Delusional tax protester deemed competent to face tax evasion sentencing

Tiffany Haddish just wants a 'thank you' from IRS

Gambling loss deductions still allowed under new tax law

Tax Talk: September Tax News Round-up

As we get closer to the end of the year, there’s plenty of important tax news to go over. One of the most exciting stories is that our founder and CEO, Chuck McCabe, has been named one of Accounting Today’s “Top 100 Most Influential People in Accounting” for the sixth year in a row.

His work with the Income Tax School and tax preparation entrepreneurs seems particularly relevant and necessary right now with major tax reform in place and technology changing at a rapid pace. Accounting Today points out, “At a time when tax practitioners are examining the underpinnings – and the future – of their practices, McCabe’s sage advice on building a strong tax business is more valuable than ever.”

Read the full list of the top 100 influential accountants on Accounting Today

Heading into the fourth quarter, the headlines from this month’s tax news reflect how close we’re getting to tax prep season. The Internal Revenue Service (IRS) is preparing. More stories are popping up about the nitty gritty details of what’s included in the new tax laws. The reality of what returns and tax bills are going to look like is starting to set in. Here are some stories we’ve read this month that tax preparers should know about.

Whether or Not You Can Claim Other Dependents Changes Your Tax Picture a Lot

A larger standard deduction is supposed to take the place of personal exemptions – including exemptions you would claim for any children as dependents. What does this look like in reality for different families? Kelly Phillips Erb with Forbes breaks down the details of claiming dependents under the new tax regulations.

 

New Individual Tax Transcript Format Should Provide Better Security

The IRS announced it has developed a new format for individual tax transcripts. The new format redacts personal information on the transcripts, which should make the documents more secure. Accounting Today gives more details about the new format and what prompted the change.

 

Section 199A Pass-through Rules Adds to Compliance Costs

The new pass-through entity rules that reduce the tax liability of sole proprietors and pass-through entities with a 20% deduction on business-related income is likely to add as much as $1.3 billion in compliance costs. Get a breakdown of where the extra cost is likely to come from and where that burden will fall.

 

Could the Miscellaneous Expenses Deduction Make a Comeback?

The Tax Cuts and Job Act did away with the miscellaneous expenses deduction, which is what some workers used to make above-the-line deductions for work expenses, such as uniforms and even union dues. A new bill introduced to the Senate could bring these deductions back. Read more about the proposed Tax Fairness for Workers Act, including what’s in it and where it stands today.

source https://www.theincometaxschool.com/blog/tax-talk-september-tax-news-round-up/

Higher interest rates prompt bank cash awards, and taxes, for new accounts

Individuals' 2017 moving costs paid or reimbursed by employers in 2018 are still tax free

Tax pros convince IRS to delay Form W-4 changes

Congressman Brady Asks IRS To Issue More Guidance on Virtual Currency

On 9/19/18, Congressman Kevin Brady (R-TX), chair of the House Ways and Means Committee sent a letter to the IRS asking them to issue more guidance, as it had promised in 2014, on taxation of virtual currency. Chairman Brady also refers to the 2018 letters from the ABA and AICPA requesting guidance.

In the letter, Brady states:

"While the Committee appreciates the IRS’s need to undertake enforcement actions to ensure that taxpayers generally meet their tax obligations, in this case, we are concerned that the IRS is seeking to enforce guidance that does not adequately advise taxpayers of their tax obligations when using virtual currencies.  Furthermore, while the issues surrounding virtual currencies are complicated and ever evolving, a key component of the IRS’s duties as the nation’s tax administrator is to assist taxpayers in understanding what their tax obligations are and how they may best meet them.  A failure to put forth adequate guidance severely hinders taxpayers’ ability to do so.  The IRS has had four years to work through these issues since its preliminary guidance was issued, providing more than adequate time for the IRS to thoughtfully consider what additional information is needed.

