There’s still time to get substantiation for 2018 donations
To claim an itemized deduction for a donation of more than $250, generally you need a contemporaneous written acknowledgment from the charity. “Contemporaneous” means the earlier of 1) the date you file your income tax return, or 2) the extended due date of your return. If you made a donation in 2018 but haven’t received substantiation and you’d like to deduct it, consider requesting a written acknowledgment from the charity and waiting to file your 2018 return until you receive it. Additional rules apply to certain types of donations. Contact us to learn more.
Many tax-related limits affecting businesses increase for 2019
A variety of tax-related limits affecting businesses are annually indexed for inflation, and many have increased for 2019. For example, the Section 179 expensing limit has gone up to $1.02 million from $1 million. Also up are the income-based phase-ins for certain limits on the new-last-year Sec. 199A qualified business income deduction for owners of pass-through entities. And most limits related to employer-sponsored retirement plans, such as 401(k)s, are higher this year. Contact us for more information about the limits that will affect your business in 2019.
Is your business stuck in the mud with its marketing plan?
A good marketing plan should be like a network of well-paved, clearly marked roads shooting out into the world and leading back to your company. But a business can get stuck in the mud trying to build these thoroughfares. For example, many companies use the same, outdated marketing materials for years. Others overly focus on one marketing medium, missing critical opportunities. Still others have messaging that’s inconsistent, hard to follow or too controversial. The good news is that there are corrective measures for these foibles and others. Contact us for ideas.
What will your marginal income tax rate be?
Under the TCJA, unmarried taxpayers could see their taxes go up due to their filing status. To further eliminate the marriage “penalty,” the TCJA changed some of the middle tax brackets, negatively affecting some unmarried filers. For example, single and head of household filers could be pushed into the 32% (33% in 2017) and 35% tax brackets much more quickly than pre-TCJA. It will be hard to tell exactly how specific taxpayers will be affected by TCJA changes until they file their 2018 tax returns. Contact us for help assessing your tax bracket for 2018 and 2019.
Higher mileage rate may mean larger tax deductions for business miles in 2019
A higher IRS mileage rate means larger tax deductions for business miles in 2019. The optional standard mileage rate used to calculate the deductible costs of operating an auto for business has increased by 3.5 cents, to 58 cents per mile. The mileage rate comes into play when businesses don’t want to keep track of actual vehicle-related expenses. But you still must record certain information, such as the mileage, date and destination for each trip. The mileage rate can also be used for reimbursing employees. Many rules and limits apply. Contact us for details.
Getting wise to the rise of “smart” buildings
If your business is considering upgrading its facility, or moving to or constructing a new one, be prepared to encounter “smart” buildings. A smart building is one equipped with sensors that gather and track information about energy usage. With this data, the building’s energy consumption can be more accurately tracked and regulated to lower costs. When buying or building a new facility, factor the long-term advantages of smart technology into the price. When leasing, inquire about whether and how smart features have been added. Contact us for more info.
2 major tax law changes for individuals in 2019
Most TCJA provisions went into effect in 2018 and apply through 2025 or are permanent, but two major changes affect individuals beginning in 2019: 1) While the TCJA reduced the medical expense deduction threshold from 10% of adjusted gross income to 7.5%, the reduction applies only to 2017 and 2018. So for 2019, the threshold returns to 10%. 2) For divorce agreements executed (or, in some cases, modified) after Dec. 31, 2018, alimony payments won’t be deductible by the payer but will be excluded from the recipient’s taxable income. Contact us for details.
4 business functions you could outsource right now
It’s never been easier to outsource. Outsourcing can help you stick to your mission and build your bottom line. One option is IT: A good provider can keep your systems updated and secure. Payroll/HR is another possibility. Today’s compliance requirements are complex and variable. You could outsource customer service to avoid the turnover problems typical of this department, or you might outsource accounting services to a provider capable of handling the challenges of bookkeeping, payables, receivables and financial reporting. We can help you explore outsourcing.
Is there still time to pay 2018 bonuses and deduct them on your 2018 return?
There aren’t too many things businesses can do after a year ends to reduce tax liability for that year. But you might be able to pay employee bonuses for 2018 in 2019 and still deduct them on your 2018 tax return. To be eligible for this favorable tax treatment, you must be an accrual-basis taxpayer and the bonus liability must have been fixed by the end of the tax year, which requires passing the “all-events test” and may necessitate a bonus pool arrangement. If you’re a calendar-year company, you must pay the bonuses by March 15. Contact us to learn more.
Economic damages: Recovering what was lost
A business can suffer economic damages arising from a variety of illegal conduct. Common examples include breach of contract, patent infringement and commercial negligence. The goal of any economic damages case is to make your company “whole” again. This involves answering one critical question: Where would you be today “but for” the defendant’s alleged wrongdoing? A financial expert, working with other advisors, can choose the right method, as well as apply discounts and adjustments, to build a damages claim that will stand up. Contact us for more information.