IRS SETS FINAL 2018 DEADLINE FOR ROTH CONVERSION DO-OVERS

NSTPDeadline, Internal Revenue Service (IRS)

One of the few retirement changes in the tax overhaul was the elimination of do-overs for Roth IRA conversions. It used to be that you could convert a traditional IRA to a Roth IRA one year, and then have until October 15th of the next year to undo the transaction and avoid the tax hit. That move—called “recharacterization”–is no longer allowed under the 2017 Tax Cuts and Jobs Act. But what about taxpayers who made the move in 2017? It was not clear if they only had until December 31, 2017 to unwind transactions, or if they would be allowed the extra time. Now the Internal Revenue Service has spoken in FAQs, and it’s a taxpayer-friendly answer. The IRS website says this under IRA FAQs: What is a recharacterization of a contribution to a traditional or Roth IRA? A recharacterization allows you to treat a regular contribution made to a Roth IRA or to a traditional IRA as having been made to the other type of IRA. A regular contribution is the annual contribution you’re allowed to make to a traditional or Roth IRA: up to $5,500 for 2018, $6,500 if you’re 50 or older. It does not include a conversion or … Read More

USE IT OR LOSE IT: DEADLINE FOR STARTUPS TO CLAIM R&D CREDIT LOOMS

NSTPDeadline

Startup businesses have one last chance to claim a valuable credit, experts say – but they need to act fast. Before 2016, businesses could only take the Research & Development Credit against their income tax liability. But a provision in the Protecting Americans from Tax Hikes Act, or PATH Act, of 2015, allows eligible small businesses to apply part or all of their research credit against their payroll tax liability, instead of their income tax liability. The option is meant to benefit startups that have little or no income tax liability. The new option was available for the first time for 2016 returns, but under a special rule for tax-year 2016, a small business that failed to choose this option can still make the election by filing an amended return by Dec. 31, 2017. “This is a tremendous opportunity for startups, but the deadline is approaching rapidly,” said Michael Silvio, tax director at Hall & Co. CPAs. “Under the rules, small-business startups may claim up to $250,000 in credits per year against the payroll tax liability instead of the income tax liability. Eligible firms can earmark the credits against payroll for the first quarter after the filing. Businesses that did … Read More

TAXPAYERS ABROAD MUST FILE BY JUNE 15; EXTENSIONS AVAILABLE; NEW FILING DEADLINE NOW APPLIES TO FOREIGN ACCOUNT REPORTS

NSTPDeadline, Taxpayer

The Internal Revenue Service is reminding taxpayers living and working abroad that they must file their 2016 federal income tax return by Thursday, June 15. The special June 15 deadline is available to both U.S. citizens and resident aliens abroad, including those with dual citizenship. For those who can’t meet the June 15 deadline, tax-filing extensions are available and they can even be requested electronically. In addition, a new filing deadline now applies to anyone with a foreign bank or financial account required to file an annual report for these accounts, often referred to as an FBAR. Here is a rundown of key points to keep in mind: Most People Abroad Need to File: An income tax filing requirement generally applies even if a taxpayer qualifies for tax benefits, such as the Foreign Earned Income exclusion or the Foreign Tax credit, which substantially reduce or eliminate U.S. tax liability. These tax benefits are only available if an eligible taxpayer files a U.S. income tax return. A taxpayer qualifies for the special June 15 filing deadline if both their tax home and abode are outside the United States and Puerto Rico. Those serving in the military outside the U.S. and Puerto … Read More