Tax Tidbits from the 2017 Tax Cuts and Jobs Act

Tax Tidbits from the 2017 Tax Cuts and Jobs Act: Volume I

While the most prominent features of this piece of legislation centered on the reduction in the corporate tax rate to a flat 21% after 2017, there were a number of provisions affecting individuals/businesses that seemed to fly under the radar. In a series of brief articles we will initiate coverage of some of the most under reported of those provisions.

One of the provisions have the most sweeping effects of the entire Act is the elimination of the deduction for entertainment,  amusement or recreation activities, facilities or membership dues related to such activities or other social purposes. Thus, dues for membership in Rotary, Lions, or other fraternal or civic organizations are no longer deductible. At the same time, tickets to sporting events, theatre, or like venues are also not deductible. There are limited exceptions, i.e. if expense is included in the employees compensation subject to tax. These rules apply regardless of whether, as under prior law, the expense was directly related to or associated with the active conduct of the taxpayer’s trade or business.

Tax Tidbits from the 2017 Tax Cuts and Job Act: Volume II

The Act includes a repeal of the ACA (Affordable Care Act) failure to have minimum essential health insurance penalty. While the ACT still requires minimum essential health coverage, the penalty is reduced to zero beginning in tax years after 2018. Certain other provisions of the ACA still remain in effect, including the 3.8% Medicare Surtax and the additional 0.9% HI tax. Absent the complete repeal of ACA, this provision alone is sure to have a significant impact in the health insurance markets and the availability of insurance coverage for those most in need of coverage.

Tax Tidbits from the 2017 Tax Cuts and Job Acts: Volume III

Provisions affecting itemized deductions were also prominent in this legislation and along with an increase in the standard deduction, will serve to reduce a wide swath of taxpayers who would otherwise itemize deductions. Foremost, in our opinion, is the elimination of miscellaneous itemized deductions. These include unreimbursed employee business expenses, investment expenses and expenses for the production or collection of income, tax determination expenses among others. Tax preparation and other tax related fees would still be deductible if related to business or production of income. In that regard, firms such as ours should, by necessity, provide bill breakdowns delineating the cost of our services attributable to those deductible expenses versus those which are not.