Tax forms get a remodel. The Tax Cuts and Jobs Act has brought many changes, including physical modifications to some tax forms. Form 1040 is now significantly smaller and has far fewer lines. Also changed is the due date listed. While the tax filing deadline for most taxpayers is 4/15/19, calendar year filers who live in Maine and Massachusetts will have until 4/17/19 to file. Forms 1040A and 1040EZ have been eliminated for 2018,
The TCJA didn’t change the research credit, but it has an impact on the credit. Previously, corporations subject to alternative minimum tax (AMT) couldn’t offset the research credit against AMT liability, which erased the credit’s current benefits. By eliminating corporate AMT, the TCJA removed this obstacle. Pass-through businesses can still claim the credit against AMT if their average gross receipts are $50 million or less. And qualifying start-ups without taxable income can still claim the credit against up to $250,000 in payroll taxes.
The IRS reminds taxpayers to take advantage of their employers’ Flexible Spending Accounts (FSAs) in 2019. For 2019, the contribution limit is $2,700. If an employer chooses, employees can carry over up to $500 of unused funds into 2020. Otherwise, FSAs have a “use or lose” provision. FSAs provide employees a way to use tax-free dollars to pay medical expenses not covered by other health plans. Amounts contributed aren’t subject to federal income tax,
A taxpayer can generally deduct a bad debt in the year it becomes worthless. But these deductions are disallowed if the debt is owed by a political party. One taxpayer claimed a bad debt deduction for an unpaid loan he made to a now-defunct 501(c)4 organization. He stated the organization wasn’t a political party, but existed to advocate for better public education. In Chief Counsel Advice, the IRS said the 501(c)4 was a political party,
Disaster victims in Wisconsin qualify for tax relief. The IRS announced that victims of severe storms, flooding and landslides in Wisconsin counties designated as federal disaster areas qualifying for individual assistance have more time to make tax payments and file returns. The following Wisconsin counties are designated federal disaster areas: Crawford, Dane, Juneau, La Crosse, Monroe, Richland, Sauk and Vernon. For affected counties, the onset date of the disaster was 8/17/18 and the extended filing deadline is 12/17/18.
Taxpayers that have a tax dispute may request a hearing before the IRS Office of Appeals. They then raise issues to be considered. One taxpayer was found to owe $39,737. Instead of paying it, he sent a check on a related matter, for $1,396, with a letter instructing the IRS that, if this amount didn’t satisfy his full tax bill, the check shouldn’t be cashed. The check was cashed, and he was sent a notice of deficiency for the balance.
President Trump announced he will propose a middle-income tax cut and that Congress would vote on it soon. Trump said that his administration is studying a tax cut for middle-income earners but it’s unclear if or when a vote could happen. While the House has recently passed legislation that would make the individual tax cuts in the Tax Cuts and Jobs Act permanent, the Senate hasn’t taken up the proposed legislation because it’s concerned about increasing the deficit.
The IRS and the Treasury Dept. have issued proposed guidance for the new Opportunity Zone tax incentive. This incentive was passed as part of the 2017 Tax Cuts and Jobs Act, and designates as Opportunity Zones, 8,761 communities in all 50 states, the District of Columbia and five U.S. territories. Investors that make appropriate investments in the zones can defer tax on almost any capital gain achieved, through 12/31/26. To qualify, an investor must have made an election after 12/31/17,
IRS video tax tip: Tax Exempt Organization Search (TEOS) http://bit.ly/2Klxhm5
Getting extra time to file information returns will be a bit harder for some businesses. Previously, employers and others that couldn’t timely file forms W-2, 1099, 1042-S and 8027 could get automatic 30-day extensions. The IRS has issued a revised November 2018 Form 8809 (Application for Extension of Time to File Information Returns), adding boxes to check when the late forms include Forms W-2 or 1099-MISC with nonemployee compensation. The boxes explain why the extension has been requested.
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