Each year, hurricanes and other natural disasters leave widespread damage in their wake. In addition to property losses, disasters can have an effect on victims’ taxes. The IRS wants taxpayers to know that when a disaster strikes, the agency is here to help.
Here are some resources taxpayers can find on IRS.gov:
The IRS has launched an easy-to-use webpage, IRS.gov/taxreform, with information about how the Tax Cuts and Jobs Act affects your taxes, with a special section focused on tax exempt entities.
The tax reform page features three areas designed specifically for:
Visit IRS.gov/taxreform often for the latest updates, guidance and FAQs issued for the Tax Cuts and Jobs Act.
After a disaster, taxpayers might need to reconstruct records. This could help them prove their losses, which may be essential for tax purposes, getting federal assistance or insurance reimbursement.
Here are several things taxpayers can do to help reconstruct or get copies of specific types of records after a disaster:
Tax Return Transcripts
Proof of loss
Records about property
Publication 547, Casualties, Disasters, and Thefts
Publication 584, Casualty, Disaster, and Theft Loss Workbook
Publication 584-B, Business Casualty, Disaster, and Theft Loss Workbook
Publication 2194, Disaster Resource Guide for Individuals and Businesses
Small Business Administration
The IRS reminds employers that several programs have been affected as a result of the Tax Cuts and Jobs Act passed last year. This includes changes to fringe benefits, which can affect an employer's bottom line and its employees' deductions.
Here’s information about some of these changes that will affect employers:
Entertainment Expenses & Deduction for Meals
The new law generally eliminated the deduction for any expenses related to activities generally considered entertainment, amusement or recreation.
However, under the new law, taxpayers can continue to deduct 50 percent of the cost of business meals if the taxpayer or an employee of the taxpayer is present, and the food or beverages are not considered lavish or extravagant. The meals may be provided to a current or potential business customer, client, consultant or similar business contact. Food and beverages that are purchased or consumed during entertainment events will not be considered entertainment if either of these apply:
The new law also disallows deductions for expenses associated with qualified transportation fringe benefits or expenses incurred providing transportation for commuting. There is an exception when the transportation expenses are necessary for employee safety.
Bicycle Commuting Reimbursements
Under the new law, employers can deduct qualified bicycle commuting reimbursements as a business expense. The new tax law suspends the exclusion of qualified bicycle commuting reimbursements from an employee’s income. This means that employers must now include these reimbursements in the employee’s wages.
Qualified Moving Expenses Reimbursements
Employers must now include moving expense reimbursements in employees’ wages. The new tax law suspends the exclusion for qualified moving expense reimbursements.
There is one exception as members of the U.S. Armed Forces can still exclude qualified moving expense reimbursements from their income if they meet certain requirements.
Employee Achievement Award
Special rules allow an employee to exclude achievement awards from their wages if the awards are tangible personal property. An employer also may deduct awards that are tangible personal property, subject to certain deduction limits. The new law clarifies the definition of tangible personal property.
The rehabilitation tax credit offers an incentive for owners to renovate and restore old or historic buildings. Tax reform legislation passed in December 2017 changed when the credit is claimed and provides a transition rule:
Taxpayers use Form 3468, Investment Credit, to claim the rehabilitation tax credit and a variety of other investment credits. Form 3468 instructions have detailed requirements for completing the form.
Rehabilitation Tax Credit - Real Estate Tax Tips
Internal Revenue Code Section 47
Don't forget - October is the month for preparing third-quarter 2018 payroll reports. As you begin gathering the information you'll send to federal, state and local governments, check your compliance in these four key areas:
And if you have employees and independent contractors, make sure to know the difference so you can ensure your workers are classified correctly.
When you pay an employee more than $200,000 in a calendar year, you'll also withhold an additional Medicare tax of 0.9 percent from your employee's wages. Keep in mind, there is no employer match for the additional Medicare tax.
Call if you have questions about your payroll taxes. We're here to help you stay up to date.
October 15 is the filing deadline for taxpayers who requested an extension for their 2017 tax return. However, those who have an extension should mark this coming Monday, Oct. 15 as the deadline to file.
While the deadline is just around the corner, there are still things these taxpayers can remember to make sure they file a complete and accurate return. Here are a few tips and reminders for taxpayers who have not yet filed:
Try IRS Free File or e-file. Taxpayers can e-file their tax return for free through IRS Free File. The program is available on IRS.gov through Oct. 15. IRS e-file is easy, safe and the most accurate way to file taxes.
