December 24, 2019 - Christmas Eve Update

Time for some end of the year Tax News!

• Some unpopular Obama-era taxes have been eliminated – 40% excise tax on expensive health insurance plans, fee charged to health insurers and a 2.3% excise tax on medical devices.

• Congress is considering the “SECURE ACT”, which would  require minimum IRA distributions starting 72 (vs. 70.5), allow contributions past the age of 70.5, require inherited IRAs to be withdrawn within 10 years and require 401(K) plans to show annuity illustrations on benefit statements.

• The 2019 1040 is going to look different! Pensions and annuities will no longer be lumped with IRA distributions – these two incomes will have their own boxes. The health insurance coverage check box will disappear. The virtual currency checkbox will appear. Attaches schedules will decrease from 6 to 3. People who deduct alimony will need to fill in the date of the divorce.

• IRS developed a new form – 1040-SR – for senior citizens. It’s the same form 1040-SR but with larger-print text for the visually impaired.

• Does your business deduct charitable expenses? The IRS ruled that business can deduct charitable contributions only if they are “related to the payer’s business” and there is a “commensurate financial gain”.

• IRS is going to be scrutinizing tax credits for electric cars. The IRS estimates that they gave out close to $83 million in erroneous credits in the last four years. To increase their due diligence – the IRS will now compare the VIN numbers on Form 8936 to a third party VIN database.

• Currently 77% of taxpayers receive their refunds electronically, a 6% increase from 2011. Those who opt for paper checks are mostly lower-income filers, people over 65 and single people between the ages of 18-25. Get with the program! Request an electronic refund! These are processed faster and electronic refunds can’t be lost in the mail!