions with your CPA (if you don’t have a CPA, read this) in these first months of 2019. In this article, we’ll list...

4-Steps to Choosing the Right Accountant for your Business

Choosing the right accountant to work with your small business may seem like a daunting risky decision, however it really doesn’t have to be when you’re equipped with the right tools to measure their performance. The big question is whether to hire an outside firm...

Get Your QuickBooks Ready for your Accountant

Finalizing your books for the year has already been on your mind since perhaps the beginning of the last quarter of the year. And now you have to have your QuickBooks file ready for your CPA. How can you make it easier for them to prepare your annual financial...

Is it a Requirement for a Small Business to have a CPA?

Accountant Vs. CPA First, it is important to distinguish the difference between a CPA and an Accountant. In general terms, an accountant is a professional who follows specific rules and regulations, including Generally Accepted Accounting Principals (GAAPs), which are...

What You Need To know About the 2018 Tax Reform – Part I

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Introduced in November 2017, the Tax Cuts and Jobs Act has made many important changes and updates to existing tax law for areas like the individual mandate, medical expense deductions, miscellaneous tax deductions, and much more. Given that these changes will be going into effect the next time you do your taxes, it is important to recognize what changes have occurred with the passage of this tax overhaul and how they will affect both your business and personal taxes. Over the next few weeks, we will be discussing the specific changes that have occurred as a result of this new law.

The Individual Mandate

Starting January 1st 2019, you will no longer face a tax penalty for not having health insurance without a valid exemption. The individual mandate was a key provision of the Patient Protection and Affordable Care Act that was signed into law by former President Barack Obama. While the mandate is still in effect for the 2018 year, the individual mandate will no longer be enforced in 2019. While it is obviously a good thing to have health insurance due to the life’s (often undesirable) spontaneity, if you do decide to cut health insurance out of your budget, you won’t have to worry about being penalized by the IRS for your decision. While there are arguments for both the benefits and downsides of this repeal, the fact is that there will be no individual mandate for 2019.

Alimony Deductions

Under the existing tax law, when a person pays alimony, they are able to deduct those payments from their income. The recipients of the alimony payments are then required to count those payments as part of their income. However, beginning January 1st, 2019, alimony payments will no longer be a deductible and the recipients will no longer need to count them as part of their income. This will affect any separation or divorce that was either effective or modified on or after January 1st, 2019.

Child Tax Credit

Under the previous tax law, the child tax credit was $1,000 for each child under 17 years old. As you may already realize, this child tax credit began to decrease by $50 for every $1,000 that you earned over specific thresholds. For instance, this decrease began to occur for single and head of household taxpayers at $75,000 and for married couples at $110,000 (filing jointly) and $55,000 (filing separately). But beginning January 1st, 2018, the child tax credit is $2,000 per child. Also, the new threshold levels begin to decrease at an AGI amount of $200,000. For married couples, the decrease will now begin at AGI amounts of $400,000 and higher.

Corporate Tax Rate

Under the previous tax law, the corporate tax rate for individuals with a taxable income greater than 10 million was 35 percent. Effective January 1st, 2018, however, this top tier of the corporate tax rate is cut down to 21 percent.

Estate Taxes

Previously, estates with a value of $5.49 million or less were exempt from the estate tax (also known as the “death tax”), with a top tax rate of 40 percent. But beginning January 1st, 2018, estates up to $11.2 million are exempt from this estate tax.

In Conclusion

In this article, we discussed five of the specific changes that are occuring as a result of the Tax Cut & Job Act. Next week, we will discuss more of the specific provisions and updates that are occurring as a result of the 2018 Tax Reform. If you would like to know more about the specific details of these changes, or how they are applicable to your situation, feel free to contact MBS Accountancy. Our team of expert accountants and tax law professionals will assist you with any questions or concerns you may have as a result of the 2018 Tax Reform.

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