CALCULATORS TO ESTIMATE YOUR NEW TAX LIABILITY

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For those interested in running a few ‘what-if’ scenarios based on the provisions of the new tax bill following are some calculators available online that attempt to make some projections. Since taxes are so personal, it’s hard to say specifically. But several websites have published calculators that give us a rough idea of where our taxes will stand now that the new tax bill is law. Here are some places you can check out what you’re 2018 tax bill, due when you file your not-postcard-sized return in 2019. Three of the sites provide standard-type calculators where you enter in your expected income, some details about your personal situation and then hit enter to get an idea of your taxes. They are: MarketWatch, CNN Politics and CalcXML. Two other tax bill estimators are in graphical form. They are the ones created by the New York Times‘ Upshot column and the Washington Post. Remember, all these calculators will provide you only a general idea of what your taxes might be in the coming years that H.R. 1 is in effect. I noticed that none of them had a place for investment earnings, which are and will remain taxed at lower capital gains rates. And the Post’s graphic … Read More

TAX CUTS AND JOBS ACT – A LOOK AT SOME PROVISIONS:

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Following are some of the provisions of the Tax Cuts and Jobs Act. For a complete report of the Conference Committee final tax provisions click here. Corporate Tax Rate:  the Conference Committee settled on a corporate tax rate of 21%, considerably lower than the current maximum rate of 35%. The rate would take effect in 2018. Individual Tax Rates:  the highest rate would drop from the current 39.6% to 37%, however, they retained the seven tax brackets. Higher standard deduction but personal exemption eliminated: the bill would double the standard deduction from $6,350 (single) and $12,799 (joint) to $12,000 and $24,000 which is expected to lower the number of taxpayers who itemize. At the same time, the bill would eliminate the personal exemption, but some credits were also increased. State and local taxes: taxpayers would be able to deduct up to $10,000 of all taxes combined for state and local taxes, real estate taxes, and income and sales taxes. Mortgages indebtedness: interest can be deducted on loans up to $750,000. Resolution on pass-through entities: owners of pass-through entities such as S corporations and partnerships would be able to apply a 20% deduction to their business income, with limits starting at around … Read More

TIGTA REPORT ON REFUNDABLE CREDIT COMPLIANCE BY TAX PREPARERS

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In October 2017 TIGTA issued their report, Improvements are Needed to Better Document the Return Preparer Refundable Credit Compliance Treatment Identification and Selection Process. This audit was initiated because return preparers play a significant role in EITC compliance.  The IRS estimates that 24 percent or $16.8 billion in EITC payments were issued improperly in Fiscal Year 2016.  The objective of this review was to assess the IRS’s strategy and processes for identifying and addressing return preparers’ filing returns with erroneous refundable credits such as the EITC. Read the full report here. Results of Review In FY 2016, the IRS completed various compliance treatments to address 24,312 return preparers identified as filing high rates of tax returns with characteristics of an erroneous EITC claim. Return preparers may receive more than one treatment type.  Figure 2 provides key compliance treatments completed in an effort to increase EITC return preparer compliance. Figure 2:  Completed Key Compliance Treatments for the FY 2016 Workplan Compliance Treatment Number Completed Post-Refund Client Audits 23,575 Compliance Letters 5025 7,961 Letter 4858, EITC Due Diligence Requirements For Return Preparers (Filing Season) 5,386 Warning Letters 4833-A, EITC Tax Return Preparer Alert 3,754 Letter 4858, Issued to New Return Preparers (Filing Season) 3,524 Warning Telephone Calls (Filing … Read More

TAX BILL UPDATE: SENATE BUDGET COMMITTEE APPROVES “TAX CUTS AND JOBS ACT

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On November 28, the Senate Budget Committee, voting 12 to 11, advanced the Senate Republicans’ version of the “Tax Cuts and Jobs Act” (¶ 2874), setting the scene for a floor vote. The vote to take up the Senate tax reform bill could occur as early as Wednesday, which would start 20 hours of debate and the amendment process. Final vote on passage could occur as soon as Thursday evening or Friday. It has also been reported that, in exchange for the elimination of the individual mandate under the Affordable Care Act (ACA or Obamacare) in the Senate tax reform bill, President Trump has agreed to accept the “Bipartisan Health Care Stabilization Act of 2017”, a bipartisan deal brokered by Senator Lamar Alexander (R-TN) and Democratic Senator Patty Murray (D-WA). This deal would stabilize the ACA for two years by continuing ACA subsidies to private health insurers for coverage of low-income individuals (i.e., cost-sharing reduction payments). It would also give states more flexibility to offer a wider variety of health insurance plans (see ¶ 2555). In addition, President Trump is reported to have accepted the House’s tax reform provision which would eliminate the deduction for State and local income or sales tax, but retain … Read More

BE SURE YOUR E-FILE APPLICATION HAS CURRENT INFORMATION

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Authorized IRS e-file Providers (Providers) should ensure that the IRS has current information by reviewing and updating their IRS e-file Applications. Providers may review their IRS e-file Application information electronically via e-services. The IRS also removes Providers from participation in IRS e-file when it receives undeliverable mail or is unable to contact a Provider. Until the Provider updates the information, the IRS rejects all returns submitted by the Provider. Avoid Deactivation: Maintain e-File Application and EFIN Once the EFIN application process is complete and an EFIN has been issued, it is important to keep accounts up-to-date. This includes reviewing the e-file application periodically. The e-file application must be updated within 30 days of any changes, such as individuals involved, addresses or telephone numbers. Failure to do so may result in the inactivation of the EFIN. Check the EFIN status to ensure that it is not being used by others. The e-Services account will give practitioners the number of returns the IRS received, which can be matched to practitioner records. The statistics are updated weekly. Contact the IRS e-help Desk at 866-255-0654 if there’s a higher volume shown than the number transmitted by the practitioner.

UPDATE ON TAX CUTS AND JOBS ACT

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While any discussion regarding the new tax bill under consideration by both the House and the Senate is a moving target the most current update is that the House Ways and Means Committee has advanced the bill to the full House for consideration and it will be on the agenda for this week. The committee approved, along party lines, a number of amendments to the original bill. The House is expecting to hold a vote on the bill during the week of November 13, 2017. Meanwhile, the Senate Finance Committee also released their version of the Tax Cuts and Jobs Act, which in many respects varies greatly from the version approved by the House Ways and Means Committee. The Senate Finance Committee is expecting to mark up their version during the week of November 13, 2017. Possible roadblocks to ultimately getting a bill to the president’s desk before year end are unified opposition from Democrats, intense lobbying efforts to preserve tax breaks slated for elimination, and the significant differences between the House and Senate versions. See Tax Tidbits from last week for links to the full context of the bill.