From large corporations to small business owners, this year’s tax season brings some noteworthy changes. Rosemarie Coyne, CPA, AVP, Financial Reporting Specialist at Fidelity Bank, highlights a few new regulations that every business owner should be mindful of as the deadline for filing approaches.
First, let’s talk deductions. Three areas of the tax code that have changed since last year are meals and entertainment (M&E), and transportation fringe benefits:
The cost of business meals during meetings or travel was 100% deductible last year. This deduction still exists, but it’s been cut in half. For 2018, you can deduct 50% of the cost of meals directly related to business.
In the past, you may have deducted entertainment expenses you incurred while hosting a new client, or attending a convention, reception, or business meeting. However, scratch this deduction from your list when preparing your 2018 taxes. Entertainment expenses are no longer deductible.
Businesses are no longer permitted to deduct the cost of transportation fringe benefits, which includes the expense of on-site employee parking and qualified parking.
Next, let’s talk about the corporate tax rate.
A new, lower corporate tax rate may offset the reduction or elimination of deductible items in this year’s tax code. The corporate tax rate that once rose as high as 35% has been lowered to 21%. This is a huge benefit to most corporations.
In addition, a new bonus depreciation is in effect. Qualified property purchased after September 27, 2017, can now be fully depreciated (100%) for taxes.
These are just a few of the changes impacting businesses this year. To learn more, consult a professional tax preparer. Consider consulting with your account or professional tax preparer throughout the year to be proactive as you plan and strategize for upcoming tax seasons.
Fidelity Bank has multiple local branch offices throughout Lackawanna and Luzerne counties, and our full-service Customer Care Center is at your service 7 days a week. Call or visit your local branch office today.
Daniel J. Santaniello, President and CEO, of Fidelity Bank, publishes Financially Fit with Fidelity, your guide to financial well-being, every Thursday. If you’re interested in a financial topic we haven’t yet covered or want to subscribe to our emails, please feel free to drop us a line at blog at fddbank dot com. We would love to hear from you.
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