The new tax bill signed in December 2017 has numerous changes for business and individuals. Below is a brief description of some of the business deduction changes.
2017 Standard Mileage Rates for Business, Medical and Moving AnnouncedIR-2016-169, Dec.13, 2016
WASHINGTON — The Internal Revenue Service today issued the 2017 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.
Beginning on Jan. 1, 2017, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:
The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs.
Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.
A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be used for more than four vehicles used simultaneously.
These and other requirements are described in Rev. Proc. 2010-51. Notice 2016-79, posted today on IRS.gov, contains the standard mileage rates, the amount a taxpayer must use in calculating reductions to basis for depreciation taken under the business standard mileage rate, and the maximum standard automobile cost that a taxpayer may use in computing the allowance under a fixed and variable rate plan.
WASHINGTON, D.C. (DECEMBER 7, 2016)
BY MICHAEL COHN
The Senate passed legislation Wednesday eliminating a tax penalty on employers who reimburse employees for the cost of health insurance premiums, following passage of the measure last week in the House.
The IRS began enforcing the penalty on employers last year, even though it isn’t part of the Affordable Care Act. Employers who violate the rule can be fined up to $100 per day for each employee, or up to $36,500 a year, which is 18 times more than the penalty imposed on larger employers that don’t offer insurance to workers.
Under Section 18001 of the 21st Century Cures Act, business owners would be permitted to compensate employees for the cost of individual insurance premiums or medical visits. President Obama has issued a statement in support of the legislation.
The National Federation of Independent praised passage of the bill. “Both the Senate and the House have now passed critical legislation to protect small business owners from outrageous IRS fines,” said NFIB president and CEO Juanita Duggan in a statement. “Our research showed that a significant percentage of NFIB members reimbursed employees for the cost of health insurance, a practice the IRS tried to stamp out despite the lack of clear direction from Congress. Now Congress has acted to make it clear that businesses should not be punished just for trying to help their employees pay for health care costs.”
The legislation includes a number of other sweeping health care provisions, including more funding for research into diseases, improvements in the mental health treatment system, and an overhaul of the regulatory system for medical devices and pharmaceuticals. It also includes funding to fight opioid drug abuse, collect genetic information from a million volunteers for medical research purposes and provide money to back Vice President Joe Biden’s “moonshot” effort to find a cure for cancer.
“One of the last times I'll preside over an actual Senate vote count,” Biden tweeted Monday. “A lot of lives will be saved by this bill, God willing.”
The bill also provides more authority for the National Institutes of Health to fund innovative medical research, allowing it to set up "Eureka prize" competitions to find effective treatments.
From Accounting Today
The IRS announced on Thursday that it has launched an online tool that allows individuals to check their tax account balances online, including tax due, penalties, and interest, after they complete an online registration process called Secure Access. To register for Secure Access the first time, taxpayers must have an email address, a text-enabled cellphone in the taxpayer’s name, and specific account information for the taxpayer, such as credit card accounts and loan account numbers. - See more at: http://www.journalofaccountancy.com/news/2016/dec/tax-tool- . . .
—Sally P. Schreiber (firstname.lastname@example.org) is a JofA senior editor.
When it comes to the IRS tax-scam epidemic, an ounce of prevention is worth a pound of cure
Nearly 18 million Americans were victims of identity theft in 2014. Here are a few steps you can take to protect yourself.
Article from Forbes Magazine
The election of Donald Trump, coupled with Republican control over the House and Senate, mean tax cuts are inevitable. So, deferring income into next year might be wise when rates should be lower. From that viewpoint, it seems obvious that the Trump tax plan could impact your 2016 year-end planning. Just be wary of the ‘constructive receipt’ tax doctrine, discussed below. Under current law, we pay tax on ordinary income tax at graduated rates stretching from 10% to 39.6%. Add Obamacare’s 3.8% surtax on net investment income, and the top federal rate for individuals is 43.4%. Even capital gains now pay the extra 3.8%.
The IRS will likely begin accepting income tax returns in the upcoming filing season with “no significant delays,” IRS Commissioner John Koskinen told the AICPA National Tax Conference in Washington on Tuesday. Return filing can begin “certainly before the end of January,” Koskinen said, although he did not announce an exact date. The IRS’s ability to start tax season on time partly reflects that the current run-up to tax season, unlike previous ones, is not hampered by uncertainty surrounding the fate of the retroactive extension of expired tax provisions, thanks to the Protecting Americans From Tax Hikes (PATH) Act of 2015 (part of the Consolidated Appropriations Act, 2016, P.L. 114-113).
However, for some taxpayers, Koskinen said, the PATH Act will mean delays in receiving refunds. Due to a change to Sec. 6402(m), starting in 2017, refunds for returns claiming an earned income tax credit or additional child tax credit cannot be issued before Feb. 15. Despite this statutorily mandated delay, Koskinen urged return preparers to submit returns as they usually do, and not hold them until after Feb. 15, because that will only put the returns further back in the queue. Security measures Another new PATH Act change for 2017 requires Forms W-2, Wage and Tax Statement, to be filed with the Social Security Administration by Jan. 31. Those changes are intended to give the IRS a better chance to check returns and prevent improper payments and better protect taxpayers against fraudulent refund claims using stolen identities, Koskinen noted. Koskinen said he hoped the Service could build on a successful 2016 filing season that saw improved levels of telephone service to taxpayers and practitioners, and progress throughout the year in stopping identity theft fraud. The former, he said, was largely due to an additional $290 million funding appropriation.
