2018 Tax Tips

Meals And Entertainment Deduction
One of the changes from the Tax Cuts and Jobs Act that will impact almost every business is the change to the meals and entertainment tax deduction. Before the TCJA, Businesses were allowed a 50% deduction for both meals and entertainment and even 100% deductions for employee meals. Now, businesses will only be allowed a 50% deduction for all meals and no deduction for entertainment expenses. As always, there are exceptions, including a 100% deduction for company picnics and holiday parties. It is even more important now to report these items separately on your income statement to maximize your tax deduction.
-Stephanie Spangler, Anders CPAs + Advisors

Contributing To Your IRA
If you’re an individual, consider increasing or contributing to your IRA or your employer’s retirement plan (401[k], 403[b], etc.). IRA contributions can be made as late as April 15, 2019, and still be deducted on your 2018 tax return. This is an easy way to pay yourself, save for retirement and reduce federal and state taxes. If you contribute to a Roth IRA or Roth 401(k), you don’t get a deduction, but the earnings grow tax-free and, if held long enough, distributions are tax-free.
-Cory Gallivan, Scheffel Boyle

Establishing A Retirement Plan
If you’re a business owner, consider establishing a retirement plan. This is an easy way to reduce taxes and help you and your employees save for retirement. Most plans need to be set up before the end of the year. A SEP-IRA could be set up as late as the due date of your business’s tax return, including extensions. Some plans are funded by employer contributions, others by employee contributions and some by a combination of the two. Talk to your tax adviser about the options you have.
-Cory Gallivan, Scheffel Boyle

Purchasing Equipment/Paying Down Debt
Restaurant and brewery owners with excess cash on hand at year-end should consider purchasing equipment or paying down any existing debt. The purchase, outright or financed, of new or used equipment in 2018 is eligible for accelerated depreciation, which could result in significant tax savings. Additionally, paying down existing debt, including debt on the aforementioned equipment purchase, could reduce the amount of interest paid, which may otherwise be disallowed on the company’s tax return due to the new business interest limitation rules. Working with a qualified professional can help restaurant and brewery owners effectively plan for year-end and beyond.
-Tim O’Neill, Mueller Prost CPAs + Business Advisors

529 Savings Account
If you have children attending an elementary, secondary or postsecondary school, consider using distributions from a 529 savings account to pay for their tuition. Contributions to these plans may be a deduction on your state income tax return in the year a contribution is made. Distributions up to $10,000 per year including earnings are generally tax-free as long as they are used to pay for qualified education expenses including tuition, fees, books, supplies, and required equipment, as well as reasonable room and board if the student was enrolled at least half-time in a postsecondary institution.
-Bradley Danner, Becker and Rosen CPAs LLC

Standard Deduction
The standard deduction has been increased to $24,000 for joint filers and $12,000 for single filers under the new tax law. As a result, fewer taxpayers will benefit from itemizing deductions, and this could mean your charitable contributions will not yield tax savings. If this applies to you and you are over age 70½, consider qualified charitable distributions as a means to taking your required minimum distribution from your IRA, 401(k) or other employer retirement account. Doing so will reduce your adjusted gross income, potentially increase tax credits and deductions, and ultimately lower your tax liability.
-Madeline Brinker, Becker and Rosen CPAs LLC

Federal/State Withholdings
The approach of a new year warrants a review of your pay stub. Consider changing your federal and state withholdings if you have had a change in personal circumstances or anticipate a large tax bill or refund for 2018. Take full advantage of all employee benefit plans including pre-tax contributions to your employer’s flexible spending account or health savings account. HSA contribution limits are $3,500 (single) and $7,000 (family) for 2019. Maximize your employer-sponsored retirement plan contributions. The IRS has launched a series of YouTube videos and plain-language tax tips to assist with your paycheck checkup.
-Kathleen Keeven, Becker and Rosen CPAs LLC

Donating To Charity
Are you 70½ or older? Consider donating all or a part of your required minimum distribution from your retirement plan directly to a qualifying charity. You will effectively reduce your taxable income!
-Nathan Laurentius, Schmersahl Treloar & Co. PC

Pro Forma Your 2018 Taxes
Pro forma your 2018 taxes as soon as possible. Because of the new tax law changes and modified standard withholding, you may be in for a surprise next April. It may not be a good one!
-Paul Meier, Schmersahl Treloar & Co. PC

If are close to the itemized deduction threshold ($24,000 for MFJ), consider bunching deductions into one year in order to claim more than the standard deduction. Consider bunching charitable deductions, medical expenses and taxes paid.
-Mark O’Donnell, Schmersahl Treloar & Co. PC

Filing Deadlines
- Due date for filing Form W-2s and Form W-3 is Jan. 31, 2019, whether you use paper or file electronically.
- Due date for filing to the IRS Form 1099-MISC Box 7 nonemployee compensation is Jan. 31, 2019. The IRS has again increased the penalties. Penalties will apply after the filing deadline. Penalties range from $50 to $270 per return with a maximum of $1,094,000 for small businesses.
- All other Form 1099s, such as rent or interest, are still due to the recipient by Jan. 31, 2019, but can be uploaded to the IRS by March 31, 2019.
- Partnership and S corporation tax returns are due March 15, 2019.
- Corporate tax returns are due April 15, 2019.
- Individual tax returns are due April 15, 2019.
-Sandra M. Furuya, Wamhoff Accounting Services