The IRS posted a draft of a form that affected taxpayers will submit with their 2019 tax returns showing how they computed their qualified business income (QBI) deduction under Sec. 199A. Taxpayers who have QBI, qualified real estate investment trust (REIT) dividends, or qualified income from a publicly traded partnership (PTP) will use Form 8995, Qualified Business Income Deduction Simplified Computation, to report the computation. To read the full article in the Journal of Accountancy, click: Taxpayers Will File QBI Deduction Computation with IRS Next Year.
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The Tax Court also denies capital gain treatment but allows business deductions for a taxpayer’s subsequent shooting activity. Recently, the Tax Court ruled that an individual who received income as a nominee of a C corporation was not subject to the hobby loss rules of Sec. 183. To read the full article in the Journal of Accountancy, click: Salesman’s Termination Payment Held Not For Goodwill.
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With the year coming to a close, Kiplinger offers last-minute tips for retirees to enhance their tax savings this year. Clients nearing retirement will need to revise their tax-saving strategies, as some tax breaks are no longer available and replaced by new ones, thanks to the new tax law, according to Kiplinger. For example, these clients should consider running the numbers based on standard deduction and itemized deduction and choose the option that will generate the bigger savings. To read the full article in Financial Planning, click: Trim Tax Tabs with These Year-End Moves: Tax Strategy Scan.
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The proposed rules include a way that taxpayers can group or aggregate separate trades or businesses and an anti-abuse rule designed to prevent taxpayers from separating out parts of an otherwise disqualified business in an attempt to qualify those separated parts for the Sec. 199A deduction. To read the full article in the Journal of Accountancy, click: Qualified Business Income Deduction Regulations Proposed.
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Clients will be better paying off their mortgage before the retirement date to get rid of the feeling of having a debt burden. Carrying no mortgage debt into retirement will also give clients guaranteed return and greater flexibility in their budget. And about that tax deduction, it is not enough of a reason to keep a mortgage. To read the full article in FinancialPlanning, click: Yes, Clients Should Pay Off Their Mortgages Before Retiring.
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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 standard deduction, increased the child tax credit, limited or discontinued certain deductions, and changed the tax rates and brackets. To read the full article in The Tax Advisor, click: Draft 2019 Form W-4 and Instructions Posted.
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Congressional Republicans created a juicy new tax break for clients when they rewrote the U.S. tax code late last year. Three months later, hundreds of thousands of them still do not know if they qualify. The IRS has said it will provide guidance detailing exactly who is allowed to take the so-called pass-through deduction. With billions of dollars at stake, business groups are lobbying for the agency to open the doors to the deduction as widely as possible. To read the full article in FinancialPlanning, click: No One’s Sure Who Qualifies for this $415B Tax Deduction.
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Qualified charitable distributions can offer a tax-saving opportunity, and they may be more advantageous to consider under the new tax law. QCDs, which are available only for certain clients, count toward required minimum distributions and are excluded from income. To read the full article in InvestmentNews, click: Why Aren’t Clients Using QCDs? Help Them!
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Republican lawmakers released a framework for tax reform, announcing that their goals are to cut tax rates, simplify the Internal Revenue Code, and provide a more competitive environment for business. The framework generally reiterates proposals made in April. Alistair Nevius, JofA’s editor in chief, explains. To read the full article in the Journal of Accountancy, click: Republicans Unveil Tax Reform Framework.