Which 2016 tax law changes can affect my business’s federal tax filings?

1. Accelerated Filing Deadlines for Forms W-2, W-3 and Form 1099-MISC
   • January 31, 2017. Previously, the deadline was the end of February to file paper Forms W-2 with the SSA and until the end of March to make electronic filings. The January 31 deadline also applies to Forms W-2AS, W-2GU, W-2VI, W-3 and W-3SS.
2. Penalties for the late filing of these information returns have also increased.
   • For each information return or payee statement with respect to which a failure occurs, the penalty has been increased from $100 to $250, and the maximum penalty that may be imposed has been increased from     $1,500,000 to $3,000,000. The per-failure penalty for intentionally disregard the filing requirements also has been increased, from $250 to $500.
3. Change in Return Due Dates
   • C Corp – due by the 15th day of the fourth month following the close of the tax year (April 15th)
   • S Corp – unchanged (March 15th)
   • Partnership- due by the 15th day of the third month following the close of the tax year (March 15th)
   • Trust and Estate – unchanged (April 15th)
4. Extension Dates
   • C Corp – unchanged still 6 months (October 15th)
   • S Corp – unchanged (September 15th)
   • Partnership – now allowed 6 months used to be 5 months (September 15th)
   • Trust and Estate – Extended 15 days (September 30th)
5. Vehicle Deductions
   • With respect to deductions relating to vehicles, we need to ensure that your business records include the following information with respect to each vehicle used in the business:
     1. the amount of each separate expense with respect to the vehicle (e.g., the cost of purchase or lease, the cost of repairs and maintenance); (2) the amount of mileage for each business or investment use and the total miles for the tax period;
     2. the date of the expenditure; and the business purpose for the expenditure.
6. Vehicle Substantiation
   • The following are considered adequate for substantiating such expenses:
     1. records such as an account book, diary, log, statement of expense, or trip sheets; and
     2. documentary evidence such as receipts, canceled checks, bills, or similar evidence.
7. S Corporation Salaries
   • For any business operating as an S corporations, it’s important to ensure that shareholders involved in running the business are paid an amount that is commensurate with their workload. Distributing profits instead of paying compensation subject to employment taxes, is an area that the IRS targets on such returns. Failing to do so can lead not only to tax deficiencies, but penalties and interest on those deficiencies as well. The key to establishing reasonable compensation is determining what type of work you did for the S corporation as an employee-shareholder. If you are in this situation, we need to document the factors that support the salary you are being paid.
8. Deductions Eliminated Under Trump’s Tax Reform Proposal
   • Deductions the Proposal Retains
     1. Incentives for Home Ownership
     2. Charitable Contributions
     3. Retirement Contributions
   • Itemized Deductions the Proposal Eliminates
     1. Medical Itemized Deductions
     2. Deduction for State And Local Taxes
     3. Investment Interest Deduction
     4. Casualty & Theft Losses
     5. Employee Business Expenses
     6. Legal Fees
     7. Gambling Losses
   • Non-itemized Deductions the Proposal Eliminates
     1. Teacher’s Expenses
     2. Health Savings Account (HSA) Deduction
     3. Moving Expenses
     4. Self-Employed Health-Insurance Deduction
     5. Penalty for Early Withdrawal of Savings
     6. Alimony Paid
     7. Student-Loan Interest Deduction
     8. Domestic-Production Activities Deduction
9. Travel Costs are Deductible
   • Our tax tip on travel is to write off expenses like airfare, hotel fees, car rental and mileage, and travel expenses like laundry costs. Food is only deductible up to 50%.
10. Tax Planning for Small Business Owners
    •  Goals:
      1. Reducing the amount of taxable income
      2. Lowering your tax rate
      3. Controlling the time when the tax must be paid
      4. Claiming any available tax credits
      5. Controlling the effects of the Alternative Minimum Tax
      6. Avoiding the most common tax planning mistakes
    • Entertainment expenses are legitimate deductions that can lower your tax bill and save you money, provided you follow certain guidelines.
    • Important Business Automobile Deductions – The mileage reimbursement rate for 2017 is 53.5 cents per business mile. If you own two cars, another way to increase deductions is to include both cars in your deductions.
    • Expensing for tax year 2017 allows you to immediately deduct, rather than depreciate over time, up to $510,000, with a cap of $2,030,000 worth of qualified business property that you purchase during the year.