The Tax Cuts and Jobs Act was signed into law last year, bringing many changes that affect individuals, businesses, and tax-exempt and government entities. Dave Gourley, president of TaxBot, a TAR member benefits partner, offers a few insights into changes that affect your business deductions. Remember to consult with your personal tax advisor to determine how the following might apply to your business.
- Entertainment.The days of writing off that round of golf or other forms of entertainment with your client may be gone, but treating them to a nice meal should still be deductible.
- Healthcare costs. Healthcare costs continue to rise, but there may be a silver lining. Many small-business owners may be able to write off 100% of their healthcare expenses utilizing a Health Reimbursement Arrangement (HRA). For more info, go to hra.taxbot.com.
- Luxury vehicles.The luxury limits for cars increased dramatically. You can now write off up to $50,000 of a luxury vehicle over a five-year period. (It was previously $15,800.) This means you can write off luxury vehicles up to three times faster than before.
- New 20% pass-through bonus deduction. Most business owners can now get a deduction equal to 20% of their business’s net income. This would effectively reduce your taxable income. Your business must be a “pass-through” entity, so consult with your tax advisor to determine if your business qualifies.
- Trade association participation. Deduct expenses related to and necessary for attending business meetings or conventions of certain tax-exempt organizations. This includes the REALTOR® association, so there’s one less excuse for not getting involved.