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Tax Talk: July Tax News Roundup

Are you helping your clients stay informed of the latest tax happenings? Newsworthy tax stories occur year-round, and the off-season is no exception. If you’re feeling out of the loop, we’ve got good news! We rounded up the biggest tax stories from the last month to help tax pros stay current and keep clients in-the-know.

Here are a few recent stories tax pros should know about.

Tax Refunds For Injured Veterans

Easily one of the biggest stories in tax this month – The IRS is issuing refunds for qualifying veterans who received disability severance payments after Jan. 17, 1991, and included that money as income when they filed their tax returns. The refund is due largely to the Combat-Injured Veterans Tax Fairness Act, which became law on Dec. 16, 2016. (Learn more)

IRS Tax Forums

There’s still time to attend an IRS Tax Forum 2018! Every year, the IRS puts on these incredibly informative and helpful seminars across the country. The Tax Forums are a great way for tax pros to network and keep up with the latest news and best practices. San Diego (August 7-9) is sold out, but there’s still time to register for Chicago (August 21-23) and Orlando (Sept 11-13). (Learn more)

IRS Working on New 1040

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. The new 1040 – about half the size of the current version — would replace the current Form 1040 as well as the Form 1040A and the Form 1040EZ. According to the IRS, the new approach “will simplify the 1040 so that all 150 million taxpayers can use the same form.” (Learn more)

House Passes Repeal of Medical Device Tax

The House approved a repeal of the Affordable Care Act’s medical device tax, along with a bill that prohibits the IRS from rehiring any employee who was fired for misconduct. Implementation of the 2.3 percent excise tax has repeatedly been delayed by Congress ever since the passage of the ACA in 2010, in part thanks to lobbying by medical device manufacturers. (Learn more)

House Committee Introduces Tax Reform 2.0

With many of the provisions of the Tax Cuts and Jobs Act (TCJA) now in effect, Congress has begun pushing for further tax reform. While concrete details are currently “still scarce”, the current framework calls for discussions on permanent tax cuts, new retirement savings plans, expanded 529 education savings accounts, improvements affecting entrepreneurs, and more. (Learn more)

Know of an important tax story we missed? Let us know and we’ll include it in a future roundup!

source https://www.theincometaxschool.com/blog/tax-talk-july-tax-news-roundup/

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Want to Pass the Enrolled Agents Exam? We’ve Got What You Need

If you’re like so many tax professionals out there, you’ve been doing taxes for a while and feel like you really know your stuff. However, you haven’t yet obtained the ultimate tax professional credential: Enrolled Agent status. Yeah, it’s a really big exam. But did you know that you don’t have to take it all at once? You have two years to complete all three parts. That means, you can study and pass one section at a time? Making the process so much more manageable!

So what’s holding you back? 

We’re excited to announce a new partnership with Surgent EA Review (formerly Exam Matrix EA Exam Review) to offer the leading Enrolled Agent exam prep course in the industry.

Surgent EA Review students achieve pass rates of over 80% and study half the time of the other guys!

Three things to know about the EA Exam

1. After taking our Comprehensive Tax Course and working as a tax preparer for a couple of years, odds are good you can pass “Part 1 – Individuals” of the EA Exam. You can solidify that tax education knowledge by taking Surgent’s “Part 1- Individuals – EA Review Course“. Then you can sit for Part 1 of the EA Exam. When you pass it, you’ll already be 1/3rd of the way there!

2: “Part 2 – Businesses” of the EA Exam is the hardest part to pass. It’s probably because so many tax preparers don’t focus on small business tax returns. Our Small Business tax courses can help you prepare for Part 2, and then you can back that knowledge up with Surgent’s “Part 2 – Businesses – EA Review Course“. Pass Part 2 of the EA Exam and you’re more than half way there!

3: “Part 3 – Representation, Practice and Procedures” of the EA Exam is about the rules and regulations for tax preparers. This part is more about understanding the rules and regs required for tax preparers than it is about preparing actual returns. You can study Surgent’s “Part 3 – Representation, Practice and Procedures – EA Review Course“, and then you’ll be ready to sit for, and pass, Part 3 of the EA Exam! Once you have successfully completed all 3 parts of the EA Exam you can apply to become an Enrolled Agent!

We Know You’ll Pass the Exam with help from our courses and Surgent’s EA Review! Here are 6 reasons.

