How To Exploit the New Tax Laws to Save Money

Yes, it’s a pretty catchy title, but it turned out to be true.  On Thursday, March 29th we held a webinar that lived up to its name.  Missed it?  I’ll give you the highlights here, but if you want more information, you can WATCH THE WEBINAR HERE in full.

Here is what we covered:

Personal Loss Limitations:

  • The ability to offset passive income with business losses is now limited to $500,000 per year for married couples and $250,000 for an individual.  Losses in excess of this will be carried forward to be used in future years.

Personal Deductions that have been limited:

  • Home mortgage interest is now limited to total debt of $750,000.  There is some good news: second homes now qualify and can be part of that $750 and loans that were closed before 12/15/2017 continue to be governed by the previous tax laws.

  • State and local sales tax and property taxes are no longer deductible unless they are related to expenses for the production of income.

  • If you prepaid 2018 property taxes hoping it would be deductible for 2017, that was a gamble you lost.  This was specifically outlawed.

  • If your divorce agreement is executed (or modified) after 12/31/2018, alimony and separate maintenance payments will no longer deductible by the payor and the income will have to be declared by the payee.

  • de minimis taxes

  • There are a number of states that if you work in the state for as little as three days you can be subject to income tax.  Not surprisingly, California and New York are among the most aggressive about this.  To see the full list of states, CLICK HERE and check out slide 9.

Business Deductions that were INCREASED

  • Property placed in service after 9/27/2017 and before 1/1/2023 can be fully depreciated in Year 1.  It phases down after 2023, but I’m not going to go into that detail here.  If you are really interested, see page 13 on THE PRESENTATION.

  • Depreciation for cars purchased after 12/31/2017 has increased to 10K the first year, 16K for the second year, 9.6K for Year 3, and 5.7 for the fourth and later years.

  • Computer equipment no longer has to be capitalized (placed on your Balance Sheet) it can be fully expensed.  This does have a couple of implications for your Business Property Taxes.  Watch THE REPLAY for a deeper discussion of this.

Business Deductions that were LIMITED:

  • Net Operating Losses are limited to 80% of taxable income.  This is different from the personal limits listed above.

  • Entertainment is no longer deductible

  • All meals will be 50% deductible.  This means no more 100% deductible Working Meals.  However, Team Building activities are 100% deductible.  Just a little fun fact you can use any way you like.

  • Deductions for employee transportation benefits (parking, mass transit) are not allowed.

  • Payments to settle sexual harassment cases made in conjunction with non-disclosure agreements are no longer deductible.

The 20% deduction

Can you claim the 20% pass through income deduction?  There was a lot of discussion about professional service businesses (lawyers and accountants but not engineers or architects) being excluded, but there are exceptions.  Here are the qualifications/limitations:

  • If your total household income is under $157,500/$315,000 Single/Married Filing Jointly – YES

  • If your income is over the limit, it then reverts to a formula tied to the total W2 wages your company paid.  It phases out at $207,500/$415,000

To see if you can take advantage of this deduction and how much you will be able to claim, CLICK HERE to download the spreadsheet.

When prepping for this webinar, I realized that talking about taxes is great, but not if your profit isn’t where it should be.  And I am often asked where people should be spending their money and where they shouldn’t to increase profitability. As a result, we developed something called the Profit Finder.  We have been using it for a while with our clients, but for the first time, offered it to non-clients.  If you aren’t a client, but would like to find more profit in your business, I will make the same offer to you.  Here is the deal: I shared on the webinar about how we can show you how to get more profit out of your business for just $99. You send us your Profit and Loss (P&L) plus answer a couple of other easy questions and then I will get on a ½ hour call with you to tell you exactly where you have the opportunity to add more profit to your bottom line.

Do I believe in this? Yes. So much so, that it comes with a money-back guarantee. If I can’t show you a 10X return on your investment, I will refund your money. That means that if I can’t show you where there is $1,000 that is not being spent efficiently, you get your money back. We do this on a regular basis and I have to tell you, I rarely find $1,000 – I usually find TENS of THOUSANDS. So yes, it is worth a ½ hour call with me.

This price was only supposed to be valid through last Friday, but because of the great response, I am happy to extend the offer to anybody who reads this article.  So if you want to take advantage of this special price, CLICK HERE

If you want to download the slide deck, CLICK HERE.

Any questions or concerns can be emailed to Sarah@CathCap.com