The Newport Beach Tax Attorney blog is dedicated to tax issues serving Orange County and Southern California. Posts cover recent news and tax cases including offshore disclosures, tax litigation, IRS, and marijuana tax issues. For more on the Orange County Tax Attorney Joseph P. Wilson, visit www.wilsontaxlaw.com or 949.397.2292
Please note the availability of a new tax form, Form 1040-SR, featuring larger print and a standard deduction chart making it easier for older Americans to read and use. All lines and checkboxes on Form 1040-SR mirror the Form 1040, and both forms use all the same attached schedules and forms. The revised2019 instructionscover both Forms 1040 and 1040-SR. Taxpayers born before January 2, 1955, have the option to file Form 1040-SR whether they are working, not working or retired. The form allows income reporting from other sources common to seniors including investment income, Social Security and distributions from qualified retirement plans. Moreover, married taxpayers filing a joint return can use the Form 1040-SR regardless of whether one or both spouses are aged 65 or older or retired. Finally, the form can be used to file the 2019 federal income tax returns, which is due April 15, 2020.
Just a reminder to all employers and other businesses. This Friday, January 31, 2020, is the deadline for submitting wage statements and forms for independent contractors with the government. Employers also need to file their copies of Form W-2, Wage and Tax Statement, and Form W-3, Transmittal of Wage and Tax Statements, with the Social Security Administration by said deadline. The deadline also applies to certain Forms 1099-MISC, Miscellaneous Income, filed with the IRS to report non-employee compensation to independent contractors. If an employee does not receive their W-2 by the end of February, as a first step, they should contact their employer.
Contact Wilson Tax Law Group if you require assistance or have questions regarding your legal filing requirements at 949.397-2292.
Many people with less complex returns can do both their federal and state tax returns for free online through Free File offered either by the IRS or by states that have a similar public-private partnership. Inidivuals whose prior-year adjusted gross income was $69,000 or less can use IRS Free File. Generally, individuals must complete their federal tax return before they can begin their state taxes. More than 20 states also have a state Free File program patterned after federal partnership, which means many taxpayers are eligible for free federal and free state online tax preparation. Moreover, for residents of Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming, IRS Free File may be the only tax product required. Those states do not have an income tax. To take use of Free File:
Treasury issued new proposed (Reg-112607-19) and final (T.D. 9885) regulations on the base erosion anti-abuse tax (BEAT) on December 12, 2019. The BEAT is a minimum tax on modified taxable income, determined by adding back base erosion payments to US taxable income. The BEAT only applies to "applicable taxpayers" that have an annual average of $500 million or more in gross receipts, calculated over 3 years, and a base erosion percentage of 3 percent (2 percent for certain financial companies) (i.e., the ratio of deductible payments made to non-US related parties' overall deductible payments).
These new provisions provide some helpful news to captive insurance companies. The proposed regulations provide an election to forego deductions in order to stay under the 3 percent base erosion percentage cliff, and the final regulations provide that certain loss payments made on behalf of unrelated underlying insureds are not base erosion payments and are not included in either the…
The Internal Revenue Service confirmed that the nation's tax season will start for individual tax return filers on Monday, January 27, 2020, when the tax agency will begin accepting and processing 2019 tax year returns. The deadline to file 2019 tax returns and pay any tax owed is Wednesday, April 15, 2020. Remember you can extend the return due date, but not the payment date. More than 150 million individual tax returns for the 2019 tax year are expected to be filed, with the vast majority of those coming before the traditional April tax deadline.
In December 2019, the U.S. Tax Court delivered a gift to the IRS and entered its first decision on a syndicated conservation easement transaction. In TOT Property Holdings, LLC v. Commissioner, Docket No.005600-17, the Tax Court sustained in its entirety the IRS's determination that all tax benefits from a syndicated conservation easement transaction should be denied and that the 40% gross valuation misstatement and negligence penalties applied. The Tax Court found that the transaction failed the legal requirements applicable to donations of land easements and, in imposing the gross valuation misstatement penalty, found that the actual value of the easement donation was less than 10 percent of what was originally reported on the tax return. "In denying the deductions and upholding the 40% gross valuation misstatement penalty, the Tax Court confirmed that aggressive syndicated easement transactions simply will not survive scrutiny," said IRS Commissioner Chuck Rettig. &quo…