1. A.S.A.P. Technology – This adaptive software generates daily study sessions customized to your needs! This helps you focus on weak areas…turning them into strengths!
2. Integrated Study Planner Tool – This helps determine exactly how many hours you’ll need to devote to preparing for the EA exam based on your exam date, chosen study days, and mastery of material.
3. Daily Surge Dashboard – This is your EA study material lineup, made up of Q&A and reading material.
4. Unlimited Practice Tests – So you can go into the exam fully prepared.
5. Trending Scores Indicates your performance. So you know exactly when you’re ready to pass the EA Exam!
6. Surgent’s Pass Guarantee Pass or your money back.

Summer is the perfect time to get started on your way to E.A. As an Enrolled Agent, you can charge more, and market your tax expertise to potential clients.

Learn more about the Enrolled Agents Exam:

The Path to Enrolled Agent

How to Succeed As An Enrolled Agent

The Benefits of Becoming An Enrolled Agent

 

source https://www.theincometaxschool.com/blog/pass-the-enrolled-agents-exam/

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Heat wave tips for keeping yourself, pets & taxes cool

It's hot. Not just here in Texas, but across the United States. In fact, around the world.

That means we all need to be careful. More careful than the hubby, who decided to mow our yard yesterday. And not during the relative cooler morning when temperatures were in the 80s, but in the afternoon when the thermometer nudged 100 and it felt even hotter. It wiped him out for the rest of the day and evening.

I love my man, but I guess it's true that the heat does make us do dumb things.

Deadly heat: Excessive heat also tends to be more dangerous that other weather extremes and, according to U.S government data, results in the highest number of annual deaths among all weather-related hazards.

That's why in times of extreme heat, which officially is defined as a long period (2 to 3 days) with temperatures above 90 degrees, we need to take extra care, especially if you live in an area of accompanying high humidity.

During these hot periods, evaporation is slowed and our bodies must work harder than usual to maintain a normal temperature. That added exertion can be deadly.

Remember as temperatures climb that:

• Extreme heat can occur quickly and without warning.
• Older adults, children, and those who are sick or overweight are at greater risk from extreme heat.
• Animals suffer as much as their human family members.

Take care of everyone: So that means we need to take care of ourselves, as well as those we love. This means our friends and family, including the furry ones.

And that brings me to today's Saturday Shout Out. It's an infographic shared by the aptly named Daily Infographic on 16 ways to help your dog fight the summer heat.

Some of the tips, excepted below, are just common sense.

Others you might not have thought about because you're in good shape, maybe better than your pooch.

And while the creative visual advice focuses on canines, many of these tips apply to cat and other animal lovers, too.

Check out all 16 tips on the full infographic and take care of your furry best friend and all your other pets, too, during this hottest season of the year.

Care tips for humans: Now that you've got your fur babies cooled, it's time to chill out with your family and friends and help them also avoid the ill effects of heat.

Stay in air-conditioned space if possible. If your home is not air-conditioned, go to a public library, shopping mall, heat-relief shelter or other cool location.

If you are outside, find shade. Wear a hat wide enough to protect your face.

Drink plenty of non-alcoholic fluids. Check with your doctor if you are usually supposed to limit your fluids.

Wear loose-fitting, lightweight clothing.

Cut back on exercise. 

As with your pets, never, ever, for even just a minute leave anyone of any age (but especially not children or older people) in an enclosed, parked vehicle.

Leaving the auto's air conditioning on isn't an acceptable excuse either. An inadvertent swipe of an arm could cut off the cooling and the person in the vehicle might not know how to restart it. And errands generally take more than just 60 seconds.

Recognize and respond: Even after taking precautions, sometimes the heat wins. Here are the most common heat-related illnesses and how to respond to each.

Heat cramp signs include muscle pains or spasms in the stomach, arms or legs. If you or someone experience these symptoms, go to a cooler location. Remove excess clothing. Take sips of cool sports drinks with salt and sugar. Get medical help if cramps last more than an hour.

Heat exhaustion is indicated by heavy sweating, paleness, muscle cramps, tiredness, weakness, dizziness, nausea or vomiting, headache or fainting. In cases of suspected heat exhaustion, go to an air-conditioned place and lie down. Loosen or remove clothing. Take a cool bath. Take sips of cool sports drinks with salt and sugar. Get medical help if symptoms get worse or last more than an hour.

