September 30, 2020
Congress passed tax legislation in its budget deal this past December some of which impacts 2018 tax returns that were already filed.
Please note that the retroactive changes and extenders may lead to amended 2018 tax returns – should the cost be worthwhile.
Business tax extenders impact specific industries and some impacting certain entities – like the look-thru rule for related CFCs and changes related to Qualified Opportunity Zones.
Individual tax changes should show up in the tax software – kiddie tax rate change; medical expense reduction; others like mortgage insurance premium, discharge of indebtedness may not have been captured on information reporting documents. Energy efficient homes credit and energy efficient commercial buildings deduction are among other esoteric tax law extenders.
SECURE Act changes: non-tuition stipend or fellowship payments are eligible for IRA contributions; repeal of maximum age for traditional IRA contributions; IRA distributions of RMD, required minimum distribution, begins for new retirees at 72 not 70 ½; distributions from retirement plans for births or adoptions penalty-free; expansion of Sec. 529 plans; modifies rules relative to unrelated employers that join multiple employer plans and expands provisions for long-term, part time employees to participate in retirement plans. There are other specific changes for retirement plans.
The failure to file penalty is increased to the lesser of $435 or 100% of the amount of the tax due.
Contact us directly should you require further information.