Leave it out. Want to help hurricane victims? The IRS has authorized a program where you don’t have to pay any money. Instead you forgo unused leave time—including vacation, sick or personal time—in exchange for cash contributions made by your employer. Under this program, you’re not taxed on the donated leave, and the employer claims the deduction. The deadline is more than a year off—Jan. 1, 2019. (IRS Internal News Release IR-2017-154, 9/14/87)
Going up? According to projections from various media sources, the annual gift-tax exclusion will increase from $14,000 per recipient to $15,000, beginning in 2018. This would be the first increase in the gift-tax exclusion amount, which can only go up in $1,000 increments, in five years. The official figures will be released in late October. We will have more to report on the gift-tax exclusion in next month’s issue.
Emotional response. If you receive a settlement for physical injury or illness, the proceeds are tax free, but not for amounts attributable to emotional distress. New case: A worker sued for a racially hostile environment and the employer paid up. Even though the worker claimed that he suffered physical symptoms as a result of the discrimination, the Tax Court ruled that these damages are taxable. (Collins, TC Summary Opinion 2017-74, 9/11/17)
Check on disaster aid. In the aftermath of hurricanes Harvey and Irma, the IRS cautioned taxpayers to beware fraudsters impersonating charities providing relief to victims. (IRS Internal News Release IR-2017-137, 8/31/17) The con artists use materials and websites similar to those of well-known organizations. Then they steal your money or personal identification information for nefarious means. Among other sensible tips, the IRS advises against sending cash to any disaster-relief charity. Also, for security and tax-record purposes, it is telling taxpayers to contribute by check, credit card or some other way that provides documentation of the donation. Finally, the IRS provides tools to quickly and easily check the status of charitable organizations. Visit www.irs.gov.
States granting amnesty. Several individual states are hoping that some leniency will help fill their tax coffers. Short-term amnesty programs are currently available in Oklahoma and Virginia. In Oklahoma, the state will waive all tax penalties and interest for taxpayers who confess to their delinquencies between Sept. 1 and Nov. 30. However, Virginia’s program is a little tougher. From Sept. 13 through Nov. 14, it will waive the penalties, but only 50% of the interest. Rhode Island is up next: Penalties will be waived from Dec. 1 to Feb. 15 of next year. For other state tax proposals on the drawing board, visit www.cost.org/WorkArea/DownloadAsset.aspx?id=95275. These programs may signal a trend if they prove to be successful.
- Small Business Tax Deduction Strategies No matches