IRS Confirms Tax Filing Season to Begin January 28, 2019

IR-2019-01, January 7, 2019

WASHINGTON ― Despite the government shutdown, the Internal Revenue Service today confirmed that it will process tax returns beginning January 28, 2019 and provide refunds to taxpayers as scheduled.

“We are committed to ensuring that taxpayers receive their refunds notwithstanding the government shutdown. I appreciate the hard work of the employees and their commitment to the taxpayers during this period,” said IRS Commissioner Chuck Rettig.

Congress directed the payment of all tax refunds through a permanent, indefinite appropriation (31 U.S.C. 1324), and the IRS has consistently been of the view that it has authority to pay refunds despite a lapse in annual appropriations. Although in 2011 the Office of Management and Budget (OMB) directed the IRS not to pay refunds during a lapse, OMB has reviewed the relevant law at Treasury’s request and concluded that IRS may pay tax refunds during a lapse.

The IRS will be recalling a significant portion of its workforce, currently furloughed as part of the government shutdown, to work. Additional details for the IRS filing season will be included in an updated FY2019 Lapsed Appropriations Contingency Plan to be released publicly in the coming days.

“IRS employees have been hard at work over the past year to implement the biggest tax law changes the nation has seen in more than 30 years,” said Rettig.

As in past years, the IRS will begin accepting and processing individual tax returns once the filing season begins. For taxpayers who usually file early in the year and have all of the needed documentation, there is no need to wait to file. They should file when they are ready to submit a complete and accurate tax return.

The filing deadline to submit 2018 tax returns is Monday, April 15, 2019 for most taxpayers. Because of the Patriots’ Day holiday on April 15 in Maine and Massachusetts and the Emancipation Day holiday on April 16 in the District of Columbia, taxpayers who live in Maine or Massachusetts have until April 17, 2019 to file their returns.

Software companies and tax professionals will be accepting and preparing tax returns before Jan. 28 and then will submit the returns when the IRS systems open later this month. The IRS strongly encourages people to file their tax returns electronically to minimize errors and for faster refunds.

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The New QBI Deduction = Huge Tax Savings

The New QBI Deduction = Huge Tax Savings

by: Mike Ward, EA

The Qualified Business Income (QBI) Deduction is a game changer for small business! In its basic terms the deduction is 20% of business income.  “Wow” is what we should be thinking on this deduction.  It will include most individuals who have income from the following:

  • K1 income from 1120S SCorps & 1065 Partnerships
  • Schedule C Sole Proprietors
  • Schedule E Rental Properties
  • Schedule E Other Rental Activities
  • Statutory Employees
  • Schedule F Farm income

There are details to this deduction and each situation is different. See a tax professional this year so you can take advantage of this once in a generation Tax Deduction.

 

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TAX REFORM

How will tax reform affect you? Contact a local tax expert today!

The Tax Cuts and Jobs Act is the largest change to the tax code since 1986.  This bill will be effective for the 2018 tax year and beyond.  For the vast majority of  taxpayers this means they will not see a change in there taxes until they file a return in early 2019. Below are a FEW key changes that will impact the majority of our clients.

Individual,  Married Filing Joint,  and Head of Household Filers:

  • Lower tax brackets for the large majority of filers.  (new brackets listed below)
  • Doubling (approximately) of the standard deduction from to $12,000 for individuals and $24,000 for married filing joint, and $18,000 for head of household.
  • Doubling the Child Tax Credit to $2,000 per child.
  • Add the 529 savings accounts for child education savings (was a Maryland State deduction not federal deduction).
  • 20% deduction on “pass-through” income for most S-Corps and Partnerships.
  • Repeal of the Affordable Care Act’s individual mandate beginning 2019.
  • Elimination of the interest deduction on home equity loans.
  • Elimination of most itemized deductions OTHER THAN home mortgage interest, state and local taxes, property tax, charitable deductions, and medical deductions.
Tax Rate Income Range for Individuals   Income Range for Married Joint Filers
10% $0 – $9,525   $0 – $19,050
12% $9,526 – $38,700   $19,051 – $77,400
22% $38,701 – $82,500   $77,401 – $165,000
24% $82,501 – $157,500   $165,001 – $315,000
32% $157,501 – $200,000   $315,001 – $400,000
35% $200,001 – $500,000   $400,001 – $600,000
37% $500,001 and Up   $600,001 and Up

Businesses: SCORPs, PARTNERSHIPS

The new tax code favors these structures with a 20% deduction on pass through income.  Please call OC Tax today and see if your business could benefit by converting to a  “Pass-Through” entity structure.

This is a brief description of key points that effect our clients and potential new clients, we will being updating the information in the coming weeks.

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