Knaub & Company, P.C.

certified public accountants

PO Box 161030, Big Sky, MT 59716

Phone: 406-995-6040

Fax: 406-993-2772

Email: knaubco@3rivers.net

July 2018

July 2018 Q and A

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Question

I heard the new tax changes affect depreciation on business-owned automobiles. What are the specifics?


Answer

The Tax Cut and Jobs Act increased annual depreciation caps on passenger cars. Depreciation on both new and used vehicles acquired and placed in service during 2018 (with a bonus first year depreciation deduction) is capped at $18,000, $16,000, $9,600 and $5,760 for service years one through four. The latter cap also applies after the fourth year. Depreciation limits for business vehicles without the bonus deduction are $10,000, $16,000, $9,600 and $5,760 for service years one through four.


Question

My parents want to give a gift to my son to help pay his college tuition. Will this affect our financial aid?


Answer

Yes, it will likely affect what’s known as your Expected Financial Contribution (EFC), which the federal government, colleges and universities use to determine scholarships. A dependent student is expected to pay a higher percentage of income for college expenses than parents, so giving your son the money directly will likely decrease any financial aid. Your best bet is to have the grandparents make the gift to you or pay some expenses directly for the least effect on financial aid.


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