Tax Reform Creates Taxes on Employee Fringe Benefit for Bicycles
Tax reform created taxes on the employee fringe benefit for bicycles. You could (and can) deduct your costs for reimbursing employees for their qualified bicycle transportation costs. But tax reform now makes this bicycle transportation benefit a taxable event for your employees. In what for this tax reform is an interesting twist, businesses may continue to pay the monthly $20 bicycle benefit, but they must add the benefit to the employee’s W-2 and subject it to withholding and payroll taxes. The employee continues to come out ahead with the bicycle reimbursement even though it’s taxable.

Example:

Say the employee receives a $100 reimbursement and pays taxes at the 25 percent rate. The employee is $75 ahead ($100 – $25).
If you are an employer, you should consider continuing this fringe benefit because it does help your employee with his or her physical health and it costs you almost nothing. Because of tax reform, you’ll have to change your payroll for this fringe benefit, but that’s not likely to cause much trouble.

Tax Reform Provides New 20% Deduction

The new 2018 Section 199A tax deduction that you can claim on your IRS Form 1040 is a big deal. There are many rules (all new, of course), but your odds as a business owner of benefiting from this new deduction are excellent.

How the 20% Deduction Works for a Specified Service Provider

How the 20% Deduction Works for a Specified Service Provider As previously discussed, the 20 percent tax deduction under new 2018 tax code Section 199A is a very nice tax break for business owners, except for owners with high income who also fall into the out-of-favor...

Phaseout for New 20% Deduction

  Phase-out for New 20% Deduction If your pass-through business is an in-favor business and it qualifies for tax reform’s new 20 percent tax deduction on qualified business income, you benefit at all times, including being above, below, or in the expanded wage...

Preserve the Deduction with an S Corporation

Will your business operation create the 20 percent tax deduction for you? If not, and if that is due to too much income and a lack of (a) wages and/or (b) depreciable property, a switch to the S corporation as your choice of the business entity may produce the tax savings you are looking for.

Tax Benefit for Business Vehicle Trade-In Eliminated

Tax Benefit for Business Vehicle Trade-In Eliminated Beginning January 1, 2018, tax reform no longer allows Section 1031 exchanges on personal property such as your business vehicle.  The trade-in was the most common 1031 exchange of a business vehicle. Now, because...

Tax Reform Cuts Deductions for Employee Meals to 50 Percent

Tax Reform Cuts Deductions for Employee Meals to 50 Percent Tax reform (Public Law 115-97) includes winners and losers.  Employers who for their convenience provided business meals for their employees are losers—50% losers to start and then total losers later. Meal...

Tax Reform Destroys Entertainment Deductions for Businesses

Tax Reform Destroys Entertainment Deductions for Businesses First, lawmakers reduced the directly related and associated entertainment deductions to 80 percent with the 1986 Tax Reform Act. Later, in 1993, they reduced that 80 percent to 50 percent.   And now, with...

Tax Reform Allows 100 Percent Deductions for Presentation Expenses

Tax Reform Allows 100 Percent Deductions for Presentation Expenses Tax reform did much damage to tax deductions for business entertainment and meal expenses. But meals served at business presentations survived the entertainment and prospect and client meal...
Want to know more?  Have some tax questions of your own?  Get in touch with us and we’ll guide you thru the tax and accounting process.

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