CARL WATTS & ASSOCIATES

May 14, 2018

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Some New Tax Regulations for
the Self-Employed and Small Businesses
To claim the credit, employers must have a written policy that meets certain requirements:

  1. Employers must provide at least two weeks of paid family and medical leave annually to all qualifying employees who work full time. This can be prorated for employees who work part time.
  2. The paid leave must be not less than 50 percent of the wages normally paid to the employee.

A qualifying employee is any employee who:

  1. Has been employed for one year or more.
  2. For the preceding year, had compensation that did not exceed a certain amount. For 2018, the employee must not have earned more than $72,000 in 2017.




For purposes of this credit, “family and medical leave” is leave for one or more of the following reasons:

  1. Birth of an employee’s child and to care for the newborn.
  2. Placement of a child with the employee for adoption or foster care.

  3. To care for the employee’s spouse, child, or parent who has a serious health condition.

  4. A serious health condition that makes the employee unable to perform the functions of his or her position.

  5. Any qualifying event due to an employee’s spouse, child, or parent being on covered active duty – or being called to duty – in the Armed Forces.

  6. To care for a service member who is the employee’s spouse, child, parent, or next of kin.

The credit is a percentage of the amount of wages paid to a qualifying employee while on family and medical leave for up to 12 weeks per taxable year.

An employer must reduce its deduction for wages or salaries paid or incurred by the amount determined as a credit. Any wages taken into account in determining any other general business credit may not be used toward this credit.

The credit is generally effective for wages paid in taxable years of the employer beginning after December 31, 2017. It is not available for wages paid in taxable years beginning after December 31, 2019.


We will bring more news to your attention in the weeks to follow. For now, remember that whether you are self-employed, a business owner, or an employee, help from a tax professional may prove invaluable especially now with all the new provisions and regulations brought along by the Tax Cuts and Jobs Act.
The major tax reform approved by Congress in the Tax Cuts and Jobs Act (TCJA) on December 22, 2017 affects both individuals and businesses.

Although many of the new regulations are already the subject of articles all over the media, the IRS is still expected to provide information and guidance to taxpayers, businesses and the tax community as soon as these are available.


Most recently, new guidance has come forth regarding depreciation deduction and taxes for businesses.

Business taxpayers can generally depreciate tangible property except land, including buildings, machinery, vehicles, furniture and equipment.

Changes to depreciation and how they will affect businesses may include:

Businesses can immediately expense more under the new law; taxpayers may elect to expense the cost of any property and deduct it in the year the property is placed in service.

Maximum deduction increased from $500,000 to $1 million.

The phase-out threshold increased from $2 million to $2.5 million.

The new law allows taxpayers to elect to include improvements made to nonresidential property. The improvements must have been made after the date the property was first placed in service.


These improvements include:
  1. Any improvement to a building’s interior;
  2. Roofs;
  3. Heating and air conditioning systems;
  4. Fire protection systems;
  5. Alarm and security systems.

Improvements that do not qualify include:
  1. Enlargement of the building;
  2. Service to elevators or escalators;
  3. Internal structural framework of the building.

These changes apply to property placed in service in taxable years beginning after December 31, 2017.


The Employer Credit for Paid Family and Medical Leave

Employers may claim the credit based on wages paid to qualifying employees while they are on family and medical leave.

Here are some facts you should know about this credit and how it benefits employers.
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