The IRS’s need for increased funds after years of budget cuts was a constant refrain through Koskinen’s address, and he said it will be his biggest priority in the remaining year of his five-year term as commissioner. Koskinen touted the work this year of the Security Summit, a cooperative effort by the IRS with representatives of preparers, the tax preparation software industry, financial institutions, and state tax administrators, noting that its work accompanies a drop of more than 50% in filings by taxpayers of Form 14039, Identity Theft Affidavit. But, he said, thieves may be adapting. Foreign organized crime syndicates have a “stunning” estimated 1 billion stolen online user IDs and passwords with which to “ping” banks for financial account access. “It’s no longer beanbag we’re playing here,” he said, “but a serious, ongoing battle.” In trying to predict thieves’ strategy, the IRS has grown increasingly concerned about tax preparers’ systems and their vulnerabilities. “If they can hack into your systems and get the data about your clients, they are better able to file a more effective-looking fraudulent return,” he said; hence the IRS is promoting its “Protect Your Clients; Protect Yourself” campaign. Another security measure Koskinen promoted for the upcoming filing season is expansion of the use of a 16-digit verification code on Forms W-2 from 2 million last year to 50 million, and he urged practitioners in the audience to enter any such code they encounter into returns. This could help reduce the number of false positives in the millions of suspicious returns the IRS stopped last year. IRS future state Koskinen also sought to reassure the audience that the IRS’s Future State initiative would not require taxpayers who do not wish to interact with the IRS online to do so but would allow them to communicate by phone or in person
Earlier Tuesday, National Taxpayer Advocate Nina Olson described her reservations on that score. Olson said she has observed in recent years that “as the responsibilities of taxpayers have become more and more onerous, the IRS has become more remote.” She identified her top priority going forward as working to encourage a culture of engagement by the IRS with taxpayers and one not as quick to assume taxpayers are not complying with their obligations. The IRS’s primary goal should be “building trust, not just by creating an online account by which they can look up what they owe,” Olson said. Koskinen stressed that the Future State is “not some new invention” but part of a natural evolution in recent years of online tools such as “Where’s My Refund?” and online installment agreements—for taxpayers who prefer to deal with the IRS online. And having more taxpayers get their answers online could in turn improve the IRS’s telephone service, as well as allowing for quicker review of returns for errors that taxpayers can correct more expeditiously and simply, he said. —Paul Bonner (email@example.com) is a JofA senior editor.
The U.S. stock market rebounded by midday the day after the U.S. presidential election — a quick reversal that erased an overnight 800-point plunge by Dow futures as investors were initially spooked by a surprise Donald Trump win. “The risk markets hate uncertainty,” said Wharton finance professor Jeremy Siegel. But then investors took the broader perspective that Republicans are vastly more capital friendly than Democrats and changed course. He noted that Wall Street also has learned lessons from Brexit — in which the markets recovered after the initial shock of the vote to exit. It taught investors not to overreact to the surprise election news, he says.
According to Siegel, if the financial markets continue to be calm over the next few weeks, the Fed will likely be on track for a December rate hike. But he saw higher long-term interest rates arriving as Trump talks about big infrastructure spending and tax cuts that could fuel huge deficits. Siegel agreed with some projections that the Dow Jones Industrial Average could hit 25,000 or higher in about five years. His own projection pegs gains at an annual return of 6% to 6.5%, or 5% after inflation. Siegel, and PNC’s chief investment strategist Bill Stone, joined the Knowledge@Wharton show, which airs on the Wharton Business Radio on Sirius XM Channel 111, to discuss the effect of Trump’s election on the markets.
By Roger Russell
November 9, 2016
Donald Trump has already done the impossible by winning the presidency, but once he takes office he may have to do so again – by finding a way to pay for the across-the-board tax cuts he promised during his campaign. “Trump’s plan is vague on the ‘pay-fors’”, said Mark Luscombe, principal federal tax analyst for Wolters Kluwer Tax & Accounting. “They’re aware of the problem, but haven’t yet identified a solution.”
The large-scale revision to the Tax Code that Trump has proposed will be limited by the usual partisan divisions as well as differences Trump has had with members of his own party.
from Forbes Magazine
by Tony Nitti
Opinions expressed by Forbes Contributors are their own
You’re absolutely sure?
Donald Trump was el…
You’re sure you’re sure? OK, if you say so. Here goes….
Donald Trump was elected the 45th President of the United States last night, and while I allow that to sink in for a bit, it’s also worth nothing that Republicans retained control over the House and Senate. As a result, the GOP has unfettered control over the future of tax policy, meaning we may be in for some big changes. What can you expect?
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