3 big TCJA changes affecting 2018 individual tax returns and beyond
When you file your 2018 income tax return, you’ll likely find that some big tax law changes affect you, besides the much-discussed tax rate cuts and reduced itemize deductions. For 2018 through 2025, the TCJA: 1) eliminates personal exemptions, 2) increases the standard deduction and 3) expands the child credit. The degree to which these changes will affect you depends on whether you have dependents and, if so, how many. It also depends on whether you typically itemize deductions. We can help ensure you claim all of the breaks available to you on your 2018 return.
Best practices when filing a business interruption claim
Business interruption insurance generally provides cash flow to cover revenues lost and expenses incurred while normal operations are suspended because of an applicable event. But submitting a claim can be time-consuming and requires preparation. First, notify your insurer of an interruption immediately and review your policy. Then reorganize your bookkeeping to segregate costs related to the business interruption and carefully maintain supporting documents. The loss calculation is often a contentious issue in making a claim. We can help you through the process.
Some of your deductions may be smaller (or nonexistent) when you file your 2018 tax return
While the Tax Cuts and Jobs Act reduces most income tax rates and expands some tax breaks, it may cause you to see these five itemized deductions shrink or disappear when you file your 2018 tax return: 1) state and local tax, 2) mortgage interest, 3) home equity debt interest, 4) miscellaneous, and 5) casualty and theft loss. The combination of a much larger standard deduction and smaller itemized deductions may mean that, even if itemizing has typically benefited you, you might now be better off taking the standard deduction. Contact us for details.
Some of your deductions may be smaller (or nonexistent) when you file your 2018 tax return
While the Tax Cuts and Jobs Act reduces most income tax rates and expands some tax breaks, it may cause you to see these five itemized deductions shrink or disappear when you file your 2018 tax return: 1) state and local tax, 2) mortgage interest, 3) home equity debt interest, 4) miscellaneous, and 5) casualty and theft loss. The combination of a much larger standard deduction and smaller itemized deductions may mean that, even if itemizing has typically benefited you, you might now be better off taking the standard deduction. Contact us for details.
The home office deduction: Actual expenses vs. the simplified method
Do you run a business from your home or perform business-related functions at home? You may be able to claim a home office deduction against your business income on your 2018 tax return. One option is to deduct actual expenses, including direct expenses, such as the cost of carpeting; a proportionate share of indirect expenses, such as utilities and insurance; and a depreciation allowance. But tracking actual expenses can be time-consuming. With the simplified method, you deduct $5 for each square foot of home office space, up to $1,500. Contact us for details.
Don’t let scope creep ruin your next IT project
Starting an IT project? Beware of “scope creep.” This is when a project’s objective (or “scope”) gradually expands while the job is underway, resulting in lost time and money. Scope creep is usually caused by miscommunications during planning, excessive implementation time and ineffective project management. To address the problem, set clear objectives, put them in writing, divide the job into phases, formally address proposed changes, and allow some budget and schedule flexibility. We can help assess the financial impact of any IT projects you’re considering.
Why you shouldn’t wait to file your 2018 income tax return
The IRS opened the 2018 income tax return filing season on Jan. 28. Consider filing as soon as you can, even if you typically don’t file this early. It can help protect you from tax identity theft, in which a thief files a return using your Social Security number to claim a bogus refund. If you file first, it will be returns filed by any would-be thieves that are rejected by the IRS, not yours. Other benefits: You’ll get your refund sooner or, if you owe tax, you’ll know how much you owe sooner so you can be ready to pay it by April 15. Contact us with questions.
Fundamental tax truths for C corporations
The flat 21% federal income tax rate for C corporations under the Tax Cuts and Jobs Act has been great news for these entities and their owners. But some fundamental tax truths for C corporations largely remain the same. For example, although the 21% rate will lower the impact, double taxation is still an important issue to consider, especially if a C corporation owns assets that are likely to appreciate significantly. And C corporation status still generally isn’t advisable for ventures that will incur ongoing tax losses. Have questions? Contact us.
Depreciation-related breaks on business real estate: What you need to know when you file your 2018 return
Commercial buildings and improvements generally are depreciated over 39 years, which essentially means you can deduct a portion of the cost every year over the depreciation period. (Land isn’t depreciable.) But special tax breaks that allow deductions to be taken more quickly are available for certain real estate investments. Some were enhanced by the Tax Cuts and Jobs Act (TCJA) and may provide a bigger benefit when you file your 2018 tax return. But there are two breaks you may not be able to enjoy due to a drafting error in the TCJA. Contact us to learn more.
Office Resurgence Continues in Detroit
Deliveries are about to pick up, as more than 1.1 million square feet of office space was under construction as of June, the most in the last decade.