Archive for Tax Cuts Jobs Act

Deducting Your Mortgage Interest After The Tax Reform

This past week, the IRS offered guidance on its website on the new restrictions placed by the Tax Cuts and Jobs Act (“TCJA”) on the home mortgage interest deduction.

The guidance is noteworthy for the U.S. expat community, because when it comes to the home mortgage interest deduction, the tax code does not distinguish between a home in the U.S. and a home abroad. In appropriate circumstances, the mortgage interest deduction can be an important tax saving method for citizens living abroad.

The Home Mortgage Interest Deduction Read More

Written by | Posted in Home Mortgage Interest Deduction • IRS • Tax Cuts Jobs Act

Tax Cuts Jobs Act (TCJA) – Changes To Deductions For Meals, Entertainment, And Expenditures

The Tax Cuts and Jobs Act[1] (“TCJA”) made various changes to the deductibility of certain entertainment, amusement, recreation, meals, and fringe benefit expenditures[2]. The central theme of the items below was to close the gap where items were previously deductible by an employer and not includible in the income of the employee (i.e., permanent differences with the Treasury losing on both ends). Rather than attempt to tax the recipient, Treasury appears to have generally chosen to deny deductibility to the employer (while retaining non-inclusion by the recipient).

Below is a summary of the relevant provisions impacted by TCJA: Read More

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Some Taxpayers Eligible For A Refund And Do Not Even Know It

Taxpayers who are not required to file a tax return may want to do so. They might be eligible for a tax refund and don’t even know it. Some taxpayers might qualify for a tax credit that can result in money in their pocket. Taxpayers need to file a 2017 tax return to claim these credits.

Here is information about four tax credits that can mean a refund for eligible taxpayers:

  • Earned Income Tax Credit. A taxpayer who worked and earned less than $53,930 last year could receive the EITC as a tax refund. They must qualify for the credit, and may do so with or without a qualifying child. They may be eligible for up to $6,318. Taxpayers can use the 2017 EITC Assistant tool to find out if they qualify.

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Written by | Posted in Individual Tax • Tax Credit • Tax Cuts Jobs Act • Tax Return

Calculator Helps Taxpayers Review Withholding For New Tax Law

WASHINGTON –The Internal Revenue Service today released an updated Withholding Calculator on IRS.gov and a new version of Form W-4 to help taxpayers check their 2018 tax withholding following passage of the Tax Cuts and Jobs Act in December.

The IRS urges taxpayers to use these tools to make sure they have the right amount of tax taken out of their paychecks.

“Following the major changes in the tax law, the IRS encourages employees to check their paychecks to help ensure they’re having the right amount of tax withheld for their personal situation,” said Acting IRS Commissioner David Kautter. Read More

Written by | Posted in Tax Cuts Jobs Act • Withholding Calculator

Unintended Consequences Of Tax Jobs And Cuts Act On Canadian Citizens And Others Abroad

“This legislation is being interpreted by a number of tax professionals to mean that individual U.S. citizens living outside the United States are required to simply “fork over” a percentage of the value of their small business corporations to the IRS. Although technically “CFCs” these companies are certainly NOT foreign to the people who use them to run businesses that are local to their country of residence. Furthermore, the “culture” of Canadian Controlled Private Corporations is that they are actually used as “private pension plans”. So, an unintended consequence of the Tax Cuts Jobs Act would be that individuals living in Canada are somehow required to collapse their pension plans and turn the proceeds over to the U.S. government” -John Richardson Read More

Written by | Posted in British Columbia • Canada • Tax Cuts Jobs Act

5 IRS Penalties Changed Under The Tax Cuts And Jobs Act Of 2018

This post contains cocktail party killer one liners about how 5 IRS Penalties Changed Under the Tax Cut and Jobs Act of 2018.

My editor also quipped that reading this post helps with insomnia as well. So if you are looking to either kill a party and/or fall asleep faster please continue reading.

If you are a tax practitioner however, you better know this stuff and with all due respect – most do NOT.

