News

                                                                                                          (updated 7/9/2018)

IRS Has Released New Draft Tax Forms

The IRS has released some new draft tax forms, including the "postcard" 1040.  However, instead of simplifying anything, there are now simply more schedules to report the information that has been removed from the old 1040.  Meet the new Schedules 1 through 6. 

Schedule 1 - Additional Income & Adjustments to Income: This is where most of the 1st page of the old 1040 has moved.  Many of the items will also still require their traditional Schedules as well (i.e. Schedule C for sole proprietorship, Schedule D for capital gains, etc).

Schedule 2 - Tax: This is where lines 44 - 46 on the 2nd page of the old 1040 have moved (Tax, AMT, Excess Advance Premium Tax Credit Repayment).  Again, you will still need to use the traditional forms that feed into these lines (i.e. Form 6251 for AMT, Form 8962 for the Excess Premium Tax Credit, etc).

Schedule 3 - Nonrefundable Credits: This is where lines 48 - 56 of the old 1040 have moved (i.e. Foreign Tax Credit, Dependent Care Credit, Education Credits, etc).  Still the traditional associated forms will also need to be filed.

Schedule 4 - Other Taxes: This is where lines 57 - 63 of the old 1040 have moved (i.e. Self-Employment Tax, Additional tax on early withdrawals of retirement plans, Net Investment Income Tax, etc).  Additional Forms still apply.

Schedule 5 - Other Payments & Refundable Credits: Lines 65 - 73 of the old 1040.  Basically all the refundable payments or credits that are not federal taxes withheld on your W-2 or 1099. 

Schedule 6 - Foreign Address & 3rd Party Designee:  This used to be a single additional line on the top of the 1st page of the old 1040 & a single line on the bottom of the 2nd page.  


IRS to Publish Regulations Regarding Section 199A Later this Year:

The Internal Revenue Service says that the agency will likely issue guidance on Section 199A (the section affecting taxation of pass-through entities) sometime in the late summer or early fall.  For those unfamiliar with Section 199A, it is the part of the new "Tax Cuts & Jobs Act of 2017" law (see below) that allows a 20% deduction of certain modified income from pass-through organizations (S-Corporations/Partnerships/Sole Proprietorships) to their shareholders/partners/sole-proprietors.  But there are certain types of service companies that are not allowed the deduction a certain income level & a complicated set of calculations that goes with it the Section.  The Section, as written, does not explain well how to apply these calculations or have clear enough definitions.  We are waiting for the IRS to give much-needed clarity to the process so that we can best advise our clients.

 

H.R.1 - An Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018 (formerly titled "Tax Cuts and Jobs Act of 2017")

Passed on 12/22/17, the afore-stated Act passed both the House & the Senate & became "Public Law No: 115-97".  There will still be technical adjustments needed before actually implementing the bill due to  contradictions or errors within the law. The law goes into effect for the tax years beginning after 2017.

Some of the more generally applicable changes to Individual tax returns are listed here

Some of the more generally applicable changes to Business tax returns are listed here