The dawning of 2019 means the 2018 income tax filing season will soon be upon us. After year end, it’s generally too late to take action to reduce 2018 taxes. Business owners may, therefore, want to shift their focus to assessing whether they’ll likely owe taxes or get a refund when they file their returns this spring, so they can plan accordingly. With the biggest tax law changes in decades (under the TCJA) generally going into effect beginning in 2018,
Avoid tax time surprises with an estimated payment, advises the IRS. The Tax Cuts and Jobs Act brought many changes, including lower tax rates for most people. While the IRS expects that most taxpayers will still get refunds, a larger-than-usual number of people will owe taxes and possibly penalties. At greatest risk are two-wage-earner households, employees with nonwage sources of income and those with complex tax situations. You may be able to avoid shortfalls by making an estimated payment for 2018 by the 1/15/19 deadline.
The IRS announced a phaseout of the tax credit for Tesla plug-in electric vehicles. The reason? Tesla, Inc. has sold more than 200,000 vehicles eligible for the plug-in electric drive motor vehicle credit during the 3rd quarter of 2018. Thus, a phaseout of the credit available for purchasers of new Tesla plug-in electric vehicles is triggered beginning 1/1/19. The tax code provides a credit that begins to phase out for a manufacturer’s vehicles after a certain number have been sold for use or lease in the United States.
The IRS announced the 2019 standard mileage rates. The optional mileage allowance for owned or leased vehicles (including autos, vans or pickups) will rise 3.5 cents to 58 cents per mile for business travel. Employers can also use the rate to reimburse employees who supply their own autos for business use and to value personal use of certain low-cost employer-provided vehicles. The rates for medical purposes will rise 2 cents to 20 cents per mile and the rate for driving in service of charitable organizations will remain 14 cents per mile.