Here are some changes made by TCJA. IRS also made a few revisions to help protect taxpayers.
State and local tax (SALT) deductions are now limited to $5,000 for a married person filing a separate return and $10,000 for all other filers. This limit applies to the 2018 to 2025 tax periods. Click to learn which taxpayers are impacted by the SALT limit.
Special Tax Breaks for U.S. Armed Forces
Key tax benefits are available to members of the military including combat pay, foreign earned income exclusion, filing deadline postponement, automatic extensions and earned income tax credit; just to start. Dependent care assistance programs available for military personnel, are also excludable and not included in the military member’s income. Click to get more benefits.
To provide greater security and improve transparency, IRS now requires an ITIN or SSN from individuals named as “responsible party” on Form S-4, Application for Employer Identification Number. This revision is effective May 13, 2019. Only government entities are exempt from the responsible party requirement, to include military and state national guards. Click to get the entire news release.
Penalty Relief Threshold Lowered to 80 Percent
IRS expands penalty waiver for taxpayers whose withholding and estimated tax payments fell short in 2018. The usual threshold is 90 percent to avoid a penalty. An 85 percent threshold was announced Jan 16. “Taxpayers who have already filed for tax year 2018 but qualify for this expanded relief may claim a refund by filing Form 843, Claim for Refund and Request for Abatement and include the statement “80% Waiver of estimated tax penalty” on Line 7. This form cannot be filed electronically.” Click to learn more.
A taxpayer affected by disaster could be any individual whose principal residence is located in a disaster area; the spouse of an affected taxpayer; or any business or sole priorietor whose principal place of business is located in a disaster area. Also included is any individual, business or sole proprietor not located in a covered disaster area, but whose records necessary to meet an IRS deadline are located in the disaster area.
There are four (4) types of disaster relief:
• Administrative relief is the granting of additional time to file tax returns, pay taxes and perform other time sensitive tasks. You may also be able to get late filing and payment penalties waived or abated.
• Tax relief is claiming casualty losses on your tax return.
• For Safe harbor provisions see your tax professional.
• Election to claim disaster losses on a prior year tax return.
Taxpayers may elect to deduct a casualty loss that occurred in the current tax year on their preceding year tax return if the casualty loss occurred in a federally declared disaster area determined to warrant federal assistance.
The election to claim disaster losses on a preceding year tax return can be made up to six months after the due date of the taxpayer’s federal income tax return for the disaster year (without regard to any extension of time to file.) Effective for tax returns filed after October 13, 2016. Click to learn more about disaster relief.