Business Deductions with New Tax Act 2018

Did you know that you can no longer write off miscellaneous itemized expenses? That’s because of the Tax Cuts and Jobs Act. Toby Mathis talks about how to take personal expenses that are not deductible and make them reimbursable business expenses that you don’t have to report as taxable income.

Highlights/Topics:

• Identify expenses that may not be deductible to you as an individual, but to a business; expenses that benefit a business that you incur personally as an employee
• How businesses are structured (sole proprietorship, partnership, corporation, etc.) and operate affects personal expenses for business
• Accountable Plan - Reimbursements and Expense Allowance Arrangement: Amounts  paid are excluded from employee’s gross income, not reported as wages/compensation
• Keep a paper trail; document who, what, why, when, and where you’re writing off
• Four-part Test:

1. Is there a business connection to the expense?
2. Substantiation: Can you provide proof (i.e. a receipt) to the employer proof that you incurred the expense?
3. No Excess Payments: It can reimburse you what you paid. But, can it give you extra money?
4. Timeliness: Do you let the employer know of expenses every 90 days, for the employer to reimburse you within 120 days?

• Examples of expenses that you might get reimbursed on include travel to and from the hotel and business meals
• Employee Home Office - Four ways for a home office deduction, if you:

1. Are an employee doing administrative activities at home, it qualifies as a principal place for business.
2. Have a cash register for your business, or transacting business and collecting money in your home.
3. Have a physical place where you meet patients, clients, customers, or whatever.
4. Have a detached structure that is not part of or attached to the dwelling unit.

Resources

Tax Cuts and Jobs Act

Schedule C

Accountable Plan

FICA

FUTA

Railroad Unemployment Insurance Act

Toby Mathis

Anderson Advisors

Tax and Asset Protection Event