Tax News: April ’18
Find a tax pro. Do you need late help preparing your 2017 tax return? Although it won’t give you any “recommendations,” the IRS has compiled an online list of tax pros who can do the job. The list includes CPAs, tax attorneys, Enrolled Agents and others who met the requirements for the voluntary IRS program. You can search for the location of each preparer, as well as finding out their qualifications, at https://irs.treasury.gov/rpo/rpo.jsf.
New estate tax figure. It took awhile, but the IRS finally announced that the indexed federal estate tax exemption amount for 2018 is $11.18 million, not $11.2 million as originally estimated. (IRS Revenue Procedure 2018-18, 3/6/18) This update reflects the revised indexing method required by the Tax Cuts and Jobs Act (TCJA). Generally, this TCJA change will result in smaller inflation increases than the prior method.
Mo’ money for IRS? The budget for Fiscal Year 2019 proposed by President Trump would free up more money for the IRS. Specifically, the president is calling for $2.3 billion to address tax filing and compliance and $110 million to update IRS computer systems. Trump also wants to increase oversight of tax return preparers and give taxpayers more leeway to correct returns. Downside: Tax refunds could be delayed.
Tax climate control. Where are the best places in the country to do business from a tax perspective? You don’t have to look far for an answer. The Tax Foundation, an independent research group, recently posted its annual State Business Tax Climate Index (SBTCI) for 2018. According to the SBTCI, the 10 best tax states for businesses are as follows: (1) Wyoming, (2) South Dakota, (3) Alaska, (4) Florida, (5) Nevada, (6) Montana, (7) New Hampshire, (8) Utah, (9) Indiana and (10) Oregon. What are the worst tax states for doing business? As they have in recent years, California, New York and New Jersey bring up the rear. For the complete 2018 list from the Tax Foundation, visit https://taxfoundation.org/publications/state-business-tax-climate-index.
Employer mandate remains. The Tax Cuts and Jobs Act abolishes the individual health insurance mandate in 2019. But businesses with more than 50 full-time equivalent (FTE) employees still face tough penalties if they don’t provide affordable coverage. For 2018, the penalty is $2,320 multiplied by the number of FTEs (not counting the first 30). In addition, an employer could get hit with a fine of $3,480 for each FTE who buys marketplace coverage and obtains a credit. Affordable coverage is based on contributions from workers who don’t exceed 9.56% of total household income. Alternatively, employers can base the 9.56% calculation on employees’ pay rate, W-2 wages or the federal poverty line. Note: A company plan must pay at least 60% of the cost of covered health benefits.
