Tax inflation adjustments expected to shrink

Bloomberg Tax and Thomson Reuters have released their 2019 projected inflation adjustments for a variety of tax-related items that are subject to change each year, but particularly after last year’s big tax overhaul. Typically, items such as tax brackets and deduction amounts have been based on the Consumer Price Index for All Consumers, also known as CPI-U. But the passage …

Qualified business income deduction regulations proposed

The IRS issued proposed regulations on Wednesday regarding the qualified trade or business income deduction under Sec. 199A, which was enacted by P.L. 115-97, the law known as the Tax Cuts and Jobs Act (TCJA) (REG-107892-18). At the same time, it issued Notice 2018-64, which provides guidance on how to compute W-2 wages for purposes of the deduction, along with FAQs. The …

IRS Announces Interest Rates For Late Payments And Tax Refunds

Interest rates are staying put – at least when it comes to the Internal Revenue Service (IRS). The IRS has announced in Revenue Ruling 2018-18 that interest rates will remain the same for the third calendar quarter (beginning July 1, 2018) as they did for the last quarter. The rates for the third quarter for individuals will be: 5% for …

When is a debt worthless – and tax deductible?

Just because a creditor thinks a debt has become worthless doesn’t mean they can deduct it, according to a recent Tax Court ruling. A debt that becomes wholly worthless within the taxable year is deductible as a business bad debt. To deduct a business bad debt, the taxpayer must show the existence of a valid debtor-creditor relationship, that the debt …

Draft 2019 Form W-4 and instructions posted

The IRS issued a draft version of the 2019 Form W-4, Employee’s Withholding Allowance Certificate, and instructions for the form, in an attempt to further simplify the task of determining income tax withholding for individual taxpayers after the passage of P.L. 115-97, known as the Tax Cuts and Jobs Act of 2017 (TCJA). The TCJA eliminated personal exemptions, increased the …

IRS issues tax guidance on tip jars

The Internal Revenue Service’s Chief Counsel has issued a memorandum providing advice on unreported tip income, with the caveat that the advice cannot be used or cited as precedent. One of the issues that arose was whether cash amounts distributed to individuals from “tip boxes” are properly classified as tips under the Tax Code and subject to FICA tax. The …

New Tax Proposal Would Boost Charitable Mileage Rate To Equal Business Rate

Now that the effects of last year’s tax reform bill are being felt, the proposals to reform the reform (say that quickly three times) keep rolling in. Last month, Sen. Bob Casey (D-PA) put forth a bill to reinstate unreimbursed job expenses. This week, Rep. Richard Nolan (D-MN) introduced H. R. 5662, also known as the Volunteer Driver Tax Appreciation Act …

Tax Cuts & Jobs Act

IRS guidance addresses limitations on business interest expense

In Notice 2018-28, the IRS answered a number of important questions about the new business interest limit in Sec. 163(j), as amended by P.L. 115-97, known as the Tax Cuts and Jobs Act (TCJA), and asked for general comments on regulations it plans to issue. Under amended Sec. 163(j), the deduction for business interest is limited to the sum of (1) …