Tax Strategies for Businesses - Part 2

View part I here.

The recently enacted Tax Cuts and Jobs Act (TCJA) has altered the tax landscape for a lot of businesses. Please consult your HM&M advisor if you would like to have a conversation about how your business has been impacted or any of the following strategies.

Tax Strategies for Businesses – Part II

Depreciation Expense

Bonus depreciation and Sec.179 expensing of property have been available in varying amounts for quite a while and have been popular tax planning tools. While the rate of bonus depreciation and the amount of the maximum Sec. 179 limit have varied, the ability to deduct significant portions (or the entirety) of fixed asset purchases has been appreciated by business owners. The new tax law has increased the bonus depreciation percentage to 100% until 2023, where it will decrease by 20% until it reaches zero. Bonus depreciation now applies to both new and used qualified property. The Sec.179 expense limit is now $1 million of allowable expensing with a total purchase threshold of $2.5 million. If you purchase more than $2.5 million in eligible fixed assets during the taxable year, the expense limit allowed will be reduced.

The higher limits and expansion in the definition of property that qualifies for these deductions allows for tax planning opportunities. As part of your planning, we’d like to understand your asset purchasing behavior and plans for the future so we can maximize these deductions for you. Contact your HM&M advisor if you have questions about depreciation options and your fixed asset purchases.

Credits for Paid Family and Medical Leave

A new credit was created under the TCJA for employers who provide eligible employees paid family and medical leave. You may be providing paid leave for employees already, so please engage with us to determine if your employee benefit qualifies for the new credit. There may be minor adjustments necessary to make your leave policy compliant with the new credit, which we can help you with. If you are thinking about implementing a plan to offer to employees, please contact us to ensure that your plan will meet the requirements to be eligible for this credit.

Let’s discuss your business outlook and options for 2018 and future years!