DIVORCE AND THE TCJA

The new tax law known as the Tax Cuts and Jobs Act will impact married taxpayers who divorce after December 31, 2018.  Like they say, “timing is everything,” and that is certainly the case here.

Before the TCJA, alimony was deductible on the tax return of the spouse who paid alimony, and reported as income on the return of the spouse who received the alimony.  The TCJA changed that.  If you sign a divorce or separation agreement after December 31, 2018, alimony payments are not deductible by the payor and are not included in income of the payee.

So, if you are in the process of a divorce and will be paying alimony, hurry up and sign those papers!  If you will be on the receiving end of those alimony payments, you’ll want to move more slowly. 

Consider using the loss of the tax deduction to negotiate a lower payment if you will be paying alimony.

If you are currently paying or receiving alimony from an agreement that was signed before December 31, 2018, you may still deduct payments of alimony and must include alimony payments received in income on your return.

Honorine M. Campisi, CPA

What do the changes in Business Expense Deductions for Meals and Entertainment mean for your business?

The IRS has recently issued new guidelines for these deductions:

• Any expense related to activities generally considered entertainment, amusement or recreation have been eliminated and are no longer deductible.
• Businesses can continue to deduct 50% of the cost of business meals.  An employee or the taxpayer must be present and the food and beverages cannot be considered lavish
• The meals must be provided to a potential or current business customer, consultant, client or similar business contact.
• Food and beverages purchased during an entertainment event will not be considered entertainment if it is purchased separately.

The IRS expects to publish proposed regulations clarifying when business meals are deductible and what constitutes entertainment.

Stay tuned for further guidance on these issues!

Christine A. Murphy

Accounting Manager

What are the rules for NYS Sales tax for my profession? --This blog’s industry is Interior Decorating and Design Services.

What are the rules for NYS Sales tax for my profession?

In this blog we are highlighting another industry with a few of the broad guidelines to follow!  Our hope is to not only provide helpful information for the business owners, but the consumers as well!

This blog’s industry is Interior Decorating and Design Services.

First, it is important to know what an interior decorating and design service is.  An interior decorating and design service is any service that generally relates to the planning and design of interior spaces. Such services include:

·         Preparation of layout drawings pertaining to the planning and design of interior spaces

·         Furniture arranging

·         Staging

·         Interior floral design

·         Any similar services

Any interior decorating or design service is taxable if those services are delivered in New York State or if they have a place of business in New York State.  Interior decorating and design services do not include services that consist of the practice of architecture or engineering.  However, if a drawing or plan is sold to a licensed architect or engineer, that is a taxable service.  If an engineer or architect uses an interior decorating or design service, the use of that service is subject to a use tax.  The tax rate for an interior decorating and design service depends on where the service is delivered or used. In other words, the sale of an interior decorating or design service is taxable where the plan was delivered to the purchaser.  For example, a plan that is purchased in Nassau County is subject to the Nassau County sales tax rates, regardless of where the property that is subject of the plan is located. On the other hand, a plan that is purchased in Delaware is not subject to New York State and local sales tax since the plans were delivered outside of New York State.  This is just a brief overview of the sales tax laws regarding the sale of interior decorating and design services.  Feel free to give our office a call for more information.

By Renee Greenspan