Heat stroke is the most severe heat-related malady. Signs include extremely high body temperature (above 103 degrees on an oral thermometer); red, hot, and dry skin with no sweat; rapid, strong pulse; dizziness; confusion; or unconsciousness. In these cases, call 911 or get the person to a hospital immediately. Cool down with whatever methods are available until medical help arrives.

Spreading the cool: After you've ensure you and yours are safe from the heat, consider helping those who aren't as fortunate.

Here in Austin, Family Eldercare, in partnership with (among others) the local NBC affiliate KXAN, holds an annual fan drive to get enough of the cooling units to folks who don't have air conditioning. The primary recipients of the new box and oscillating fans are Central Texas seniors, adults with disabilities and families with children.

I suspect this type of program is replicated across the country, so check with your local social services.

Also touch base with your utility company. Many offer customers the option to pay a little extra with each bill, with the added dollars going to a fund to help those who need help keeping the A/C operating (or the heat in the winter).

If your electric or gas company doesn't have such a program, check out charities that focus on helping folks pay their bills. A secondary Saturday Shout Out goes to NeedHelpPayingBills.com, which tracks, as the website's name indicates, groups that help folks cover their day-to-day expenses. In the summer, higher cooling costs put extra pressure on these individual's and families' resources.

And to get back to pets, consider giving to your local animal shelter. Utility bills are a big cost for the agencies that provide a cool summer place for pets until they chill out in their forever homes.

Tax thanks for giving: While I'm sure you're giving this summer and year-round because you want to, remember that the tax deduction for charitable gifts is still on the tax books.

True, most folks now will claim the increased standard deduction amount instead of messing with itemized deductions on Schedule A.

But if you do still itemize, note that while several expense claims were reduced or eliminated by the Tax Cuts and Jobs Act, the deduction for charitable donations remains.

In fact, cash gifts got a bit of a boost under the new tax law. Those who are able to give a lot can now claim charitable cash donations that are up to 60 percent of their adjusted gross income, an increase of the previous 50 percent limit.

So if you do give to help others stay cool and safe, thank you.

And if you can get a tax break for your generosity, be sure to claim your tax thank you when you file your return next year.

You also might find these items of interest:

• Tax reform could cost charities $13 billion a year
• 9 ways to maximize your charitable tax deduction
• Volunteer time is not tax deductible, but some related contributions might be 

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source http://www.dontmesswithtaxes.com/2018/07/heat-wave-tips-for-keeping-yourself-pets-chilled-and-cool-tax-deduction.html

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Tax, Tech and Form 1099 - H.R. 5377

H.R. 5377, Creating An Online Platform For Instant 1099 Submissions Act, introduced in March 2018 by Congressman Renacci (R-OH), a CPA, calls for something that should already be part of our tax system. H.R. 5377 "directs the Internal Revenue Service (IRS) to provide taxpayers with online access to IRS resources and guidance that will allow them to: (1) prepare and file Forms 1099, (2) prepare Forms 1099 for distribution to recipients other than the IRS, and (3) create and maintain necessary taxpayer records. The IRS must ensure that the online services required by this bill: (1) are a supplement to, and not a replacement for, other services provided to taxpayers by the IRS; and (2) comply with security standards developed by the National Institute of Standards and Technology.

Just like we can pay bills online, order goods and services online, why can't a business complete a Form 1099, such as for payment to a contractor, online with it being automatically sent to the contractor and the IRS?

H.R. 5377 would give the IRS until 2021 to get the system working.  Seems reasonable.

What do you think?

source http://21stcenturytaxation.blogspot.com/2018/07/tax-tech-and-form-1099-hr-5377.html

5 Summer Tasks To Help Grow Your Business

Summer is full swing! While many tax pros are soaking up some well-deserved sun after a busy tax season, many are also using this time to grow their business. Whether you’re reading this blog post at the beach, on vacation, or even while relaxing at home, we’ve got good news. There are lots of ways to grow your business during the off-season, no matter where you are or how much downtime you have.

Generally speaking, summer is an excellent time to take care of those business tasks you simply just can’t get to during the busy months. It’s also an excellent opportunity to re-evaluate for next year. What went well? What could be improved? What needs to go to make next year a success for both you and your clients?

