Like it or not, we’re coming up on 2017. That means in just a few short months, we’ll have a new president and all sorts of glorious new tax laws and codes that will affect how we run our businesses.
The good news is that enough information is out there for small business owners to plan for these changes. Here are some updates to watch for in the new year.
Insurance Forms
If your company offers health benefits, then mark your calendars because dates will change for critical insurance forms in 2017. The deadline for Form 1095, which is the proof of insurance coverage, will be earlier in the year – Jan. 31, to be exact. This will be done to ensure employees receive their form concurrently with their W-2s. Additionally, hard filing deadlines now are imposed for Forms 1094-B and 1095-A, B, and C due by Feb. 28 by mail or by e-file on March 31.
Bonus Depreciation
Grab some great “clearance” or “end of year” deals, if you can. Back in February we discussed the Protecting Americans from Tax Hikes Act of 2015 (PATH), which extends bonus depreciation allowances for qualified property placed in service from 2015 through 2019.
If you bought or leased qualifying new software, hardware or equipment for your business since 2015, you can depreciate half the cost as part of “bonus depreciation.” Keep this pattern going through 2017 — try to get the most up-to-date equipment possible.
The bonus depreciation percentage is 50% for property placed in service during 2015, 2016 and 2017 and will phases down to 40% in 2018 and 30% in 2019.
These strategic purchases can keep more money in your hands.
Limited Deductions
The IRS allows a limited deduction – if you make money in your business – where you can expense the cost of equipment up to a certain limit rather than depreciate it. Certain property qualifies, certain property does not qualify, and there are limits to the amount of money you could deduct. You should speak to your accountant to discuss the availability.
This is a very good reason to put your business on protection payments before December 31 to get deductions.
If you are a cash-basis taxpayer, paying the expense will be enough. However, if you are an accrual-basis taxpayer, you need to match income to expenses.
Contact Brinen & Associates to discuss ways to minimize your tax payments.