We therefore strongly urge the IRS to expeditiously issue more robust guidance clarifying taxpayers’ obligations when using virtual currencies. We also ask that you provide a written response outlining where the IRS is in its efforts to issue updated virtual currency guidance, what the IRS intends to cover in this guidance, and a timeline for its release.  In addition, to assist the Committee in better understanding this issue, we will be asking the Government Accountability Office to undertake an audit on this matter."

I hope this can occur before the extended due date for 2017 returns (10/15/18).  Let's see.

What do you think?

source http://21stcenturytaxation.blogspot.com/2018/09/congressman-brady-asks-irs-to-issue.html

IRS gets thousands of online comments about SALT rule

Hiding taxable money offshore? You've got until Sept. 28 to come clean via IRS' 'amnesty' program

Free credit freezes help with ID theft, but tax fraud prevention requires more

TCJA Reference to 1944 Law Regarding SALT Cap is Now Online

Santa Clara County Law Library - great place and free - has the 1944 Cumulative Bulletin!

In describing the new $10,000 deduction limit for personal state and local taxes that was added by the Tax Cuts and Jobs Act (P.L. 115-97; 12/22/17), the committee report at footnote 168 refers to a page from the 1944 Cumulative Bulletin (CB) regarding a 1944 law change. To help understand what they were getting at, I recently tracked down that 1944 page.

This is a reminder of a few things. First, not everything is on the Internet.  While there might be a copy of the 1944 legislation available on an online database somewhere, likely not for free access (I could not find it). But the CB is really needed because footnote 168 refers to a specific page for its support of a statement about the present law (pre-TCJA law). I pulled the CB from where the Santa County Law Library (free to public) stores its old government publications (in the attic!) (Note: the photo above shows first and second floors, there really is an attic above that.)

But - now that page from the CB is on the Internet - click on Section 164 from this 1/2/18 post where I have links to a few track changes versions of Code sections changed by the TCJA. The Section 164 link will also take you to the committee report.

Second, the 1944 law is a reminder that when Congress created the concept of Adjusted Gross Income (AGI) in 1944, they described where state and local taxes are deducted (for or from AGI). For property taxes paid by your sole proprietor business for example, they are deducted for AGI because they are paid and imposed directly on the business. In contrast, state income taxes imposed on that business are deducted from AGI as they are remotely connected to the business income. Basically, I think the concept is that when an individual calculates their state income taxes that calculation involves all of their income, various deductions, exclusions and credits. How much of that state income tax is attributable to the business income?

This is why for decades, state income taxes go on Schedule A rather than splitting it among other schedules, such as C, E, and F. In contrast, property taxes paid by a business, partnership or farm are deducted above the line (as part of one of these schedules).

This was also an issue after the Tax Reform Act of 1986 when tax prep fees became subject to the 2%-of-AGI threshold. People asked - what about the tax prep fee attributable to my Schedule C sole proprietor business? Despite the treatment of state and local income taxes, the IRS determined that the tax prep fee could be allocated (see Rev. Rul. 92-29).

Also, old IRS rulings determined that in calculating a net operating loss (NOL), the state and local income taxes attributable to business income can be part of that NOL (Rev. Rul. 70-40). Thus, there are ways to measure that (there are ways to measure most things).

The $10,000 state and local income cap (also referred to as the SALT cap), is in the law from 2018 through 2025. The House Ways and Means Committee voted to make it permanent, along with other temporary individual provisions including the reduced tax rates), on 9/13/18 (HR 6760). It is unlikely the Senate will vote on this as it would take 60 votes there to pass.

Final point while I'm talking about the $10,000 SALT cap, why not change the law to allow individuals to deduct their state and local income taxes attributable to their business income above the line?  Certainly with the $10,000 cap, this seems like the right thing to do. After all, corporations don't have a cap on their state and local income tax deduction, why should individuals operating a business outside of the corporate form have a limitation. And even without the cap, deducting for AGI makes sense because not all business owners itemized.  The AICPA recommended this change while the TCJA was being discussed in Congress (which was the first time the SALT cap came up) (see item 4 in this 11/2/17 letter to Congress and this 11/13/17 letter and 11/10/17 letter).

