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TAX CLIENT ADVISORY: 2017 Tax Act & Tax Extender Bill

2017 Tax Act:

In the second quarter of 2018, the IRS will begin issuing informational notices regarding computations and clarification of the provisions contained in the 2017 tax act.  We will be posting updates as we receive more information.

A few quick notes as the 2018 tax year begins:

  • Miscellaneous itemized expenses are no longer deductible on an individual’s return. This includes unreimbursed employee business expenses and investment fees.
  • Interest on home equity loans is not deductible-even on old loans.
  • Tax rates have changed, exemptions are gone, and the IRS has estimated the new withholding tables. On the IRS website you can check your withholding rate.  Surprises are not good.  The site should be available at the end of February.  We can also assist you in this. https://www.irs.gov/individuals/irs-withholding-calculator
  • Entertainment is no longer a deductible business expense. Accounting records, invoices and expense reports must separate entertainment expenses from meals.  Meals continue to be 50% deductible.
  • Meals provided for an employer’s convenience are now 50% deductible.
  • Wages paid to an employee during a FMLA absence will generate a 12.5% credit.
  • Like kind exchanges are now limited to real estate exchanges.

Tax Extender Bill:

Thank goodness, the extender bill for 2017 passed early in the 2018 tax season. Over 50 deductions and credits were extended.  The bill passed Congress on February 9, 2018 with most of its provisions expiring on December 31, 2017.  Included in the legislation were extension of:

Tax Relief for Families and Individuals

  • Income from discharge of indebtedness on a principal residence
  • Mortgage insurance premiums treated as interest
  • Above the line deduction for qualified tuition and related expenses

Credits

  • Indian Employment credit
  • Nonbusiness energy property
  • Residential energy property credit (extended through 2021)
  • New qualified fuel cell motor vehicles credit
  • Alternative fuel vehicle refueling property credit
  • 2-wheeled plug-in electric vehicles credit
  • Second generation biofuel producer credit
  • Energy-efficient new homes credit
  • Phaseout of energy credit (extended through 2021 with some changes)
  • Excise tax credits relating to alternative fuels

Depreciation

  • Classification of certain race horses as 3-year property
  • Accelerated depreciation for business property on an Indian reservation
  • Election to expense mine safety equipment
  • Special expensing rules for certain productions (film, tv)
  • Special allowance for second generation biofuel plant property

As we obtain more information or clarification, we will be posting information to our website or sending emails to our clients.