Collaboration
Our blog is here to provide you the latest local tax news and to share insights among our members.
Tax Cuts and Jobs Act was announced today
Today, House Ways and Means Committee Chairman Kevin Brady (R-TX) introduced the Tax Cuts and Jobs Act, a bill that sets the stage for tax reform in 2017. The Ways and Means Committee is expected to mark up the legislation on November 6th. NAEA’s Government Relations team, including members from the Government Relations Committee, plan to review the legislation and offer comments.
E-filing for 2016 individual returns will end on November 18th
IR-2017-183, Oct. 31, 2017
WASHINGTON —The Internal Revenue Service today reminded people, including those in disaster areas, who want to file a 2016 tax return electronically to do so by Saturday, Nov. 18, 2017. Filing of paper tax returns will remain available after that date.
IRS Modernized e-file, the system that processes electronically-filed individual returns, will shut down after Nov. 18 so the agency can perform annual maintenance and to enable the IRS to reprogram the system for the upcoming 2018 tax-filing season.
As a result, any taxpayer needing to file after Nov. 18 will need to do so on paper.
While most individuals have already filed their 2016 federal tax returns, certain taxpayers may qualify for an extension until Jan. 31, 2018. This includes taxpayers who live in a federally declared disaster area, have a U.S. tax filing obligation, and had previously obtained a valid 6-month extension of time to file their federal tax return. The federally declared disaster areas include hurricane and tropical storm victims in Georgia, Florida, Puerto Rico, the Virgin Islands and parts of Texas, Louisiana and South Carolina, as well as wildfire victims in parts of California
IRS Gives Tax Relief to Victims of California Wildfires; Extension Filers Have Until Jan. 31 to File (IR 2017-172)
WASHINGTON –– Victims of wildfires ravaging parts of California now have until Jan. 31, 2018, to file certain individual and business tax returns and make certain tax payments, the Internal Revenue Service announced today.
This includes an additional filing extension for taxpayers with valid extensions that run out this coming Monday, Oct. 16.
Currently, the IRS is providing relief to seven California counties: Butte, Lake, Mendocino, Napa, Nevada, Sonoma and Yuba. Individuals and businesses in these localities, as well as firefighters and relief workers who live elsewhere, qualify for the extension. The agency will continue to closely monitor this disaster and may provide other relief to these and other affected localities.
The tax relief postpones various tax filing and payment deadlines that occurred starting on Oct. 8, 2017. As a result, affected individuals and businesses will have until Jan. 31, 2018, to file returns and pay any taxes originally due during this period.
This includes the Jan. 16, 2018 deadline for making quarterly estimated tax payments. For individual tax filers, it also includes 2016 income tax returns that received a tax-filing extension until Oct. 16, 2017. The IRS noted, however, that because tax payments related to these 2016 returns were originally due on April 18, 2017, those payments are not eligible for this relief.
A variety of business tax deadlines are also affected, including the Oct. 31 deadline for quarterly payroll and excise tax returns. Calendar-year tax-exempt organizations whose 2016 extensions run out on Nov. 15, 2017 also qualify for the extra time.
In addition, the IRS is waiving late-deposit penalties for federal payroll and excise tax deposits normally due after Oct. 8 and before Oct. 23, if the deposits are made by Oct. 23, 2017. Details on available relief can be found on the disaster relief page on IRS.gov.
The IRS automatically provides filing and penalty relief to any taxpayer with an IRS address of record located in the disaster area. Thus, taxpayers need not contact the IRS to get this relief. However, if an affected taxpayer receives a late filing or late payment penalty notice from the IRS that has an original or extended filing, payment or deposit due date falling within the postponement period, the taxpayer should call the number on the notice to have the penalty abated.
In addition, the IRS will work with any taxpayer who lives outside the disaster area but whose records necessary to meet a deadline occurring during the postponement period are located in the affected area. Taxpayers qualifying for relief who live outside the disaster area need to contact the IRS at 866-562-5227. This also includes firefighters and workers assisting the relief activities who are affiliated with a recognized government or philanthropic organization.
