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IRS News Updates

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IPS Accounting and Consulting

(843) 637-7100

The IRS announced that this year’s filing season will begin Jan. 29, a little later than last year’s filing season, which began Jan. 23. The announcement of the start date for tax season comes much later than last season (Jan. 4 versus the beginning of December last time). The Service had announced in November that it was still updating its systems to prepare for the 2018 filing season.
The IRS also explained that individual tax returns are due April 17 this year because April 15 is a Sunday and April 16 is a holiday in the District of Columbia.
Although the IRS will not accept returns until Jan. 29, it noted that many tax software and preparation companies will accept returns earlier and file them when the IRS begins accepting them. It also reminded taxpayers that, by law, it cannot issue refunds related to claims for the earned income tax credit or the additional child tax credit until mid-February.

 

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IRS News Update

IPS Accounting Services 

(843) 637-7100

The IRS on Thursday issued new income tax withholding tables that reflect new tax rates and other changes for individuals implemented by P.L. 115-97, known as the Tax Cuts and Jobs Act, enacted Dec. 22 (Notice 1036). Employers should use the updated withholding rules for 2018, putting them into effect as soon as possible but no later than Feb. 15, the IRS said. Until then, employers should continue to use the 2017 withholding tables.

The IRS noted that many employees should begin to see their take-home pay increase in February depending on how quickly their employers implement the new tables and whether they are paid weekly, biweekly, or monthly. The new withholding tables are designed to work with Forms W-4, Employee’s Withholding Allowance Certificate, that employees already have on file, so employees do not have to fill out new ones at this time. The IRS plans on issuing a new Form W-4 in the near future. It is also working on revising the withholding tax calculator available on its website, which it expects will be finished by the end of February.

According to the IRS, the new tables in Notice 1036 reflect the increase in the standard deduction, the repeal of personal exemptions, and new tax rates and brackets. The new tables are designed to produce the correct amount of tax withholding and are also intended to avoid over- and under-withholding of tax.

The IRS also posted a “frequently asked questions” page on its website to explain the new withholding tables to taxpayers.

The IRS says it will make additional changes to its withholding tables in 2019 and work with employers and the payroll industry on designing these changes.

Newsletter – January 2018

IPS Accounting Services LLC

843-637-7100

The new tax reform law, commonly referred to as the “Tax and Employment Reduction Act” (TCJA), is the most important tax legislation in decades. Now companies and people are trying to digest the details and evaluate how the changes will affect their fiscal situation.

Here are the biggest changes:

There will still be seven levels of taxation, but the percentages and the range of income that fall in each group have changed.

For individuals:                                                                                For married filing joint:

10%: up to          -$    9,525                                                                 10%: up to        – $  19,050

12%: $ 9,526      -$   38,700                                                                 12%: $ 19,051  – $  77,400

22%: $ 38,701   – $  82,500                                                                  22%: $ 77,401  – $ 165,000

24%: $ 82,501   – $ 157,500                                                                24%: $ 165,001 – $ 315,000

32%: $ 157,501 – $ 200,000                                                                32%: $ 315,001 – $ 400,000

35%: $ 200,001 – $ 500,000                                                                35%: $ 400,001 – $ 600,000

37%: more than- $ 500,000                                                               37%: more than   $ 600,000

The child tax credit is increased to $2.000.

The first $1.400 shall be refundable, and the elimination will increase to $200.000 for single parents and $400.000 for married couples.

The deduction for medical expenses is retained.

The corporate tax rate is reduced from 35% to 21%.

This is a permanent reduction.

In addition, corporations will pay a single tax on foreign earnings (up to 15.5%) and then, in the future, will not pay U.S. taxes on foreign income.

Taxes will also be reduced for passthrough companies like the LLC’s.

 The Alternative Minimum Tax (AMT) is reduced for people.

The corporate Amt was repealed, but the individual AMT will be reduced. Instead of 5.2 million people who pay the AMT, now only 200.000 will.

 There is a ceiling of $10.000 in state and local tax deductions.

 The inheritance tax exemption is doubled to $11.2 million per

¿What does all this mean?  The Real Facts.

Tax cuts will go into effect in January 2018 and withholding tax is reduced in February 2018.

Of American households, more than 80 percent will receive tax cuts at 2018 and five percent pay more in taxes.

These are the highlights:

20% of households will receive an average tax cut of $60.

20% of households will receive an average tax cut of $930.

20% of households will receive an average tax cut of $7.640.

The first percent of households will receive an average tax cut of $51.140.

However, 9% of that 1% higher will see a tax increase of $93.910 instead of a tax cut.

According to the Joint Committee on Taxation, the bill will produce modest growth and add nearly $1.5 trillion to the budget deficit over the next decade.

 

 

 

 

 

 

 

 

 

 

 

 

 

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