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Business Tax Provisions: The Year in Review

Lipton CPA Associates details tax changes for 2019 that business owners need to know for their books heading into the new year.

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With end-of-year tax planning upon us, business owners need to be aware about tax changes for 2019.

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Rich Lipton, Tire Review contributor and senior partner at Lipton CPA Associates, details below what tax changes business owners like tire dealers need to be aware of this year for their returns in the year ahead.

Standard Mileage Rates

The standard mileage rate in 2019 is 58 cents per business mile driven.

Health Care Tax Credit for Small Businesses

Small business employers who pay at least half the premiums for single health insurance coverage for their employees may be eligible for the Small Business Health Care Tax Credit as long as they employ fewer than the equivalent of 25 full-time workers and average annual wages do not exceed $50,000 (adjusted annually for inflation). In 2019 this amount is $54,200.

In 2019 (as in 2014-2018), the tax credit is worth up to 50 percent of your contribution toward employees’ premium costs (up to 35 percent for tax-exempt employers.

Section 179 Expensing and Depreciation

Under the Tax Cuts and Jobs Act of 2017, the Section 179 expense deduction increases to a maximum deduction of $1.02 million of the first $2.55 million of qualifying equipment placed in service during the current tax year. The deduction was indexed to inflation for tax years after 2018 and enhanced to include improvements to nonresidential qualified real property such as roofs, fire protection, and alarm systems and security systems, and heating, ventilation, and air-conditioning systems.

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Businesses are allowed to immediately deduct 100% of the cost of eligible property placed in service after September 27, 2017, and before January 1, 2023, after which it will be phased downward over a four-year period: 80% in 2023, 60% in 2024, 40% in 2025, and 20% in 2026. The standard business depreciation amount is 26 cents per mile (up from 25 cents per mile in 2018).

Work Opportunity Tax Credit (WOTC)

Extended through 2019, the Work Opportunity Tax Credit remained under tax reform and can be used by employers who hire long-term unemployed individuals (unemployed for 27 weeks or more). It is generally equal to 40 percent of the first $6,000 of wages paid to a new hire.

SIMPLE IRA Plan Contributions

Contribution limits for SIMPLE IRA plans increased to $13,000 for persons under age 50 and $16,000 for persons age 50 or older in 2019. The maximum compensation used to determine contributions is $280,000.

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