A recipe for taxes…

by | May 7, 2018 | Blog, Taxes | 0 comments

You may have heard that there some changes to the US tax code recently. What you heard is likely some mix of truth or fiction/hyperbole and perhaps you need some help figuring out which is which? If you are looking for a professional take on the new tax rules by someone who can actually explain the changes in simple terms, then keep reading.

A great analogy for the new tax laws is to think of them as an update to an old recipe book, kind of like the Joy of Cooking, which has already passed its 85th anniversary. The Joy of Cooking has published 8 editions, which have been updated semi-regularly since the 1930s, just like our beloved tax code! A lot of fundamental things about cooking/taxes have not changed all that much, despite some of the hype surrounding the most recent tax “update” from late 2017. Cookies still contain flour, water, butter, sugar, and people still pay taxes on types of income and deduct specific things for taxes. Now, the sugar may be organic, the flour imported, or the butter from a sustainable farm, but the way to make a cookie is still intact. The same goes for the tax changes that impact most small business people, the basics are still intact.

This discussion focuses on selected tax changes that impact individuals and small businesses, kind of like referencing the Joy of Cooking for the home chef. A commercial bakery would have to work through some pretty complex math to use the recipes contained in the book – converting cups to metric tons – but for the home chef/small business owner, it’s a great reference.

Let’s begin with some changes to the tax code that are relatively easy to follow, starting with things that are no longer deductible for 2018 – 2023: alimony and meals/entertainment expenses. These changes would be the equivalent of taking the raisins out of an oatmeal raisin cookie; the cookie picked last is now somehow made worse. Previously, way back in 2017, small business owners could deduct half of their meals and entertainment expenses, now Congress is punishing small business owners for eating out too much. That lunch meeting or business vacation is no longer a deduction unless you are able to get creative. Divorces were already expensive before Congress took a swipe at them, now they come without tax breaks! For anyone divorcing during 2019, alimony has no impact on taxes, which is both good and bad, just like an oatmeal raisin cookie (with or without the raisins).

Also on the “no longer a tax thing” listing is the personal exemptions, moving expenses, the ACA (“Obamacare”) penalty, and itemized deductions*. The good news, however, is that the standard deduction nearly doubled, the child tax credit also doubled*, and the tax brackets were lowered. The combination of these changes, with some positive (lower taxes) and some negative (higher taxes), is a possible decrease in overall federal taxes due. The way to relate these changes is to compare them to a chocolate chip cookie recipe. Imagine if you replaced the regular flour with whole wheat flour and substituted dark chocolate M&M’s instead of regular chocolate chips… and you reduced the sugar and chocolate chips by half. The cookie is going to taste similar, but some people might notice the lack of sugar or wheat flour and not every bite is going to contain chocolate like it used to (but some bites might contain DARK CHOCOLATE!). So, if you like dark chocolate and don’t mind the less overall taste (a.k.a. “sugar”), then you might come out ahead during tax time.

GP has not memorized the tax code like we have the Joy of Cooking, but we reference both a lot. If your current is not the advisor you hoped them to be, or you want more dark chocolate M&Ms in your life, GP would love to talk to you about your business. We may even bring cookies!

* These items are not exact and are referenced in general. Itemized deductions did not disappear, they were just narrowed and the child tax credit is only refundable up to $1,400.


Extension season is coming… are you ready?

Many Most Nearly all of GP ’s clients typically do not require an extension in order to timely file their personal and corporate tax returns. This is partly due to our regular contact with our clients and the proactive approach that helps us get ahead of any issues...

Tax Cuts & Jobs Act Nov Update

Tax Cuts & Jobs Act Nov UpdateNovember 2018IRS Says Allows Client and Prospect Business Meal Deductions In Notice 2018-76, the IRS states that client and prospect business meals continue as tax deductions under the Tax Cuts and Jobs Act. This is very good...

Let’s talk about Basis!

“Basis” is a loaded word for accountants. It is very much described in the same regards as “time”, in that there never seems to be enough time when it is needed most. For many shareholders, basis is starting to come into play at tax time and many are unprepared...

QBO v Xero a practical dissertation

is a silver partner, which does not mean that we are in second place, it just means that we are growing (and there is room for improvement). Our firm’s preference is clearly with as far as online accounting platforms and the reasons are many. Rather...

How do I become an S-corporation?

S-corporations (“S-corps”) is the technical term for the federal tax election, aka IRS Form 2553, and are named after their place in the IRS code, subchapter “S.” S-corps are generally limited to two specific business entity types, a limited liability company (“LLC or...

Hi GP CPA Client!

Dear Client:At the rate the company is going, you will end up with an $18,000 tax bill at the end of year.  With about 20 weeks left in the year, we would need to move your payroll up to about $1,000 per week (its currently at $500) and put most of the paycheck...

H. Johns
H. Johns
21:58 13 Jul 19
This firm is absolutely the best that I've dealt with when it comes to CPAs and financial advice. I'd gone to another CPA in the area for help with my small business during tax time, they stopped communicating and I was left with important documentation not filed and a lot of anxiety around what to do. My appointment with Justin was set up quickly and I was in within a couple days to sit down with him. When you first meet him, you get the impression that he's incredibly intelligent and knows what he's talking about. He took the time to me through each and every step that I needed to take to move forward and actually ended up saving me money. I am so grateful to him for his knowledge and professionalism. Total life saver! If you're a small business owner, you should not be taking your time, money or business anywhere else but GP CPA and their crew 🙂read more
Tina Simmons
Tina Simmons
13:38 17 May 19
This team is dedicated to their clients and committed to understanding your business and sharing their knowledge to help you succeed. I love working with these folks, they take the worry and uncertainty out of accounting and taxes!read more
Bravo4 Autowerks
Bravo4 Autowerks
12:55 08 May 19
Gary and his team have been fantastic for me and my business. They respond well to all my questions, are very helpful and of course keep my financials in order. Highly recommended.read more
Queen City Newborn Care
Queen City Newborn Care
15:57 02 Apr 19
I was drowning before I met Justin. He totally transformed how I run my small business and has gotten me organized in ways I didn't even know were possible. I am so grateful for his advice and suggestions! This company is worth every penny.read more
Dennis Bloomberg
Dennis Bloomberg
16:01 26 Mar 19
Unfortunately, I found GMP when my mother passed. She had a trust set up and I had no experience with one. I received excellent advice prior to filing taxes, that allow for the transfer of assets with little tax implication. The tax process was simple for me, Justin took over once he had details and cleared up all question from filing our taxes. Thank you for a job well done!read more
Natalie Knight
Natalie Knight
15:35 21 Nov 18
is up to date on technology. They handcraft a platform that works best for your company's accounting services. We really appreciate how hands on and quick their team is when replaying to any type of correspondence. Simply put, they care and want your company to succeed.read more
Ashlyn Lelej
Ashlyn Lelej
14:39 21 Nov 18
I highly recommend Justin at Prusiensky, CPA for all of your accounting and tax needs. I've been a client for over two years, and have been consistently impressed with their dedication to helping my business grow and be financially successful. His advice is invaluable. Thank you!read more
Bobby Nguyen
Bobby Nguyen
22:23 20 Nov 18
My partner and I started our very first small business last year. Justin has been a blessing to us. Being new at all of this, we didn’t understand much of how business taxes work. Justin explained and answer all of questions that we have. He took care of everything for us throughout the year and have made life so much easier for us. I couldn’t have asked for a better CPA. Highly recommended!read more
Next Reviews


Test your knowledge about NC Sales Tax for Automotive Services [QUIZ]
Unlocking value in real estate
How would like to contact us?