24 THE QUEENS COURIER • MAY 24, 2018 FOR BREAKING NEWS VISIT WWW.QNS.COM
5 Small Business Tax Items
BY JOHN SAVIGNANO, CPA
Big business entities, including
are expected to reap the main tax
rewards under the TCJA.
Alert: The new law doesn’t ignore
small businesses. Beginning in
2018, it provides plenty of tax-saving
opportunities for small business
owners, although you’ll also face
some tax obstacles.
Unlike the tax provisions for individuals,
most business-related provision
in the TCJA are permanent.
Here are 5 key tax changes that
1.deserve your immediate attention. Pounce on lower tax rates. Prior
to the new law, corporations
were taxed under a graduated taxrate
structure with a top rate of 35%.
The new law replaces this rate structure
with a flat rate of 21%. Thus, the
effective tax rate for the majority of C
corporations is lowered.
Tip: The TCJA also reduces the
dividends-received deduction from
80% to 65% if a corporation owns
20% of the stock of another corporation
(from 70% to 50% for other). 2. Max out on Section 179. The
TCJA almost doubles the maximum
Section 179 expensing allowance
from $510,000 for tax years
beginning in 2017 to $1 million
for 2018 and increases the deduction
phaseout threshold from $2.03
million for tax years beginning in
2017 to $2.5 million for 2018. Thus,
many small businesses can currently
deduct the entire cost of qualified
property placed in service in 2018.
Tip: The deduction is still limited to
your income from business activities. 3. Seize bonus depreciation. For
the next five years, your business
can claim 100% bonus depreciation,
up from 50% in 2017, for
qualified business property placed
in service. After 2022, the deduction
is reduced incrementally, as shown
below, before it disappears completely
Tip: Qualified business property
is expanded to include used, not just
4.new, property. Ride in tax luxury. Depreciation
deductions for so-called “Luxury
cars” for business drivers are limited
to relatively modest amounts.
However, under the law, the annual
limits for luxury cars are boosted. For
example, if you acquire a used business
car in 2018, the maximum firstyear
deduction for 100% business use
is $10,000. (It was $3,160 in 2017.)
Tip: A business car may also be eligible
for bonus depreciation of $8,000.
5.Pass through a deduction. For the
first time ever, the owners of many
pass-through entities such as partnerships,
S corporations, limited liability
companies and sole proprietorship
can deduct 20% of net business
income on the personal returns. In
effect, you’re only taxed on 80% of your
small business income. But this provision
includes restrictions against gaming
the system. Notably, the deduction
is phased out for owners of most service
businesses, other than architects
and engineers. Everyone else from photographers
to plumbers is covered.
Tip: This restriction doesn’t apply
to single filers with taxable income
up to $157,500 and up to $315,000
for joint filers.
John Savignano is a partner with
Savignano Accountants & Advisors
located at 47-46 Vernon Blvd.,
Second Floor, in Long Island City.
If you have any questions or require
additional information, please call
John at 718-707-0955.
Attorney At Law
25-59 Steinway Street
Astoria, NY 11103
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Co-Author of the
best selling book
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Salvatore P. Candela, EA, ATA, ABA
Enrolled Agent - Tax Advisor