Are my withholdings correct under the new tax law for 2018?
Because of the: reductions to tax rates; elimination of dependent deductions; and increase in the Standard Deduction, it is wise to review your W-4 and revise it if necessary.
Even though your employer should be using the new tax tables, it is still a smart thing to do up to you to revise your W-4 so you don’t get a rude surprise when your taxes are prepared next year!
The IRS has provided a Withholding Calculator and link to the new W-4 form for 2018 and this IRS page also has a federal W-4 link: https://www.irs.gov/individuals/irs-withholding-calculator?mkt_tok=eyJpIjoiTUdObE1UQTNZMkprWldJMiIsInQiOiJqWlVNWE5rZnB4WHZNU0NHT0pKVzVwbDBSZldtRjNzaDRHYm1OeW1mbVBBUEdKQjhhUFZRcTdoU3VqSkpxVkhkNXBMTmx5K2NzOWlZVnN1d2ZxdFdMdVppNHBLcDJHNWFpNlhSKzV2YXlzdWh3YzUxY2VtZ0dkemVGMHdTQjgxZyJ9
Please also remember what you need for your federal W-4 may be different from what you need for Michigan (MI-W4) (https://www.michigan.gov/documents/taxes/MI-W4_370050_7.pdf) and what you need for your local withholdings if it applies to you.
Despite the hyperbole you may have heard, the sky is not falling!
Yes, there are some changes to the tax treatment of meals, entertainment, etc. And you must still follow the same business purpose and substantiation tests. Plus, changing your bookkeeping accounts to accommodate these changes back to January 1, 2018 will make it much easier for you at the end of the year when you go to prepare your taxes!
- Meals: was 50% and still 50%
- Entertainment (sporting, concert or other events: was 50% of face value of ticket) now non-deductible
Employee travel meals: was 50% and still 50%
Office Holiday parties: was 100% and still 100%
Meals provided for employer convenience located on employer’s facility:
- Was: 100% deductible provided the meals are excluded from the employee’s gross income as de minimis fringe benefits; otherwise 50%
- New: 50% deductible through 2025; non-deductible after 2025
The budget bill, signed today, extends several important tax provisions.
This morning President Trump signed a budget bill averting yet another government shutdown. Tucked in the Bipartisan Budget Act of 2018 are several extender provisions that expired but are now available retroactively through Dec. 31, 2017.
Exclusion for discharge of indebtedness on a principal residence
The provision extends the exclusion from gross income of a discharge of qualified principal residence indebtedness through 2017. The provision also modifies the exclusion to apply to qualified principal residence indebtedness that is discharged pursuant to a binding written agreement entered into in 2017.
Premiums for mortgage insurance (PMI) deductible as mortgage interest
The provision extends the treatment of qualified mortgage insurance premiums as interest for purposes of the mortgage interest deduction through 2017. This deduction phases out ratably for taxpayers with adjusted gross income of $100,000 to $110,000.
Above-the-line deduction for qualified tuition and related expenses
The provision extends the above-the-line deduction for qualified tuition and related expenses for higher education through 2017. The deduction is capped at $4,000 for an individual whose adjusted gross income (AGI) does not exceed $65,000 ($130,000 for joint filers) or $2,000 for an individual whose AGI does not exceed $80,000 ($160,000 for joint filers).
What Is Identity Theft And What Are The Warning Signs?
Identity theft covers a wide range of topics including children, drivers license, insurance, social security, etc.. An excellent resource from the State of Michigan Department of Treasury.
This excellent article from Maddin Hauser is mostly geared towards detroit properties but may apply to any residential or commercial property. This is good reading no matter where you are located!
From the Michigan Department of Treasury:
Business taxpayers should be extra alert for cybercriminals attempting to steal W-2 forms and other sensitive information through a phishing scam, according to the Michigan Department of Treasury.
From the National Society of Accountants:
Confused About the New Pass-Through Deduction? So Is Everyone Else
Tax professionals don’t know how many partnerships, limited liability companies, and S corporations will qualify for the lower taxes that Republicans intended for pass-through businesses in their new tax law.
Guidance about who does—and doesn’t—qualify for the law’s pass-through deduction is at the top of many wish lists for advice from the IRS. The law provides a 20 percent deduction for pass-through income, but excludes service business owners making more than $157,500 as individuals or $315,000 as joint filers.
What is a service business? The tax reform law defines a service business as an entity in the fields of health, law, consulting, athletics, financial services, or brokerage services, or any trade or business where the principal asset of such trade or business is the reputation or skill of one or more of its employees or owners.
Tax practitioners say a definition relying on the reputation or skill of an employee is too broad and could apply to many businesses outside of those typically thought of as service businesses.
The IRS wants to help you avoid identity theft, malware, scams, etc. and provides some excellent guidance:
- Avoiding phishing
- Remote access takeover
- Email scams
- Making data security an everyday priority
- Business identity theft