November 25, 2017
Written by Chetan Dogra, CPA
As 2017 year-end approaches, each business should consider the many opportunities that might be lost if year-end tax planning is not explored. Among the reasons why year-end tax planning toward the end of 2017 may be particularly fruitful are the following:
One major tax deduction for many businesses is bonus depreciation. Property placed in service in 2017 is eligible for bonus depreciation at a 50% rate. The rate is reduced to 40% in 2018 and 30% in 2019. Bonus depreciation expires after 2019. Talk of full expensing under Trump’s tax reform also belongs in this mix.
The IRS issued guidance in early 2017 explaining how a qualifying small business may elect to claim a payroll tax credit of up to $250,000 in lieu of the research credit. This election is useful to a business with no income tax liability against which to claim the research credit.
Several year-end strategies involving both business expense deductions for vehicles and the fringe-benefit use of vehicles by employees require an awareness of certain rules to leverage maximum deductions.
These are just some of the considerations that can yield tax savings for your business as year-end 2017 approaches.
Trend: Approximately 2.5 million taxpayers are now earning income each month from temporary contracts and engagements now called as GIG economy. Participation continues to swell and is expected to double by 2020. IRS is reportedly stepping up its audit coverage of taxpayers working in the “GIG” economy. I will cover more on it in coming posts.
Keep in mind that everyone’s tax situation is different, and tax rules can be complex. These tax tips have been prepared for informational purposes only and should not be relied on for tax, legal or accounting advice.
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