Small-Business Quarterly April 2018


Standard Mileage Rates — In 2018, the rate for business miles driven is 54.5 cents per mile.

Section 179 Expensing — The Section 179 expense deduction increases to a maximum deduction of $1 million of the first $2.5 million of qualifying equipment placed in service during the current tax year.The deduction was enhanced to include improvements to nonresidential qualified real property, such as roofs; fire protection; alarm and security systems; and heating, ventilation, and air-conditioning systems. Bonus Depreciation — Businesses can immediately deduct 100 percent of the cost of eligible property in the year it is placed in service, after which it will be phased downward over a four-year period: 80 percent in 2023, 60 percent in 2024, 40 percent in 2025, and 20 percent in 2026. Work Opportunity Tax Credit (WOTC) — Extended through 2019, theWork Opportunity Tax Credit has been modified and enhanced for employers who hire long- term unemployed individuals (unemployed for 27 weeks or more) and is generally equal to 40 percent of the first $6,000 of wages paid to a new hire.There was no change to this tax credit under TCJA. Research and Development Tax Credit — Starting in 2018, businesses with less than $50 million in gross receipts can use this credit to offset alternative minimum tax. Certain start-up businesses that might not have any income tax liability will be able to offset payroll taxes with the credit as well. Employee Health Insurance Expenses — For taxable years beginning in 2018, the dollar amount is $26,700 ($26,200 in 2017).This amount is used for limiting the small employer health insurance credit and for determining who is an eligible small employer for purposes of the credit. Employer-Provided Transportation Fringe Benefits — If you provide transportation fringe benefits to your employees, the maximum monthly limitation for transportation in a commuter highway vehicle as well as any

transit pass is $260 in 2018, and the monthly limitation for qualified parking is $260.

Individual Standard Deduction — In 2018, the standard deduction increases to $12,000 for individuals (up from $6,350 in 2017) and to $24,000 for married couples (up from $12,700 in 2017). Alternative Minimum Tax (AMT) — In another tax change for 2018,AMT exemption amounts increase to $70,300 for individuals (up from $54,300 in 2017) and $109,400 for married couples filing jointly (up from $84,500 in 2017). ‘Kiddie Tax’ — For 2018, the net unearned income for a child under the age of 19 (or a full-time student under the age of 24) who is not subject to “kiddie tax” is $2,100. Penalty for Not Maintaining Minimum Essential Health Coverage — The penalty has been eliminated under the TCJA as part of the tax changes for 2018. AGI Limit for Deductible Medical Expenses — In 2018, the deduction threshold for deductible medical expenses is temporarily reduced to 7.5 percent of adjusted gross income (AGI). Eligible Long-Term Care Premiums — Premiums for long-term care are treated the same as health care premiums and are deductible on your taxes, subject to certain limitations. Medicare Taxes — The additional 0.9 percent Medicare tax on wages above $200,000 for individuals ($250,000 married, filing jointly), which went into effect in 2013, remains in effect for 2018, as does the Medicare tax of 3.8 percent on investment (unearned) income for single taxpayers with modified adjusted gross income (AGI) more than $200,000 ($250,000 joint filers).

Kimberly Deas, Business Broker “As the Small-Business Leader of the Year for the Entrepreneurial Growth Division, I look forward to seeing the various chambers this spring and summer and sharing why every business owner needs to have an exit plan from their business.” – Lisa Pilgrim

John Miller, Attorney “I’m looking forward to our new combined business- and estate-planning program for licensed professionals, to resolve the problem that spouses of those professionals, such as doctors and lawyers, cannot own their business after they’re gone. We are pleased

with the outlook of helping these many families. Regarding my own family, I am looking forward to a spring break camping trip with my wife and children.”


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