Don’t waste this precious time waiting for tax season to rev up again. Here are 5 easy ways to improve your tax business and make the most of your summer.

Create a marketing plan 

Get strategic. Hone in on your target audience and how you can reach them. Remember, having any marketing plan is better than no marketing plan. By taking time to plan in the off-season, you’re better able to communicate your services to those who need them most. Review those surveys you sent out, review your marketing metrics, and decide what worked and what didn’t. Refine what worked, throw out what didn’t, and try something new!

Read our Ultimate Marketing Plan Checklist for more on creating a marketing plan for your tax business, or check out our Tax Business Marketing Manual.

Take CE Courses

Are there any courses you’ve been thinking about taking, but just never have time for? Do you have CE credits looming that need to be taken by the end of the year? Why not knock them out in your down time? This way, you’ll keep your skills sharp, learn something new, and satisfy the IRS requirements. Check out our CE Course offerings and bundles.

Go golfing

Seriously! Whether golfing or some other activity, networking is always good business. Your local Chamber of Commerce or other professional groups are bound to have a mixer. Spend some time making connections, offer up your expertise to speak at a luncheon about the new tax laws of the W4. When tax time comes around, you’ll be glad you did. 

Here are some more networking tips to try this summer.

Research technology tools

Are there any tasks you just can’t stand doing, or that eat up a lot of time better spent elsewhere? A tech solution likely exists! Spend even just a few minutes here and there reading up on what’s out there. What tools can save you time? Which ones are the best to buy? If you’re skeptical about purchasing before demoing a new solution, many tools offer free trial versions you can become familiar with while work is quiet.

Here’s a good list of tools to check out that will get you started with research.

Make positive upgrades

Install faster internet. Hire and train an assistant. Shred outdated documents to free up storage space. Spend time reviewing things that you need to change. It may not seem like growth now, but small adjustments will make things more efficient later.

We hope you find these tips helpful! As year-round tax pros ourselves, we’re always looking for new ways to improve during the off-season. Have a suggestion that’s worked for you that others should know about? Leave a comment and let us know.

source https://www.theincometaxschool.com/blog/summer-tasks-grow-your-business/

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Soda taxes go flat in California, possibly Washington

With apologies to Charles Dickens, it is the best and worst of times for soda taxes.

News out of Washington State today is that Seattle's sweetened beverage tax raised about $1 million more than predicted in its first three months.

Seattle's tax — similar to others across the United States that tax a variety of sugary beverages but are popularly called soda taxes — took effect on Jan. 1, 2018.

In its first three months as law, it reportedly raised almost $4.5 million. If that pace holds throughout the rest of the year, it will blow past the city's budget office estimate that the tax would bring in nearly $15 million in its first year.

Lawmakers who supported the 1.75-cents-per-ounce tax on certain drinks say it was enacted as a way to help reduce obesity and diabetes among Seattle's residents. A Seattle King County Department of Health representative said it's too early to know if the tax is having its intended health effects.

Meanwhile, though, the local government is not turning down the tax revenue.

Seattle's tax success, however, could be the state's last, at least for a while.

Washington food and beverage referendum: Evergreen State opponents of soda taxes believe they have enough petition signatures to require voters to decide about any future new soft-drink and food taxes in Washington.

Initiative 1634, if it does qualify to make it onto November's state ballot, would leave Seattle's soda tax in place, but would prohibit other city and county governments in Washington from taking up similar measures.

The anti-tax fight is spearheaded by Yes! To Affordable Groceries, which was created in late February, two months after Seattle's soda tax took effect. The group says it formed to fight the price increases that consumers and small businesses face when food and beverage taxes are enacted.

The group is supported by, among others, labor organizations and farm, grocery and beverage associations. Yes! To Affordable Groceries' top 5 contributors are, according to its website, the Washington Food Industry Association, The Coca-Cola Company, PepsiCo Inc., Dr Pepper Snapple Group and Red Bull North America.

Last week Initiative 1634 advocates turned in nearly 300,000 signatures that they hope will get the measure before the voters this fall. At least 259,622 valid signatures are needed to qualify an initiative for the November ballot.

Why did the anti-tax group decided to grandfather the state's largest city? Seattle's budget already is in place and is based in part on the expected beverage tax revenue.

"We don't want to take anything away from a city that’s actually operating it," Yes! spokesman Michael Mandell told The Seattle Times. "This is about making sure that going forward, the one tax that shouldn't be included is a tax on food and beverages."

