THE WANDERING TAX PRO
Up-to-the-minute advice, information, resources, and, on occasion, commentary on federal and New Jersey state income taxes, and the various New Jersey property tax rebate programs, and insights and observations on tax policy and professional tax practice, by 40-year veteran tax professional Robert D Flach.
Wednesday, October 18, 2017
A REVIEW OF RECENT TAX DEVELOPMENTS
week-day daily “Checkpoint Newsstand” from Thomson Reuters recently provided a
good summary of some important tax developments that have occurred in the past three
months that affect taxpayers, their investments, and their livelihood.
have provided some of TR’s summary below, with my own wording replacing theirs
in several places, and including some of my own personal comments.
Donald T Rump Administration and select members of Congress have released a
"unified framework" for tax reform. The official framework document leaves
many specifics to be worked out by the tax-writing committees (i.e., the House
Ways and Means Committee and the Senate Finance Committee).
the standard deduction to $24,000 for married taxpayers filing jointly, and
$12,000 for single filers;
the personal exemption and the additional standard deductions for older/blind
the number of tax brackets from seven to three: 12%, 25%, and 35%;
the child tax credit;
the individual alternative minimum tax;
eliminate itemized deductions, but retain the home mortgage interest and
charitable contribution deductions;
both the estate tax and the generation-skipping transfer tax;
a maximum 25% tax rate for "small" and family-owned businesses
conducted as sole proprietorships, partnerships and S corporations;
the corporate tax rate to 20% (down from the current top rate of 35%);
full expensing for five years;
limit the deduction for net interest expense incurred by C corporations;
most deductions and credits, but retain the research and low-income housing
special tax rules that apply to certain industries and sectors;
a 100% exemption for dividends from foreign subsidiaries; and
protect the U.S. tax base, tax the foreign profits of U.S. multinational corporations
at a reduced rate and on a global basis.
mentioned above, the actual details on these proposals have still not yet been
determined.As it is so late in the year
it is, in my opinion, doubtful that substantive tax reform legislation will be
passed before year-end.In any case, I
do not expect any legislation to affect the 2017 Form 1040.
September 29, the "Disaster Tax Relief and Airport and Airway Extension
Act of 2017" (P.L. 115-63) was signed into law. The Act provides temporary
tax relief to victims of Hurricanes Harvey, Irma, and Maria.
for individuals includes, among other things, loosened restrictions for
claiming personal casualty losses, tax-favored withdrawals from retirement
plans, and the option of using current or prior year's income for purposes of
claiming the earned income and child tax credits.
that qualify for relief may claim a new "employee retention tax
credit" of 40% of up to $6,000 of "qualified wages" paid by
employers affected by Hurricanes Harvey, Irma, and Maria (for a maximum credit
of $2,400 per employee).
addition to the new law, IRS has granted specific administrative hurricane
relief, for example, extending various deadlines, encouraging leave-based
donation programs for hurricane victims, and allowing retirement plans to make
July 28, the Treasury Department announced that it would begin winding down the
myRA (my Retirement Account) program—a type of government-administered Roth IRA
initially offered by Treasury beginning in 2014. Noting that demand for and
investment in the myRA program had been extremely low, Treasury stated that it
would phase out the program over the following months.
myRA program will no longer accept new enrollments, but existing accounts will
to remain open and accessible, so that individuals could continue to manage
their accounts until further notice. Individuals can make deposits, and their
accounts would continue to earn interest. Funds in myRA accounts remained in an
investment issued by the Treasury Department.I was personally sorry to see this program go.
government announced a simplified per-diem increase for post-Sept. 30, 2017
travel. An employer may pay a per-diem amount to an employee on business-travel
status instead of reimbursing actual substantiated expenses for away-from-home
lodging, meal and incidental expenses (M&E). If the rate paid doesn't
exceed the IRS-approved maximums, and the employee provides simplified
substantiation, the reimbursement isn't subject to income- or payroll-tax
withholding and isn't reported on the employee's Form W-2. Instead of using
actual per-diems, employers may use a simplified "high-low" per-diem,
under which there is one uniform per-diem rate for all "high-cost"
areas within the continental U.S. (CONUS), and another per-diem rate for all
other areas within CONUS.
IRS released the "high-low" simplified per-diem rates for post-Sept.
30, 2017, travel. Under the optional high-low method for post-Sept. 30, 2017
travel, the high-cost-area per diem is $284 (up from $282), consisting of $216
for lodging and $68 for M&IE. The per-diem for all other localities is $191
(up from $189), consisting of $134 for lodging and $57 for M&IE.
Apparently an honest mistake is no excuse for incorrectly claimed advance
premium tax credit.The Tax Court ruled
that taxpayers who didn't qualify for the premium tax credit under the
Affordable Care Act (Obamacare) because their modified adjusted gross income
exceeded 400% of the federal poverty level had to repay all the advance premium
tax credit paid on their behalf to their insurer.
sympathetic Tax Court noted that while their state health insurance Marketplace
may have incorrectly informed the taxpayers that they were eligible for the
credit for 2014, the Court's hands were tied by the Code and regulations. The
simple fact was that the taxpayers' income exceeded eligible levels and that
they had to repay the advance premium tax credit payments.
you have any questions on how the above developments will affect you I suggest
you consult your, or a, tax professional.You can begin your search for a tax professional at my website FIND ATAX PROFESSIONAL.