The 5 big changes are summarized as follows: Read More

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Tax Cuts And Jobs Act: Impact On Businesses

The Tax Cuts and Jobs Act, a $1.5 trillion tax cut package, was signed into law on December 22, 2017. The centerpiece of the legislation is a permanent reduction of the corporate income tax rate. The corporate rate change and some of the other major provisions that affect businesses and business income are summarized below. Provisions take effect in tax year 2018 unless otherwise stated.

Corporate Tax Rates

  • Instead of the previous graduated corporate tax structure with four rate brackets (15%, 25%, 34%, and 35%), the new legislation establishes a single flat corporate rate of 21%.
  • The Act reduces the dividends-received deduction (corporations are allowed a deduction for dividends received from other domestic corporations) from 70% to 50%. If the corporation owns 20% or more of the company paying the dividend, the percentage is now 65%, down from 80%.
  • The Act permanently repeals the corporate alternative minimum tax (AMT).

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U.S. Impact Of Federal Tax Reform From Italy’s Perspective: Renewed Attention On Italy’s Anti Inversion Rules

As a result of the significant reduction of U.S. corporate income tax rates pursuant to the tax reform of the TCJA enacted on December 22, 2017, the Unites States now has a lower corporate tax rate than many of its trading partners, meaning that, in many instances, the profits of foreign owned or controlled-U.S. subsidiaries shall be taxed more favorably than the profits of their foreign parent companies or affiliates in their home jurisdictions. That creates an incentive for foreign companies to channel more profits through their U.S. subsidiaries, in order to benefit from lower U.S. income taxation compared to that applicable in the parent company’s home country. Read More

Written by | Posted in Italy Tax • Tax Cuts Jobs Act • Tax Reform • TaxConnections

U.S. Now A Black-Listed Country For Purpose Of Italy’s CFC Rules

Pursuant to the Tax Cuts and Jobs Act (“TCJA”) passed on Dec. 22, 2017, the U.S. will tax U.S. corporations with the following tax rates:

– 21 percent general corporate income tax rate,
– 13.125 effective tax rate on U.S. corporation’s foreign derived intangible income (“FDII”), for taxable years from 2018 through 2025;
– 10.5 percent effective tax rate on the U.S. corporation’s pro rata share of global intangible low taxed income (“GILTI”) of a controlled foreign corporation (“CFC”). Read More

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IRS Issues Guidance On Changes In Accounting Periods Related To The Transition Tax

WASHINGTON – The Treasury Department and the Internal Revenue Service (IRS) announced modifications to the procedures for changing the accounting period of foreign corporations owned by U.S. shareholders that are subject to the transition tax under the Tax Cuts and Jobs Act.

On Dec. 29, 2017, the Treasury Department and the IRS provided initial guidance on computing the transition tax in Notice 2018-07.  On Jan. 19, 2018, the Treasury Department and the IRS provided additional guidance in Notice 2018-13. Read More

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Tax Cuts And Jobs Act (TCJA): Changes For American Expatriates

Many American citizens who live outside the US have for years raised concerns about the United States’ Citizen-Based-Taxation System. They may have been hopeful when tax reform was being proposed but have been disappointed that their concerns have been ignored. The new tax reform bill Tax Cuts and Jobs Act called TCJA (pronounced tick-jah) has brought about massive changes in the way individuals are going to be taxed but not much has changed for American Expatriates.

Read More

Written by | Posted in Expatriate Taxes • Tax Cuts Jobs Act

Tax Planning Considerations For Privately Held Business Under The “TCJA”

On December 22, 2017 the United States passed a new tax law referred to as the Tax Cuts and Jobs Act (“TCJA”).

Given certain changes made to the federal income tax laws by the TCJA (the “Act”), privately held businesses should reconsider their tax structure to determine whether it is more advantageous to conduct their businesses as pass through entities or sole proprietorships or, alternatively, as C corporations. Read More

Written by | Posted in Private Business • Tax Cuts Jobs Act
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