Tax Bites: New Tax Law... Touchdown or Fumble?

Kathleen S. Vaccaro

Kathleen S. Vaccaro, EA

January 30, 2018

By now, you should have received your 2017 tax organizer package. New this year are "client portals" if you would like a secure method to send and receive your documents electronically. You can access your portal and find other useful information on our new website.

I'm sure you've also heard about the new tax law, which represents the biggest change to the US tax code in more than three decades. Our team has been tackling the 1,097-page behemoth, which contains many changes that already took effect as of January 1, 2018. For some, it's a touchdown! For others, uh-oh, that's a fumble!

As we are working on your 2017 tax return, we will take time to analyze how the tax code changes will play out for you in 2018 and beyond. We will also let you know if it's time to change your strategy. Our 2018 newsletters will focus on giving you a play-by-play on specific provisions of the new law. In honor of Super Bowl Sunday, this edition highlights one change that hits hard in the corporate-sponsored luxury boxes in Minneapolis.

Go Pats!


Kathleen S. Vaccaro, EA

Goldberg & Vaccaro Tax Services LLC

New Tax Law ... Touchdown or Fumble?

Tom Brady and my younger brother Mark have two things in common.

  1. They are both good-looking guys, and

  2. In my mother's eyes, they can do no wrong.

Like Tom on the football field, my brother Mark effectively used the teenage version of the "quarterback sneak," slipping by our parents with an easy smile and a joke, before heading out for a night of shenanigans.

Proponents of the new tax law have taken a page from Tom's and Mark's playbooks. They distract us from the tax law losers, while focusing our attention on the obvious tax law winners:

  • C-Corporations benefit from a much-lower 21% tax rate

  • Other types of businesses, including sole proprietors, S-Corporations and partnerships, get a new 20% pass-through deduction on their profits.

  • High income individuals benefit from a reduction in the highest rate from 39.6% to 37%

  • Individuals and couples get to double their 2017 "standard deduction" starting in 2018


But as Tom's opponents know all too well, for every well-publicized victory dance in the end zone, there is an off-camera view of the other team's players with heads hung low.

Here are some 2018 tax law changes that could cause a fumble:

  • No more "exemptions." In other words, there is no more deduction based on the number of people in your household. For most middle income taxpayers, if you have more than 3 people in your household, the tax benefits from the increased "standard deduction" won't make up for the loss of exemptions.

  • Maximum $10,000 total deduction allowed for state income and property taxes. This hits hardest in states with high property values and a state income tax. Hello, Massachusetts!

  • Limitations on the 20% pass-through business deduction if your tax return income is more than $157,000 if you file single, or more than $315,000 if you file jointly. These limitations will be the topic of our next newsletter.

  • No more "entertainment" deductions for your business.

Say what?! Rewind the tape! You can't mean the Super Bowl tickets I just bought for my best client?!

Yes, that is what I mean.

Up until the end of 2017, you could deduct 50% of client entertainment costs. According to the new tax law, this deduction is gone. Done. Finito. No more Celtics, Bruins and Patriots tickets. No more golf outings. Starting in 2018, you can no longer deduct "an activity generally considered to be entertainment, amusement or recreation, even if it is directly related to your business."

The writers of the new tax law don't seem to care much for sports. In addition to eliminating the "entertainment" deduction, they have also specifically removed the deduction for college season subscribers and others who make a "charitable contribution" to get access to athletic event tickets.

Fortunately, Congress still likes to eat. So the 50% deduction for client meals remains intact. That means you can still deduct 50% of any client-related restaurant tab as a business expense in 2018, same as you could in 2017.

Just like the new tax law, the Super Bowl will have its winners and losers. I will be watching the game with my mother, who will be as focused on Tom Brady as if her own son Mark were on the field, throwing the winning touchdown pass.

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Staff Highlight - Patrick O'Sullivan

An avid sports fan, Patrick O'Sullivan has joined our team of tax professionals. He is a Boston University graduate who recently started working on his Masters of Accounting degree. He has previous accounting experience in both large and small firm settings, including JP Morgan and start-up Potamus Trading. As one of the more computer savvy members of our team, he is in charge of setting up the new client portals this year. He works on both individual and corporate tax returns, which will help alleviate the backlog during tax season.

As a side gig, Patrick provides official statistics to TV networks for nationally televised Red Sox games at Fenway Park. He is a trivia buff, and also a Town Meeting member in his hometown of Reading MA.

About Us

Goldberg & Vaccaro Tax Services LLC specializes in tax preparation and accounting services for individuals and small business owners.

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