TCJA snack time: Gimme more, more, more
Betcha can’t have just one. We’re recalling that old advertising tag line for potato chips because it seems the same can be said of articles parsing the Tax Cuts and Jobs Act. Although the TCJA has been on the books for more than a year now, knotty issues are still arising. Here’s the latest.
No W-2c for moving expenses
The TCJA suspended employers’ reimbursement of employees’ qualified moving expenses through 2025. That created a vacuum for employers that agreed to reimburse employees in 2018 for moves made in 2017. To fill that vacuum, the IRS said only those reimbursements were tax-free to employees in 2018. But the IRS never said whether you had to report the reimbursement on employees’ W-2s, in Box 12, with Code P.
After W-2s were provided to employees, the IRS said Code P wasn’t required. But it neglected to clarify whether employers that used Code P on their W-2s had to file Form W-2c with the Social Security Administration to correct the error.
The IRS now says Form W-2c isn’t necessary. You may simply write a note to employees telling them to disregard this entry. Once more again: The IRS hasn’t clarified what to do if you have already filed Form W-2c.
Paycheck checkup webinar
Yes, paycheck checkups are back and, considering that the IRS still seems fixated on withholding accuracy, don’t expect them to go away any time soon.
Accuracy is a fine goal, but it seems to go against employees’ expectations, which lean toward favoring bigger tax refunds, at least according to the results of the March 2019 survey conducted by the New York Times and SurveyMonkey.
The IRS will host a free webinar—Understanding How to Do a ‘Paycheck Checkup’—on March 28, at 2:00 p.m. Eastern, 1:00 p.m. Central, 12:00 p.m. Mountain, 11:00 a.m. Pacific, 8:00 a.m. Hawaii.
Well, maybe the IRS will have more luck than we did trying to figure out its withholding calculator.
Point your browser here to sign up for the webinar.
Just want the TCJA to go away?
There’s comfort in what you know, or, frankly, knew.
We knew very well the 2% floor on itemized deductions, Schedule A deductions for unreimbursed business expenses, unlimited Schedule A deductions for state and local taxes and the 50% deduction disallowance on employees’ meal and entertainment expenses. The TCJA did away or suspended all those items.
But we never thought about challenging the TCJA in court. Apparently, one person did.
James M. Kerven, proceeding on his own behalf, challenged the Constitutionality of the law. Basis of his claim: Among other allegations, he claimed the TCJA violates the 14th Amendment because it creates “gross inequality” in taxation and that the “U.S. 1.5 trillion dollar loan facilitating the underpayment of taxes for current taxpayers … is an absurd violation of any intent to distribute the burden with any reasonable degree of equality.”
A federal trial court in upstate New York dismissed his case for lack of standing. In other words, he didn’t suffer a particular, imminent injury; merely being a taxpayer wasn’t enough.
More relief for underpaid 2018 taxes
Sometimes the IRS does listen. Taxpayers who paid at least 80% of their 2018 tax liability through withholding, estimated taxes or a combination of the two will now be exempt from the underpayment penalty. Earlier this year, the IRS had dropped the threshold down to 85%, from 90%, but several legislators and the AICPA wanted the threshold dropped to 80%.
Taxpayers who have already filed their 2018 1040s, but who qualify for this expanded relief may claim a refund by filing Form 843. Just be sure to include the statement “80% Waiver of estimated tax penalty” on Line 7. Form 843 can’t be filed electronically.
Yes, it’s baseball season again, and we are very happy. Not so happy, though, are the team owners, who struck out with trying to qualify for the 20% qualified business income deduction. Also 20% QBI losers: athletes with ginormous (and not so ginormous) contracts.