November 2018 Meeting Notes - Diana Chung, Tax Changes for 2018
/Vice President Melissa Barton introduced herself and opened the November 1 meeting. She asked each attendee to introduce themselves.
· Announcements: Angela Clark has been asked to join the board as an event coordinator. We recently heard of a CRM that will integrate with our All-Star Accounting Professional’s website, making it easier to bill annual membership dues and maintain the membership directory.
· Today’s speaker was Diana Chung of Schwindt & Company CPAs and the topic was the recent federal tax law changes. On December 22, 2017, the President signed into law H. R. 1, originally known as the Tax Cuts and Jobs Act. Most of the changes are effective from 2018 through 2025. Please note some changes are temporary and revert to the old laws after 2025 and some are permanent. A handout summarizing many tax law changes is available.
· The first part of the discussion focused on business tax law changes and specifically the deductibility of meals and entertainment. The IRS published Notice 2018-76 to state that meals that are ordinary, necessary, not lavish or extravagant and in which the taxpayer is present with the client, consultant or business contact continue to be deductible at 50% as long as the meal and drinks are purchased separately from entertainment or shown as a separate cost on the invoice. Entertainment costs for business clients or prospects are no longer deductible. Entertainment, food and beverages provided for employee benefit (holiday party, summer picnic, etc.) continue to be deductible at 100%.
· The new Qualified Business Deduction - This deduction allows up to 20% of business income to be exempt from taxation and is subject to limitations based upon wages or wages and depreciable or amortizable property when individual taxable income for a single or head of household exceeds $157,500 or a married couple has taxable income which exceeds $315,000. Certain “specified businesses” may not receive any benefit from this new deduction once their taxable income exceeds the limits discussed above. Specified businesses generally include those involving personal services such as fields of law, healthcare, accounting, consulting, performance art, athletics, financial services, etc.
· Other business changes impacted by the new tax law include higher Section 179, bonus depreciation and vehicle depreciation limits, a new tax credit for employer family and medical leave, a flat 21% federal tax rate for C Corporations, repeal of the corporate alternative minimum tax, disallowance of tax-deferred exchanges (Section 1031 exchanges) for personal property, including company vehicles, reduction of many employer provided transportation fringe benefits and new limitations on use of net operating losses.
· Individual tax law changes: Lower individual tax rates, the almost doubling of standard deductions and the loss of personal and dependent exemptions means every individual filing a tax return in 2018 will be impacted in some way. Real property and state and local income and sales tax deductions for those who itemize deductions will be limited to $10,000 annually. Home mortgage interest is only allowed on mortgage debt up to $750,000 after 2017 instead of one million. Interest deduction on home equity lines of credit are generally disallowed. Child tax credits increase from $1,000 to $2,000 in 2018, moving expenses are no longer tax-free if paid by employers or deductible by employees.
· We will enjoy a holiday luncheon at The Stockpot Boiler restaurant on December 6, 2018 from 11:30 – 1:00 PM located at 8200 SW Scholls Ferry Road, Beaverton, OR 97008. This luncheon will be in lieu of our regular December meeting at the Meals on Wheels location at 7710 SW 31st Avenue, Portland OR 97219.
· As our group takes a break from meeting during the month of January, our next scheduled meeting will be Thursday, February 7, 2019 at the Meals on Wheels location.
· If you have any ideas for future social events, please contact Kim. Please share this group and our website with others you know and on social media. The more people we have in our group, the greater the collaboration!