2018 Tax reform bill

2018 is swiftly coming to an end and I wanted to wish you all Happy Holidays. I look forward to hearing from you and working with you in 2018.

I just came back from the Annual Federal Tax Update seminar with a book about 3 inches thick, with more pages coming. There have been so many changes to the tax code coming 2018 that I thought you might be interested in reading the whole 178-page tax changes. Now I realize that some may or may not apply to you, but, There is a ton of information that will affect everyone. Here is the link for you to read

https://www.congress.gov/bill/115th-congress/house-bill/1/text

My short list to share:
One of the most notable changes coming is the deduction for Meals AND ENTERTAINMENT is 100% GONE. This will affect many of you in business.

MOVING EXPENSE: In order for moving expenses to be deductible there are two tests that must be met
1.0 DISTANCE TEST – The new workplace must be at least 50 miles farther from the old home than the old job location was from the old home and
2.0 TIME TEST – An employee must work full time for at least 39 weeks during the first 12 months immediately following his arrival in the general are of the new job location. A self-
employed individual must work full time for at least 39 weeks during the first 12 months and for a total of at least 78 weeks in the first 24 months immediately following his arrival
in the general area of the new work location.

ALIMONY is only deductible IF there are no conditions put on how the payment is received. For example, if there are conditions on it, like “when Johnny becomes 13 years old, the payments will decrease”, this now becomes Child Support, regardless of how the divorce/separation decree is written.

*Lump sum payments or bonuses are not considered alimony.

The rules per IRC 71(b) In order for Alimony to truly be deductible there are 4 requirements that MUST BE MET: (I know not so easy to decipher)
1.0 The payment is received by or on behalf of a spouse under a divorce or separation instrument
2.0 The Divorce or Separation instrument does not designate the payment as a payment which is includable in gross income and not allowable as a deduction
3.0 The Payee spouse and the payor spouse are not members of the same household at the time such payment is made and
4.0 There is no liability to make any such payment for any period after death of the payee spouse and there is no liability to make any payment (in cash or property) as a substitute for
such payments after the death of the payee spouse.
Specifically, the intent of the taxpayers as to whether a payment is considered alimony does not determine deductibility.

I won’t list all the changes, but these were relevant to a few of my clients and thought I would post these explanations. Honestly, all of the changes are bound to be severely cumbersome and I strongly suggest that you contact a tax professional for clarification. Please feel free to reach out to me to get your 2017 taxes prepared and to help you get set-up for the 2018 changes. You can feel free to email me at Robin@CGJAccounting.com or call me in the office at (818)990-6529.

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