As 2016 has come to an end, taxpayers need to be proactive in year-end tax planning. The Protecting Americans from Tax Hikes Act of 2015 (PATH Act), was signed into law in December 2015 and made many changes that are effective with 2016 tax returns. Restaurants, in particular, should be aware of the following items in this Act.
Certain accelerated filing deadlines for W-2 and W-3 forms, as well as certain 1099-MISC Forms
Changes to due dates for C-corp and partnership tax returns
Code Sec. 179 expensing is now permanent with various caps and phaseouts
Bonus Depreciation: There is now a new category of property, “qualified improvement property” (QIP)
Research Credit: The PATH Act made the research credit permanent and more useful to small businesses
Work Opportunity Tax Credit: This credit was modified starting in 2016 to include hires of qualified, long-term individuals unemployed for 27 or more weeks
Repair Regulations: Are you taking advantage of the de minimis capitalization thresholds? If so, do you have a written capitalization policy?
Remodel-Refresh Safe Harbor: Restaurants who remodeled in 2016 should consider using this!
FICA Tip Tax Credit: Make sure you claim the credit if your operation has tipped employees.
Food Inventory Charitable Contributions: Several changes for 2016 were made which allows an enhanced deduction for food contributions
Empowerment Zone Credit: This is a credit against federal tax for salary paid to employees who both live and work in designated zones. This credit is applicable for both federal and state credits, if you qualify
Tenant Improvement Allowances: Money received from a landlord can be excluded from taxable income in certain instances