CONTRIBUTE TO AN IRA BY APRIL 17, CLAIM IT FOR 2017

NSTPTaxpayer

It is not too late to contribute to an Individual Retirement Arrangement (IRA) and still claim it on a 2017 tax return. A taxpayer with an IRA may be eligible for a tax credit or deduction on their 2017 tax return if they make contributions by April 17, 2018 since this year’s tax-filing deadline is April 17. An IRA is designed to enable employees and the self-employed to save for retirement. Most taxpayers who work are eligible to start a traditional or Roth IRA or add money to an existing account. Generally, eligible taxpayers can contribute up to $5,500 to an IRA. For someone who was 50 years of age or older at the end of 2017, the limit is increased to $6,500. The same general contribution limit applies to both Roth and traditional IRAs. However, a Roth IRA contribution might be limited based on filing status and income. An individual cannot make regular contributions to a traditional IRA in the year they reach 70½ and older. However, they can still contribute to a Roth IRA and make rollover contributions to a Roth or traditional IRA regardless of age. If neither the taxpayer nor their spouse was covered for any … Read More

IRS REMINDS TAXPAYERS TO REPORT VIRTUAL CURRENCY TRANSACTIONS

NSTPDigital Currency, Internal Revenue Service (IRS)

The Internal Revenue Service reminds taxpayers that income from virtual currency transactions is reportable on their income tax returns. Virtual currency transactions are taxable by law just like transactions in any other property. The IRS had issued guidance in IRS Notice 2014-21 to addresses transactions in virtual currency, also known as digital currency. Taxpayers who do not properly report the income tax consequences of virtual currency transactions can be audited for those transactions and, when appropriate, can be liable for penalties and interest. Virtual currency, as generally defined, is a digital representation of value that functions in the same manner as a country’s traditional currency. There are currently more than 1,500 known virtual currencies. Because transactions in virtual currencies can be difficult to trace and have an inherently pseudo-anonymous aspect, some taxpayers may be tempted to hide taxable income from the IRS. Notice 2014-21 provides that virtual currency is treated as property for U.S. federal tax purposes. General tax principles that apply to property transactions apply to transactions using virtual currency. Among other things, this means that: A payment made using virtual currency is subject to information reporting to the same extent as any other payment made in property. Payments using virtual … Read More

ICYMI – PRESIDENT SIGNS BILL TO KEEP THE GOVERNMENT OPEN AND FUND THE IRS

NSTPInternal Revenue Service (IRS)

The Consolidated Appropriations Act, 2018, H.R. 1625, is the $1.3 trillion spending bill that Congress passed and Trump signed on Friday, March 23rd.  The bill contains a few tax-related provisions, including funding for the IRS and technical corrections to various recent pieces of tax legislation. It also amends the centralized partnership audit regime and changes the Sec. 199A deduction for farmers who sell grain to agricultural cooperatives. The bill passed the House of Representatives on Thursday by a 256–167 vote. It passed the Senate early Friday on a 65–32 vote. President Donald Trump signed the bill into law on Friday afternoon. IRS FUNDING: The bill appropriates just over $11 billion for the IRS. The bill appropriates $2.5 billion to the IRS for taxpayer services (compared with $2.2 billion last year). Of that amount, $9.9 million is earmarked for the Tax Counseling for the Elderly Program, $12 million for low-income taxpayer clinic grants, $15 million for Volunteer Income Tax Assistance matching grants, and $206 million for the Taxpayer Advocate Service. Of the money designated for the Taxpayer Advocate Service, $5.5 million is earmarked for identity theft casework. The bill appropriates $4.9 billion for IRS enforcement activities (similar to last year), of which $60 million … Read More

IRS REMINDS RETIREES OF APRIL 1 DEADLINE TO TAKE REQUIRED RETIREMENT PLAN DISTRIBUTIONS

NSTPInternal Revenue Service (IRS)

The Internal Revenue Service reminds taxpayers who turned age 70½ during 2017 that, in most cases, they must start receiving required minimum distributions (RMDs) from Individual Retirement Accounts (IRAs) and workplace retirement plans by Sunday, April 1, 2018. The April 1 deadline applies to all employer-sponsored retirement plans, including profit-sharing plans, 401(k) plans, 403(b) plans and 457(b) plans. The RMD rules also apply to traditional IRAs and IRA-based plans such as SEPs, SARSEPs, and SIMPLE IRAs, however, they do not apply to ROTH IRAs. The April 1 RMD deadline only applies to the required distribution for the first year. For all subsequent years, including the year in which recipients were paid the first RMD by April 1, the RMD must be made by Dec. 31. A taxpayer who turned 70½ in 2017 and receives the first required distribution (for 2017) on April 1, 2018, for example, must still receive the second RMD by Dec. 31, 2018. Affected taxpayers who turned 70½ during 2017 must figure the RMD for the first year using the life expectancy as of their birthday in 2017 and their account balance on December 31, 2016. The trustee reports the year-end account value to the IRA owner … Read More

ADDITIONAL TIME TO MAKE REFUND CLAIMS FOR WRONGFUL INCARCERATION EXCLUSION

NSTPInternal Revenue Service (IRS)

The Internal Revenue Service announced that wrongfully incarcerated individuals have additional time to take advantage of the retroactive exclusion from income for any civil damages, restitution or other monetary award received in connection with their incarcerations. Under the Bipartisan Budget Act of 2018, a wrongfully incarcerated individual now has until December 17, 2018, to file a related refund claim. Under the wrongful incarceration exclusion, a wrongfully incarcerated individual does not include in income any civil damages, restitution or other monetary award received that related to his or her incarceration for the covered offense for which he or she was convicted. A set of frequently-asked questions, available on IRS.gov, provides details on who qualifies for the exclusion, awards that qualify and documentation and recordkeeping requirements. To file a refund claim, an eligible individual taxpayer must file Form 1040X for each year he or she included a wrongful incarceration award in income and write “Incarceration Exclusion PATH Act” at the top of each Form 1040X. The IRS has established a special filing address for amended returns claiming the wrongful incarceration exclusion. Send these Forms 1040X, along with any supplemental documentation, to: Internal Revenue Service 333 W. Pershing Stop 6503 5th Floor Kansas City, MO 64108 Allow … Read More