Saturday April 20, 2019
Last-Minute Tax Filing Help
In IR-2019-67, the Service urged taxpayers to use www.irs.gov for last-minute tax assistance. Tax-filing day is April 15, 2019 (or April 17 for Maine and Massachusetts due to holidays).
The IRS offers five filing tips for last-minute taxpayers.
IRS Successful in Reducing Fraud
In 2015, the IRS created the Security Summit. This coalition of federal and state government tax authorities and private tax preparation companies joined together to guard against criminals who are stealing billions of dollars through tax refund fraud.
IRS Commissioner Chuck Rettig reported major progress in reducing identity theft refund fraud. He stated, "The IRS and the Security Summit continue to make tremendous inroads in the battle against identity theft. In 2018, our partnership protected more taxpayers and more tax dollars from tax-related identity theft. At a time when many in the private sector continue to struggle with these issues, the tax community has made major progress working together to stop identity theft and refund fraud."
Rettig highlighted the successes of the Security Summit. Between 2015 and 2018 there were substantial improvements in four areas.
The Security Summit will continue to focus on reducing corporate identity theft refund fraud. Rettig concluded, "Despite these major successes, more work remains. Identity thieves are often members of sophisticated criminal syndicates, based here and abroad. They have the resources, the technology and the skills to carry on this fight. The IRS and the Summit partners must continue to work together to protect taxpayers as cyberthieves evolve and adjust their tactics."
IRS Fact Sheet on Sec. 199A
In FS-2019-8, the Service outlined the principal provisions of the Sec. 199A 20% deduction for qualified business income (QBI). The QBI deduction applies to passthrough entities and was passed by the Tax Cuts and Jobs Act. Because it applies after the December 31, 2017 calendar year, taxpayers will be using the QBI deduction for the first time in tax year 2018.
For taxpayers with incomes over $315,000 filing jointly or $157,000 filing as an individual, the deduction is limited if employed in an SSTB. The SSTB involves "the performance of services in the fields of health, law, accounting, actuarial science, performing arts, consulting, athletics, financial services, investing and investment management, trading, dealing in certain assets or any trade or business [where the] principal asset is the reputation or skill of one or more of its employees or owners."
An example of a reputation or skill business is one where the income is from endorsing a product or service or use of a person's image, likeness or voice in media.
There is a safe harbor for rental real estate. See Notice 2019-07. The American Institute of CPAs (AICPA) has expressed concerns about uncertainty in filing returns because the Notice did not permit commercial and residential property to be part of the same enterprise. The AICPA indicated in an April 9 letter to the IRS that it is difficult to segregate these properties in applying the safe harbor. The New York State Bar Association Tax Section stated, "For example, a residential apartment building will often have commercial rental space on lower floors. In addition, it's not clear how the proposed revenue procedure might apply to corporate housing, short-term and long-term vacation rental properties and similar real estate holdings."
Many items are excluded from QBI. Capital gains or losses, interest income not allocable to a trade or business, wage income, income not properly within the United States, commodities transactions, notional principal contract income or loss, most annuities, reasonable compensation from an S corporation, guaranteed payments from a partnership and partnership payments for services typically are not included in QBI.
Editor's Note: This is the first filing season for a fairly complex deduction for individuals over the threshold income limits. With all of the uncertainty, there will be a large percentage of tax returns taking the QBI deduction that extend until October 15, 2019.
Applicable Federal Rate of 3.0% for April -- Rev. Rul. 2019-8; 2019-14 IRB 1 (15 Mar 2018)
The IRS has announced the Applicable Federal Rate (AFR) for April of 2019. The AFR under Section 7520 for the month of April is 3.0%. The rates for March of 3.2% or February of 3.2% also may be used. The highest AFR is beneficial for charitable deductions of remainder interests. The lowest AFR is best for lead trusts and life estate reserved agreements. With a gift annuity, if the annuitant desires greater tax-free payments the lowest AFR is preferable. During 2019, pooled income funds in existence less than three tax years must use a 2.2% deemed rate of return.
Published April 19, 2019
|U.S. Treasury Circular 230 requires that this firm advise you that any tax advice provided was not intended or written to be used, and cannot be used by you, for the purpose of avoiding penalties that the IRS could impose upon you.|
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