The holiday arrival of the most massive United State tax code overhaul in decades meant Paul Dougherty of EisnerAmper LLP was hard at work during a time when office buildings can be cricket-chirp quiet.
It’s the sound of phone calls that will ring in the new year for Dougherty, tax partner at one of the region’s top full-service advisory and accounting firms.
That’s because he’s busy with questions from clients regarding the Republican tax plan that was officially signed into law by President Donald Trump on Dec. 22, which provided only about a week for Dougherty’s clients to figure out what they should be doing before the calendar year ends Sunday.
One of the calls he fielded during his hectic holiday workweek was from ROI-NJ. In an interview, he listed some of the main takeaways he told clients to keep in mind as the year ended.
- Defer, defer, defer
“With regards to companies, and to some individuals as well, one of the best things it seems you can do with the last days of 2017 is to accelerate deductions and defer income while the rates are higher. So, anything you can do to achieve that — and there are a lot of things companies can do — is going to be an effective strategy, even if time is limited.”
- A bonus tip
“Some companies are looking to accelerate bonuses, too. You might want to give something extra this year, because you’re going to get a tax deduction based on this year’s 35 percent rate. Immediately after the bill was signed, you had a bunch of companies doing that — Wells Fargo, Comcast, Boeing and others that were giving $1,000 or so bonuses because of the rate reduction.”
- Capitalize on expenditures
“It’s hard with companies running out of time, but companies should also think about possible capital expenditures. If you were thinking about buying a piece of equipment, you’d be able to write off the full amount of purchase at a higher rate, which means it’s worth more this year.”
- Examine employee expenses
“Now’s the time for employers to rethink expense reimbursement policies. With the changes to itemized deductions, you might see a big impact on employees who paid for things working from home — such as office supplies or a cell phone for work — and then those people were able to take tax deduction for it. The loss of this may mean companies have to change policies, especially if they have something like a big sales force working remotely.”
- Do not donate unwisely
“With the higher standard deduction, we’ve been telling individuals about bunching itemized deductions, so they’ll be in excess of that figure. One of the ideas is for charitable donations, through something called a donor-advised fund, which all the investment houses have. If you contribute money to that fund, it doesn’t have to all be given in current year — you can pay it over a number of years and get the deduction year it’s in.”