The Internal Revenue Service began a new private collection program of certain overdue federal tax debts selecting four contractors to implement it.
The new program, authorized under a federal law enacted by Congress, enables these designated contractors to collect, on the government’s behalf, outstanding inactive tax receivables. Authorized under a federal law enacted by Congress in December 2015, Section 32102 of the Fixing America’s Surface Transportation Act (FAST Act) requires the IRS to use private collection agencies for the collection of outstanding inactive tax receivables.
The idea has been tossed around for years, and politicians love to suggest it would be a priority, but the postcard 1040 might finally become a reality.
As part of a larger effort to help taxpayers, the Internal Revenue Service plans to streamline the Form 1040 into a shorter, simpler form for the 2019 tax season.
In 1967 and again in 1992 the Supreme Court said a physical presence was required for retailers to be required to collect and remit sales tax. These two cases (National Bellas Hess, Inc. v. Department of Revenue of Ill., 386 U.S. 753 and Quill Corp. v. North Dakota, 504 U.S. 298) have now been overturned in a 5-4 verdict with what the Supreme Court says were "incorrect interpretation[s] of the Commerce Clause."
Without the physical presence requirement, states can now claim nexus for sales and use tax purposes, and sellers will have to deal with tax requirements at buyer locations.
Meals and entertainment expenses have a long history in business. They have been used to strengthen business relationships with colleagues, peers, and existing or potential clients. The deductions allowed have varied depending on the type of expenditure.
Under the new Tax Cuts & Jobs Act the amounts of deductions allowed have been updated effective January 1, 2018. Following is a quick analysis of the old and new rules.
Typically when property is sold any gain must be reported as taxable income. IRS Code Section 1031 allows for the deferral of tax of gain on sale of property by so-called like-kind exchanges, also known as 1031 exchanges. They work under the simple premise implied by the name: property is exchanged for like-kind property, and when all the rules are followed any gain that would have been taxable is deferred.
The deferral is allowed because the basis in the newly acquired property is reduced by the amount of gain recognized. Thus, the gain is eventually recognized when the new property is sold, because the decreased basis increases the amount of gain on sale (unless, somehow, the gain is deferred again by another like-kind exchange).
The Tax Cuts and Jobs Act changed the way tax is calculated. The IRS encourages everyone to perform a “paycheck checkup” to see if you have the right amount of tax withheld for your personal situation.
Among the groups who should check their withholding are:
Among many other changes, the recently passed Tax Cuts and Jobs Act increased the standard deduction, removed personal exemptions, increased the child tax credit, limited or discontinued certain deductions, and changed the tax rates and brackets. To help account for these new changes to the individual income tax the Internal Revenue Service has issued a new 2018 Form W-4, Employee’s Withholding Allowance Certificate.
The IRS explained that certain taxpayers would be more likely to have a change in their tax situation necessitating filing a new Form W-4 with their employers, including two-income families, taxpayers with two or more jobs or who work only part of the year, taxpayers with children who will claim credits such as the child tax credit, and taxpayers who itemized deductions in 2017.
Getting a tax benefit out of your home just became a little more difficult.
Homeowners have long used the equity in their homes as collateral to secure loans. Whether a home equity loan (typically fixed amount, term, and payment) or a home equity line of credit (a revolving credit line), individuals borrowed to get cash. The interest paid on these loans was often reported as mortgage interest for taxpayers itemizing on Schedule A.
Business expenses are best deducted in the business. Sometimes business expenses are paid for by an individual, and then reimbursed by the business. Occasionally, however, the expense is not reimbursed by the business, and an individual reports the unreimbursed business expense as a deduction on Schedule A.
This type of deduction has been considered an audit red flag in the past. However, thanks to the new tax law, this red flag is going away. You’ll want to make sure you are reimbursed for any business expenses, since starting with 2018 these deductions are eliminated for individuals. If you have some unreimbursed business expenses for 2017, get it reported to take your last tax deduction. But moving forward, make sure you get reimbursed by the business.
It won't be a bill for much longer.
On December 15 a joint committee on taxation, with representatives from both the House and the Senate, agreed to legislation that will significantly affect taxation for at least the next several years. Here are some of the more significant provisions.
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