This article is the last in a series of 8 articles that discussed the newly enacted Tax Cuts and Jobs Act passed in December of 2017 and which takes effect in 2018. Many of the individual tax law changes will expire in 2025 but most of the business tax law changes are permanent. If you missed the first 7 articles in the series I recommend that you check them all out. The 1st 4 articles discuss some of the changes that effect individuals and the last 4 in the series discuss business tax law changes.
Not all of the tax law changes are bad and this next one is likely to draw a lot of attention and support. Under the new ACT, effective for amounts paid or incurred after the enactment date, no deduction is allowed for any settlement, payout, or attorney fees related to sexual harassment or sexual abuse if such payments are subject to a nondisclosure agreement. I’m certain that we’ll see more discussion on this one in the media.
There is a new credit for an employer-paid family and medical leave for qualifying employees. This credit is based on the amount of wages paid to a qualifying employee during any period in which they are on family and medical leave if their compensation is 50% of their normal wages. The employer credit begins at 12.5% at the 50% of wage level and increases by a quarter of a percentage point for every percentage point by which the rate of compensation exceeds 50%. The maximum credit is 25% and all qualifying full-time employees have to be given at least two weeks of annual paid family and medical leave. All less than full time qualifying employees have to be give a commensurate amount of leave on a pro rata basis. This is another new law that I suspect will be topic of hot debates as taxpayers begin to understand the implications on both sides of the fence.
The cash method of accounting may now be used by taxpayers that satisfy the $25 million dollar gross receipts test regardless of whether they purchase, produce, or sell merchandise. However, certain personal service corporations and c corporations are still required to use the accrual method of accounting.
If this information has been helpful and you want to learn more, check back here for more articles covering the new tax laws. You can also visit my website at actservices-inc.com.