File by Oct. 15. Taxpayers with extensions should file their tax returns by Monday, Oct. 15. If they owe, they should pay as much as possible to reduce interest and penalties. IRS Direct Pay allows individuals to securely pay from their checking or savings accounts. These taxpayers can consider an installment agreement, which allows them to pay over time.
There is more time for the military. Military members and those serving in a combat zone generally get more time to file. These taxpayers typically have until at least 180 days after they leave the combat zone to both file returns and pay any taxes due.
There is also more time in certain disaster areas. People who have an extension and live or work in a disaster area often have more time to file. The disaster relief page on IRS.gov has more information.
Taxpayers owed a refund should use Direct Deposit. The fastest way for taxpayers to get their refund is to combine direct deposit and e-file.
There are IRS online payment options for taxpayers who owe. Taxpayers who requested an extension should have paid the tax they owed by the deadline back in April. Taxpayers who find they still owe taxes can pay them with IRS Direct Pay. It’s the simple, quick and free way to pay from a checking or savings account. For other payment options, taxpayers can visit the Paying Your Taxes page on IRS.gov.
Keep a copy of tax return. Taxpayers should keep a copy of their tax return and all supporting documents for at least three years.
Taxpayers can view their account information. Individual taxpayers can go to IRS.gov/account and login to view their balance, payment history, pay their taxes and access tax records through Get Transcript. Before setting up an account, taxpayers should review Secure Access: How to Register for Certain Online Self-Help Tools to make sure they have the information needed to verify their identities.
Health savings accounts (HSAs) have been around a long time, and little has changed since they were first introduced in 2003. They offer tax benefits, many of which you can benefit from if you know how. Here's a refresher on how HSAs work:
Keep in mind that other rules apply, including the opportunity to fund an HSA with a tax-free rollover from your individual retirement account.
Call if you have questions about how you can make the most tax-savvy choices with your HSA.
IRS issues guidance on Tax Cuts and Jobs Act changes on business expense deductions for meals, entertainment
WASHINGTON - The Internal Revenue Service issued guidance today on the business expense deduction for meals and entertainment following law changes in the Tax Cuts and Jobs Act (TCJA).
The 2017 TCJA eliminated the deduction for any expenses related to activities generally considered entertainment, amusement or recreation.
Taxpayers may continue to deduct 50 percent of the cost of business meals if the taxpayer (or an employee of the taxpayer) is present and the food or beverages are not considered lavish or extravagant. The meals may be provided to a current or potential business customer, client, consultant or similar business contact.
Food and beverages that are provided during entertainment events will not be considered entertainment if purchased separately from the event.
Prior to 2018, a business could deduct up to 50 percent of entertainment expenses directly related to the active conduct of a trade or business or, if incurred immediately before or after a bona fide business discussion, associated with the active conduct of a trade or business.
The Department of the Treasury and the IRS expect to publish proposed regulations clarifying when business meal expenses are deductible and what constitutes entertainment. Until the proposed regulations are effective, taxpayers can rely on guidance in Notice 2018-76.
Updates on the implementation of the TCJA can be found on the Tax Reform page of IRS.gov
Are you up to your ears in tax debt or at odds with the IRS over your tax liability? You may have more payment options than you think.
Offer in compromise (OIC)
Essentially, an OIC is an agreement with the IRS to settle your tax liability for less than the full amount owed. Usually, the IRS won't accept an OIC unless the amount you offer is equal to or greater than the "reasonable collection potential" (RCP) from assets you own - including real estate, autos, bank accounts and future earnings.
The IRS may accept an OIC for one of three reasons:
The application fee for an OIC is generally $186, although there are certain exceptions.
You may end up deciding to apply for an installment agreement instead if you can't pay the full amount of tax you owe within the OIC payment parameters. An installment agreement allows you to make a series of monthly payments over time.
The IRS offers various options for making these payments, including:
The user fee for installment agreements varies, depending on the type of payment, but the maximum fee is $225. Interest and possibly penalties will also be added to the amount owed.
Which option is better? It depends on your personal situation. Call to discuss what option is right for you.
To better serve our clients and friends, to keep you up-to-date and informed, our blog is a resource for tax tips and overall accounting related articles. We hope you find this useful!