California legislature pre-empts voter referendum: Further down the Pacific Coast, officials in California decided not to wait for voters to decide on soda taxes.

But the Golden State move probably is not what you expected.

California lawmakers agreed to a ban on all new sugary beverage taxes until 2031. In exchange, the beverage industry dropped its support for a Nov. 6 ballot measure that would have curbed all new such taxes in the state.

The decision by politicians in Sacramento was a surprise since the usually reliable liberal and consumer-focused state was a pioneer in soda taxes.

In 2014, Berkeley residents were the first in the country to vote for taxing sugar-sweetened beverages such as soda and juice. Two years later, their neighbors across the bay in San Francisco also approved a local soda tax.

As with the Seattle tax, the San Francisco Bay area's sin tax votes were framed as a way to combat obesity, diabetes and heart disease.

Health concerns, however, were jettisoned last week in lieu of political pragmatism.

Tying up other taxes: The California legislature and Gov. Jerry Brown bowed to pressure from the beverage industry and agreed to ban local taxes on soda for the next 12 years.

If California's soda tax ban had gone to voters and been approved, it would have made it more difficult for the state's cities and counties to raise any type of taxes. So, say the state's legislators, they opted to give in to the beverage industry to protect local jurisdictions' taxing ability and flexibility in other areas.

"This industry is aiming a nuclear weapon at government in California and saying, 'If you don't do what we want we are going to pull the trigger and you are not going to be able to fund basic government services,'" California State Sen. Scott Wiener, a Democrat from San Francisco, told the Associated Press.

The Golden State's move is similar to recent bans in Arizona and Michigan. Oregon, like possibly Washington, will vote on such restrictions in November.

On a more local level, Cook County officials implemented a tax on sugary beverages last summer. But after immediate and intense anger from Chicago area residents, repealed the penny-per-ounce soda tax a few months later. 

You also might find these items of interest:

• The fine art of social policy taxation
• U.S. MexiCoke fans fear effect of Mexico's new soda tax
• Navajo lawmakers approve 2% sales tax on snacks, sodas

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source http://www.dontmesswithtaxes.com/2018/07/soda-tax-fights-california-surrenders-washington-state-voters-ballot-initiative.html

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A look at the new Form 1040 and schedules

Postcard Size Form 1040 for 2018 - What?

Front:

Back:

For many years, some lawmakers and others touted a postcard size tax return as an indication that tax simplification had been achieved. Professors Hall and Rabushka had one on the cover of their flat tax book released in 1985 (flat tax first proposed in a Wall Street Journal op ed in 1981). Their brief return was truly simple because the flat tax only included a few items in income and only allowed a standard deduction and personal exemption. But you'll see that there was no place to sign.

Leading up to the Tax Cuts and Jobs Act (PL 115-97; 12/22/17), a postcard size return was touted by President Trump, Speaker Ryan and others.

Well, this past week, Treasury and IRS released a postcard size Form 1040:

• IR-2018-146 (6/29/18)
• Treasury

Observations:

• Unlike a postcard, the form will need to be sent in an envelope since it is 2-sided with tax information and there is no room for the sender's address. Also, you'll likely want to include your address and not want the world to see your Social Security Number on the card.
• I asked my graduate students the other day how many had ever sent or received a postcard - about 21% had.  Postcards are really a thing of the 20th and 19th century.
• Today, about 80% of returns are e-filed (ETAAC 2018 report, page 6).
• Most returns are filed via software where it really doesn't matter how many lines are on the return. In fact, software would make it possible to produce a return that only shows the lines you needed. 
• The postcard lists more than five schedules and there might also be one for the Section 199A Qualified Business Income Deduction. The schedules and attachments:
• • More than 2 dependents
  • Schedule 1 – add’l income and adj to income
  • Schedule A if itemize
  • Section 199A deduction – line on page 2; still waiting to learn if there is a form or worksheet for it
  • Schedule 2 - Tax if have net capital gains
  • Schedule 3 – Credits other than Child and dependent
  • Schedule 4 – other taxes
  • Schedule 5 – other payments orrefundable credits
• Will there also be postcards for 1040EZ and 1040A?

What do you think?



source http://21stcenturytaxation.blogspot.com/2018/07/postcard-size-form-1040-for-2018-what.html

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