Happy New Year from JCCS!
For us accountants, the coming of a new year is also the coming of a new tax season. Our team members are already hard at work, making sure we are ready to help you see beyond the numbers, because tax law doesn’t just affect tax returns. It affects business operations and personal lives, and we are committed to helping you understand those effects so you can make smart decisions that will benefit you and your business.
Recently, our tax practitioners attended a tax update seminar. Below you will find some key points from that seminar identified by our professionals.
• Taxpayers that do not have to submit financial statements to the SEC or a governmental agency can elect to deduct tangible property purchases up to $2,500 per invoice in the year acquired instead of capitalizing and depreciating as is normally required. This is called the de minimis safe harbor threshold.
In order to take advantage of this threshold, the taxpayer must make the election by filing a statement attached to their timely filed original Federal tax return for the taxable year in which the purchase is made, AND must have a capitalization policy or procedure in place at the beginning of the tax year. The capitalization policy should identify the taxpayer, the minimum amount that will require capitalization, the year(s) to which the policy applies, and be signed by the taxpayer.
If you do have to submit financial statements to the SEC or a governmental agency, the deductible amount increases to $5,000, and the capitalization policy must be written.
• Bonus depreciation is a special allowance that permits taxpayers to deduct 50 percent of the cost of qualified property as depreciation expense in the first year the property is placed into service. Starting in 2018, that percentage will begin to phase out, decreasing to 40 percent, and 30 percent in 2019.
• Residential energy tax credits are extended through 2016. Talk to us about any energy-efficient improvements you made to your residence, and we can help determine if those qualify for a tax credit.
• Partnership audit rules will undergo some significant changes starting in 2018. The new rules will affect how partnership entities are set up, and how the legal documents associated with the entity are composed. The rules will also affect the calculation of payments due to the IRS.
Whatever your situation may be, JCCS is dedicated to being an informed and engaged advisor. Because tax law is more than numbers on a tax return – it’s you and your life.