A local expert offers advice on one of the world’s most arcane documents — the 2017 US tax code.
According to Forbes.com, the current US tax code stands at a mind-numbing 9,000 pages. Even if you were a tax savant, who has the time to pore over that pulpy avalanche in order to decrypt it? Luckily, we found Edwin B. Morris, CPA, a partner in the Tax Group at Marks Paneth LLP, which has an office in Purchase. Below, Morris shares five tax-code changes for corporations and businesses in 2017.
Revised due dates for C-corporation returns
C corporations that historically have filed their income-tax returns by the 15th day of the third month after the end of the year will now have an extra month to file. Accordingly, a calendar-year C corporation, unless it files for an extension, will have to file its 2016 return by April 17 (as April 15 falls on a Saturday). S corporation due dates, however, remain the same.
Increased write-offs for business purchases
Businesses can expense up to $510,000 of qualifying business-property costs in 2017, up from $500,000 in 2016. Expensing is generally available for most depreciable property (other than buildings), off-the-shelf computer software, and certain qualified real-property costs.
Bonus first-year depreciation available
Businesses should also consider making 2017 expenditures that qualify for a 50 percent bonus depreciation write-off. While unchanged from 2016, the write-off is scheduled to drop to 40 percent for calendar-year 2018 purchases.
Retirement-plan contribution limits increased
Businesses can contribute and deduct up to $54,000 to an employee’s/participant’s defined contribution account for 2017, up from $53,000 in 2016. The limit on the annual benefit under a defined benefit plan increases from $210,000 to $215,000. 401(k) limits, however, remain the same ($18,000 regular deferral, plus $6,000 additional deferral for over-age-50 participants).
Planning for domestic-production-activities deduction
Businesses can write off 9 percent of net income from certain domestic qualified production activities, subject to limitations. One such limitation is that the deduction is limited to 50 percent of Form W-2 wages allocable to domestic production. Accordingly it may pay to increase salaries.