What do you think?

source http://21stcenturytaxation.blogspot.com/2018/09/tcja-reference-to-1944-law-regarding.html

Tapping retirement accounts early is a dangerous trend among young savers

Taxes impact on seasonal jobs

Missouri city files suit to collect Neflix, Hulu video fees

IRS gets generally good marks from TIGTA & GAO

New battles to end SALT cap waged on Capitol Hill & Albany

Charles Rettig is approved as new IRS Commissioner

IRS offers tax relief for Hurricane Florence victims

Navigating the 3 estimated tax penalty safe harbors

Tax Reform 2.0 opponents say new tax cuts' added costs should go instead to other federal programs

5 disaster preparedness moves for businesses

Tax Reform 2.0 is official with introduction of 3 House bills

Business tax deductions aren't hurt by IRS SALT rule

Smart 401(k) Plan to Help Employees with Student Loans

In PLR 201833012 (8/17/18), employer (T) sought a ruling from the IRS on whether it was permissible to amend its defined contribution 401(k) plan to allow T to make a nonelective contribution for an employee if that employee makes a student loan repayment (SLR). The option would be voluntary. The plan already included T matching contributions equal to 5% of the employee’s eligible compensation for the pay period.

Participating employees could still make elective contributions but could not receive regular matches on such contributions. T sought a private ruling from the IRS to be sure the planned amendment did not violate the “contingent benefit” prohibition at §401(k)(4)(A) and Reg. 1.401(k)-1(e)6). The IRS found no problem with the plan.

The IRS found that the plan did not violate any of the 401(k) rules.

While private letter rulings (PLRs) do not state the taxpayer's name, a taxpayer can volunteer such information. That is the case here and Abbott says it is their plan and ruling (6/26/18 press release). They call it the Abbott Freedom 2 Save Plan. 

Per Abbott, if an eligible part-time or full-time employee contributes 2% of their eligible compensation towards paying down their student loans, they receive Abbott’s 5% match into their 401(k) plan and do not need to make a contribution on their own. Abbott’s press release gives an example of an employee accumulating $54,000 in their 401(k) plan after ten years assuming a salary of $70,000 with 3% increases annually. (Also see Abbott’s infographic.)

Abbott started the plan because it found employees not contributing to plans because of their need to make payments on their student loans. Abbott employees appear to potentially have significant student debt as the company notes that most of its employees have colleges degrees and about one-third of the 1,000+ people under age 35 hired in 2017 had a doctorate degree and about the same had a master’s degree.

In 2016, the ERISA Industry Committee (ERIC) issued a press release (10/18/16) that it had asked Congress to “adopt legislation to support employers as they develop programs that assist their employees in both repaying student loans and saving for retirement.”

President Trump's Executive Order 13847 (8/31/18) on Strengthening Retirement Security in America calls for efforts to “expand access to workplace retirement plans for American workers.” Per the BLS, 23% of private-sector, full-time employees and 34% of part-time ones do not have access to a retirement plan from their employer. Complexity of plans for small employers is noted as an obstacle, as well as costs and risks of not properly following numerous rules. A key solution proposed to be explored by the Department of Labor is expanding access to multiple employer plans (MEPs).

The EO also calls for updating life expectancy and distribution period tables for required minimum distributions (RMDs) and determining how often they should be updated.

Queries:

• The PLR only applies to the taxpayer who requested it (Abbott). Will the IRS issue binding guidance applicable to all taxpayers with the same holding to provide assurance to other employers who make similar changes? The cost to obtain a letter ruling is $28,300!

• Will EO 13847 lead to other modernizations to retirement plans to let them reflect the ways we live and do business in the 21st century? For example, why not have retirement plans that tie to the worker rather than the employer? With a growing gig economy and workers changing jobs frequently, why not let them have a single plan of their own to contribute to and have employers contribute to within specified rules? With technology, this would not be difficult.

