The Tax Cuts and Job Act (TCJA) is the most sweeping change in federal tax law since 1986. It contains more than 115 new provisions. I will list a few of them now.

Do you qualify for the new section 199A deduction?

As a result of the new federal tax reform, owners of pass-through entities (e.g. partnerships, S corporations and sole proprietors) may be entitled to a new section 199A deduction for qualified business income ("QBI"). Under section 199A, certain taxpayers may be entitled to a deduction up to 20 percent of QBI.

While this deduction potentially creates a substantial tax benefit for owners, it's complicated. There are complex rules to determine qualification for the deduction and significant compliance and reporting requirements that must be evaluated and then satisfied in order to ensure the owners receive all the information necessary to properly calculate the deduction. If you operate a pass–through entity or own one, and therefore are impacted by these new requirements, please reach out to us.

Foreign Bank Account Traps

If you have ANY bank account, retirement account, investment account/or business ownership interest with a value of $10,000 or more in a foreign country, you must advise your tax preparer since special rules now apply. Failure to disclose this on your tax return could result in severe penalties, as well as additional fees in representing you in any dispute with the Internal Revenue Service. The United States has negotiated agreements with foreign countries to require them to report foreign income to the United States to ensure U.S. citizens report and pay tax on foreign income.

Standard Mileage Rates

The standard mileage rate deduction per mile for Business is 54.5 cents. The deduction for Medical miles are 18 cents per mile. The deduction for Charitable miles are 14 cents per mile. The mile rate deduction for Depreciation is 25 cents per mile.

Miscellaneous itemized deductions subject to the 2 percent AGI limits are no longer deductible beginning in 2018. Thus, the business standard mileage rate cannot be used to claim an itemized deduction for unreimbursed employee travel expenses.

Moving Expense Deduction

For the tax year 2018 there is no longer a moving expense deduction for the federal tax return for moving in job related moves. The moving expense deduction and the exclusion from income provision is allowed only to the members of the Armed Forces (or their spouse or dependents) on active duty that move pursuant to a military order or incident to a permanent change of station

The office of Moats & Hebebrand CPAs makes a concerted effort to stay on top of the changes in the tax laws so you don't have to. Let us prepare your 2018 tax returns so you know they are done right! We are also open all year to assist with tax planning and to take care of our customers.