- Tax Reform Center
IRS officials say they will reject 2017 returns that are “silent” on compliance with the Affordable Care Act (ACA) individual mandate. At an online meeting with tax professionals, the IRS said it will not accept electronically filed 2017 returns that don’t address whether a taxpayer has complied with the ACA individual mandate provisions. Returns will not be treated as complete and accurate unless a taxpayer reports full-year coverage, claims an exemption, or reports a payment on the tax return. The new tax law eliminates the individual mandate payment beginning in 2019.
Tax season is certainly upon us. The IRS began accepting 2017 federal income tax returns on Jan. 29. The tax agency reports that it is expecting upwards of 155 million returns to be filed this year. More than 70% of them are expected to yield refunds. At least 90% of refunds will be issued within 21 days of receipt of the returns. However, refunds that include an earned income tax credit or additional child credit shouldn’t be expected before Feb. 27, 2018. The filing deadline this year is April 17, 2018 due to the 15th being on a Monday and Emancipation Day in DC. Read more at: https://www.irs.gov/newsroom/irs-announces-2018-tax-filing-season-opens-with-april-17-deadline-155-million-tax-returns-projected-70-percent-expect-refunds
Employers: The IRS just released the 2018 version of Publication 15, “Employer’s Tax Guide,” which highlights important changes made by the Tax Cuts and Jobs Act. The publication provides guidance on the requirements for withholding, depositing, reporting, paying, and correcting employment taxes. It also contains information on forms employers must give to employees, forms employees must give to employers, and forms that must be sent to the IRS and Social Security Administration. The new withholding tables are included. Find it here: https://www.irs.gov/pub/irs-pdf/p15.pdf
According to recent guidance, the IRS has extended the effective period of Form W-4, “Employee’s Withholding Allowance Certificate,” until Feb. 28, 2018. The IRS has also permitted employees to claim exemptions from withholding for 2018 by temporarily using the 2017 Form W-4. In addition, the IRS temporarily suspended a requirement that employees furnish employers new Forms W-4 within 10 days of changes in status that reduce their withholding allowances. Read Notice 2018-14 here: https://www.irs.gov/pub/irs-drop/n-18-14.pdf
Late on Jan. 22, President Trump signed a continuing resolution (CR) to fund the federal government until Feb. 8. The measure also contains some tax-related changes. The 2.3% medical device excise tax (which took effect on Jan. 1, 2018) will be delayed for two years; the “Cadillac tax” that employers will pay on high-cost health insurance will be delayed for two years (until 2022); and there will be a one-year moratorium on an excise tax imposed on health insurers for the 2019 calendar year. This resolution also extends the Children’s Health Insurance Program (CHIP) for six years.
The Tax Cuts and Jobs Act made changes to business meals and entertainment expenses, effective for amounts incurred or paid after Dec. 31, 2017. The first change disallows deductions for business-related entertainment expenses. For entertainment expenses paid by December 31, 2017, a taxpayer could deduct 50% of such expenses. The second change relates to meals provided through an in-house cafeteria or on the employer’s premises. The 50% limit on the deductibility of business meals has been expanded to include meals provided through an in-house cafeteria or on the employer’s premises. (Previously, they were 100% deductible.)
The IRS issued an FAQ clarifying the effective date of a provision in the Tax Cuts and Jobs Act (TCJA) which prohibits a taxpayer from recharacterizing a Roth conversion. The IRS states that, if a traditional IRA was converted to a Roth IRA in 2017, it may be recharacterized as a contribution to a traditional IRA until Oct. 15, 2018. Contact us for more information in your situation. Read the IRS FAQs on this topic here: https://www.irs.gov/retirement-plans/ira-faqs-recharacterization-of-ira-contributions
The Tax Cuts and Jobs Act (TCJA) requires certain foreign corporations to increase their subpart F income for their last tax year that begins before Jan. 1, 2018, by the amount of deferred foreign income. The IRS has issued Notice 2018-13, which provides guidance for computing the “transitional tax” on the untaxed foreign earnings of foreign subsidiaries of U.S. companies under the TCJA. The guidance details future rules that address the calculation of earnings under the transition tax and other rules to clarify certain aspects of the new law. https://www.irs.gov/pub/irs-drop/n-18-13.pdf