Employee Benefits Blog

Posts tagged Tax Cuts & Jobs Act

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Tax Deductibility of Meals and Entertainment Expenses

A Practical Guide to the 2018 Tax Cuts and Jobs Act Changes

The Tax Cuts and Jobs Act of 2017 (the Act) made some very significant changes to the deductibility of meals and entertainment expenses. The purposes of this article are to summarize those changes and to provide businesses with some guidelines for grouping 2018 (and beyond) meals and entertainment expenses based on whether they are 100%, 50%, or 0% deductible (or, in the case of certain transportation workers, 80% deductible) under the new rules. This discussion assumes that the expense in question is an ordinary and necessary business expense, and is not lavish or extravagant; if either of these criteria are not met, then the expense is automatically nondeductible.

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The Tax Cuts and Jobs Act - A Guide Through Its Many Changes

The Tax Cuts and Jobs Act represents one of the biggest changes our federal tax laws have seen in 30 years. The law is indexed as P.L. 115-97 or H.R. 1, and is formally named an act “To provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018.”

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A New 20% Deduction for Qualified Business Income of Flow-thru Entities

(The Tax Cuts and Jobs Act’s Addition of Section 199A)

As part of the Tax Cuts and Jobs Act, Congress created Code Section 199A, providing owners of flow-through businesses and sole proprietors with a potential deduction, thereby allowing them to be more competitive with C Corporations, which under the Act saw tax rates reduced from 35% to 21%.

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New Limitation on Interest Deductions for Businesses

(The Tax Cuts and Jobs Act’s Amendment of Section 163(j))

As part of the Tax Cuts and Jobs Act, Congress amended Internal Revenue Code Section 163(j), to add a new limitation on deduction of interest expense incurred in a trade or business. The new limitation applies to all businesses with net business interest expense, regardless of form of business (partnership, corporation, sole proprietor, etc.). It is effective for tax years beginning after December 31, 2017, with additional limitations introduced for years beginning after December 31, 2021. In general, the limitation disallows any net interest expense that is in excess of 30% of a taxpayer’s adjusted taxable income (“ATI”). Disallowed interest expenses due to this limitation can be indefinitely carried forward.