Tax Cuts and Jobs Act Update

Changes to Qualified Tuition Plans:
Qualified tuition plans, commonly known as 529 plans, are a popular way to ease the financial burden of paying for college. Before the Tax Cuts and Jobs Act, earnings in a 529 plan could be withdrawn tax-free only when used for qualified higher education at colleges, universities, vocational schools or other post-secondary schools. With the passage of the Tax Cuts and Jobs Act, 529 plans can now be used to pay for tuition at an elementary or secondary public, private or religious school, up to $10,000 per year. Another change came as a result of the 2015 Protecting Americans From Tax Hikes (PATH) Act, which addresses refunds of tuition or other qualified education expenses. If a student withdraws from a class, there is often a refund issued by the institution. As long as the beneficiary recontributes the refund to 529 plan within 60 days, the refund is nontaxable! To discuss these two changes or the overall benefits of 529 plans, give us a call.

Changes to the Meals & Entertainment Deduction:
The Tax Cuts and Jobs Act of 2017 has made many important business tax changes, but one significant change relates to the deductibility of meals and entertainment. Prior to 2018, a business engagement at a local sports venue involving the cost of admission, food, or beverage was eligible for a 50% deduction. With the passage of the Tax Cuts and Jobs Act, entertainment expenses are now entirely nondeductible, regardless of the nature of the meeting. The Tax Cuts and Jobs Act also limits the deductibility of business meals provided for the convenience of the employer to 50%, which had been 100% deductible by the employer. Given these changes, businesses should consider any internal adjustments they need to make for tracking and reporting these costs. If you need guidance on the proper treatment of meals and entertainment expenditures, don’t hesitate to contact us for help!

Examples of Common Types of Meals & Entertainment Expenditures (Before & After the Act)
meals and expenditures after tax cuts and jobs act

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