Individuals and businesses who suffered uninsured or unreimbursed disaster-related losses can choose to claim them on either the return for the year the loss occurred (in this instance, the 2017 return normally filed next year) or the return for the prior year (2016). See Publication 547 for details.
The tax relief is part of a coordinated federal response to the damage caused by these wildfires and is based on local damage assessments by FEMA. For information on disaster recovery, visit disasterassistance.gov.
Spidell: Flash Email: Hurricane Tax Relief
Hurricane tax relief (10-05-17)
On October 2, 2017, the President signed H.R. 3823, the Disaster Relief and Airport and Airway Extension Act of 2017, which provides temporary tax relief for victims of hurricanes Harvey, Irma, and Maria. The following is a brief overview of some of the provisions of this Act.
- Casualty losses: Affected taxpayers can calculate their deduction without regard to the 10% floor. Also, taxpayers aren’t required to itemize to take a casualty loss.
- Withdrawals from IRAs and retirement plans: Taxpayers located in the disaster areas may withdraw up to $100,000 from IRAs and qualified retirement plans as qualified hurricane distributions. The 10% penalty doesn’t apply, the distribution is included in income ratable over three years (by election), and withdrawals can be recontributed within three years.
- Loans from retirement plans: For qualified taxpayers, the limit on loans from qualified retirement plans is increased to $100,000 and the first loan repayment is delayed for one year.
- Charitable contributions: Contributions made between August 23, 2017, and December 31, 2017, for Harvey, Irma, or Maria relief efforts are not subject to the 50%, 30%, and 20% of AGI limitations under IRC §170(b). Note that hurricane contributions must be in cash. For taxpayers that do not itemize their deductions, the contributions can still be deducted in full in addition to their standard deduction.
- Credits:
- Employers in hurricane Harvey, Irma, or Maria disaster areas will be eligible for a new employee retention credit that equals 40% of the qualified wages for each eligible employee, up to the first $6,000 of wages.
- For taxpayers in the hurricane areas, if their earned income for 2017 is less than their earned income for 2016, they may elect to use their earned income for the 2016 tax year for purposes of calculating the Earned Income Credit and the Child Tax Credit.
California does not conform to any of the provisions of the Disaster Relief Act. However, any distributions or loans made from a qualified plan under the Act will not disqualify that plan for California purposes.
IRS Tips for reconstructing records after a disaster
IRS Tax Tip 2017-54, October 4, 2017
Taxpayers who are victims of a disaster might need to reconstruct records to prove their loss. Doing this may be essential for tax purposes, getting federal assistance, or insurance reimbursement.
Here are 12 things taxpayers can do to help reconstruct their records after a disaster:
- Taxpayers can get free tax return transcripts by using the Get Transcript tool on IRS.gov. They can also call 800-908-9946 to order them by phone.
- To establish the extent of the damage, taxpayers should take photographs or videos as soon after the disaster as possible.
- Taxpayers can contact the title company, escrow company, or bank that handled the purchase of their home to get copies of appropriate documents.
- Home owners should review their insurance policy as the policy usually lists the value of a building to establish a base figure for replacement.
- Taxpayers who made improvements to their home should contact the contractors who did the work to see if records are available. If possible, the home owner should get statements from the contractors to verify the work and cost. They can also get written accounts from friends and relatives who saw the house before and after any improvements.
- For inherited property, taxpayers can check court records for probate values. If a trust or estate existed, the taxpayer can contact the attorney who handled the trust.
- When no other records are available, taxpayers can check the county assessor’s office for old records that might address the value of the property.
- There are several resources that can help someone determine the current fair-market value of most cars on the road. These resources are all available online and at most libraries:
- Kelley’s Blue Book
- National Automobile Dealers Association
- Edmunds
- Taxpayers can look on their mobile phone for pictures that show the damaged property before the disaster.
- Taxpayers can support the valuation of property with photographs, videos, canceled checks, receipts, or other evidence.
- If they bought items using a credit card or debit card, they should contact their credit card company or bank for past statements.
- If a taxpayer doesn’t have photographs or videos of their property, a simple method to help them remember what items they lost is to sketch pictures of each room that was impacted.