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Tax Reform and Fringe Benefits

October 19, 2018


The new Tax Law affects several programs, including changes to fringe benefits, which can affect an employer's bottom line and its employees' deductions.


Some of these changes that will affect employers are:


Entertainment Expenses & Meal Deductions


You will no longer be able to deduct any expenses related to activities considered entertainment, amusement or recreation.
However, under the new law, you can continue to deduct 50 % of the business meals if you or an employee of the company is present, and the food is not considered lavish or extravagant. The meals may be provided to a current or potential business customer, client, consultant or similar business contact. Food and beverages that are purchased during entertainment events will not be considered entertainment if either of these apply:

  • they are purchased separately from the entertainment

  • the cost is stated separately from the entertainment on one or more bills, invoices or receipts


Qualified Transportation

The new law also disallows deductions for expenses associated with qualified transportation expenses. There is an exception when the transportation expenses are necessary for employee safety.


Bicycle Commuting Reimbursements

Under the new law, a business can deduct qualified bicycle commuting reimbursements as a business expense, although these reimbursements must now be included in the employee’s wages.
Qualified Moving Expenses Reimbursements

Businesses must now include moving expense reimbursements in employees’ wages.

There is one exception as members of the U.S. Armed Forces can still exclude qualified moving expense reimbursements from their income if they meet certain requirements.


Employee Achievement Award

Special rules allow an employee to exclude achievement awards from their wages if the awards are tangible personal property. A business also may deduct awards that are tangible personal property, subject to certain deduction limits. The new law clarifies the definition of tangible personal property.


Please remember that LR Tax & Accounting Services, Inc. is always here to help with any questions and concerns. We offer tax planning, tax resolution, tax returns for individuals and business, accounting, payroll and bookkeeping. Please contact us today to get a quote or ask a question!


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