What do you think? What are new solutions to improve retirement savings and to help people pay down their student loans (or not to have such large debts in the first place)?

source http://21stcenturytaxation.blogspot.com/2018/09/smart-401k-plan-to-help-employees-with.html

GOP law means 75 million won't owe any 2018 income tax

Nationals face MLB luxury tax even as playoff hopes fade

GOP wants to vote on more tax reform by Sept. 30

You Have to Give to Get: Better Networking Techniques That Really Work

What’s your networking style? Do you dread going to networking events and hang out by the food, hoping for the best? Do you like to get into the thick of it and count the business cards you’ve collected as a measure of your success? Well, when it comes to networking, I have found you have to give to get, and that’s how I discovered these better networking techniques that really work.

There are right ways and wrong ways to network. If you do it the right way, even the most introverted among us can wind up enjoying networking events. If you do it the wrong way, you’ll wind up wasting your time, not having fun, and probably not be very successful at it either.

The most successful way to network that I’ve found so far is the “give to get” method. It’s really more of a mindset or a philosophy. And it works just the way it sounds. It’s the idea that in order get whatever it is you’re after, you have to give to others first.

It’s very much like the philosophy that The Income Tax School is built on. I built The Income Tax School first and foremost to help individuals start their own tax businesses so they could in turn help others. We measure success by how many people we’ve helped become independent entrepreneurs – who in turn hire others in their own communities, creating jobs and contributing to their local economies.

How “give to get” really works

Giving doesn’t have to mean that you’re giving up money or services necessarily. It’s more of a mindset that if you give of yourself by sharing energy, knowledge, and connections that can help the people you’re networking with, good things will come to you in return.

It works on two levels. On the first level, you’ll build up a reputation as being a helpful, generous person. People will remember how you helped them and return the favor if an opportunity comes up.

On another level, whether you believe in things like karma or not, generally the energy you give to the world is the energy you get back. So, even if the people you helped don’t directly “pay you back,” somehow it all works out in the end and good things come to you.

On another practical note, putting your own needs on the back burner takes the pressure off you and the people you’re interacting with. That alone can make networking go more smoothly! You’re not pushing yourself on them. It makes it easier for everyone to talk. A lot of people feel nervous at these things. By asking people about themselves to get the conversation going, it gives them a starting point. They don’t have to find some awkward way to start the conversation.

So what does “giving to get” look like in a practical sense at a networking event?

Introduce people to each other

If you’re talking to a small business owner who needs to meet a contractor, and you happen to know a really good one who is there at the same event, introduce them to each other then and there. If the two parties aren’t in the same place, make an email introduction later. Make it a habit to connect as many people as possible. It will help your friends and build those community ties.

Listen to what others need

When someone tells you they need help with marketing, are they really asking for a web designer or a copywriter? Or do they need help posting on social media? If someone says they are experiencing a problem and you’re not sure what the answer is, is there someone else you know who can pinpoint the problem and maybe point them in the direction of a real solution?

Really listen to what people are telling you in order to help them solve the right problem. Also, listen to people when they tell you what they do. Ask them who their target audience is and what kinds of problems they solve for, in case you know someone who would be a good match for them.

Take notes

In a notebook, on your phone, or on the backs of business cards, however you decide to do it, make notes about whom you speak with – notes about physical characteristics (to help you remember them) as well as what you talk about and what problems they want to solve. Also take good notes about what they can do for others in case you run into someone who can use their services.

ABC: Always be connecting

Alec Baldwin was close but not quite when he said, “ABC, always be closing.” But instead of “always be closing,” at networking events you should “always be connecting.” Look for connections between people you know and people you’ve just met. Find opportunities to introduce people to each other and connect them to information and resources they need. Not only will it will your reputation as a person people can trust and go to as a resource; it’s how you build bonds in your community.

source https://www.theincometaxschool.com/blog/give-to-get-better-networking-techniques/

Legalized sports betting could be worth billions to NFL and the IRS would be a winner, too

Make paying for college a family affair, with contributions from parents, kids and Uncle Sam

5 tax moves to make in September 2018

Union dues no longer deductible under new tax law

Taxpayer Advocate argues for revised tax-related passport revocation process

Remembering McCain's maverick approach to taxes