24 THE QUEENS COURIER • APRIL 26, 2018 FOR BREAKING NEWS VISIT WWW.QNS.COM
Changes for Employers
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Co-Author of the
best selling book
“Breaking the Tax Code”
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Salvatore P. Candela, EA, ATA, ABA
Enrolled Agent - Tax Advisor
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BY JOHN SAVIGNANO, CPA
Big changes for employers
under tax reform. We’ll delve into
three of them in this letter.
Let’s begin with meals and
entertainment. Entertainment
expenses are not deductible.
Before 2018, firms could generally
take a tax-off for half of their
business-related entertainment
costs. Tax reform axed this break
starting with 2018 returns, so no
more writing off show tickets,
golf course fees, sporting events
and the like, even if taking clients.
Holiday parties are still fully
deductible. Employee meals
on business travel remain 50%
deductible by the employer.
Limits are now placed on meals
at an employer-operated eating
facility, such as a cafeteria.
Whereas companies used to be
able to deduct the entire expense,
the write-off is now subject to
a 50% bite. After 2025, the cost
is disallowed in full. The same
rules apply to meals an employer
brings on-site for employee meetings
and other on-premises meals
that are provided for the convenience
of the employer.
The deductibility of the cost of
client meals is murky under the
new tax law. There’s a sharp divide
among tax practitioners on this
issue. Some say that client meals,
such as at a restaurant for a business
dinner or a post-golf lunch at
a country club, are 50% deductible
if business is conducted or discussed.
Others aren’t so sure and
take a more conservative position
that client meals can no longer be
written off until IRS comes out
with guidance saying otherwise.
We appreciate the uncertainty, but
we tend to side with those that say
client business meals remain 50%
deductible, provided the meals
aren’t so lavish that they rise to
the level of entertainment. To be
on the safe side, business owners
should track all of their receipts in
separate ledger accounts based on
the specific type of meal or entertainment
expense.
Firms can no longer deduct
the cost of transportation-related
fringe benefits offered to employees,
such as for on-site parking,
mass transit passes and bicycles.
The write-off is axed regardless of
whether benefits are paid directly
by the employer or through a reimbursement
arrangement or compensation
reduction agreement,
IRS confirms in Publication 15-B,
its annual employer tax guide to
fringe benefits. We expect firms
to still offer these benefits, notwithstanding
the loss of the tax
break. Employees can still use pretax
money for parking and mass
transit passes. Ditto for vanpools,
but not bicycle commuting.
The monthly limit for 2018
is $260. It should be noted that
New York City, San Francisco and
Washington, D.C., require employers
of a certain size to offer workers
pretax commuter benefits.
John Savignano is a partner with
Savignano Accountants & Advisors
located at 47-46 Vernon Blvd.,
Second Floor, in Long Island City.
If you have any questions or require
additional information, please call
John at 718-707-0955.
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