November 15, 2018
Along with the new Trump tax laws, the IRS has been steadily working on changes – they’re sometimes hard to keep track of so here’s our latest list of upcoming changes to pay attention to.
IRS Delays Changes to Form W-4
Following feedback from the payroll and tax communities, the Treasury Department and the IRS have decided to implement the new version of the Form W-4, Employee’s Withholding Allowance Certificate, in 2020, rather than 2019. The 2019 version of the Form W-4 will be similar to the current 2018 version.
While the new form is intended to assist the taxpayer in more accurately estimating withholdings, the implementation delay provides employers with additional time to consider the impact of the changes, how to communicate the change with employees and time to modify their internal processes.
IRS Makes Changes to Taxpayer Transcript Requests
Did you know the IRS will no longer fax copies of taxpayer’s transcripts to their tax preparers? In an effort to protect taxpayer information and prevent identity theft, beginning in January 2019, when taxpayers or third parties call the IRS with an individual or business transcript request, the transcript will be mailed to the
taxpayer’s address of record. This change may cause delays in a tax professional’s ability to complete client tax returns, especially if the address on file is no longer accurate. We recommend taxpayers diligently keep relevant tax documents in a safe place to avoid needing to request transcripts. If you have concerns about your tax return records, please contact us for assistance.
IRS Changes to Social Security and Nanny Tax Thresholds for 2019
Social Security Wage Base: The maximum amount of wages subject to the 6.2% Social Security tax will rise from $128,400 to $132,900 in 2019. Medicare tax rates and wages bases will remain the same as 2018.
Nanny Tax Threshold: The maximum wages that can be earned by a household employee without being subject to Social Security or Medicare tax, often referred to as the “nanny tax”, will remain at $2,100, the same as it was in 2018. Amounts paid above this threshold to anyone who works in and/or around your home such as babysitters, housekeepers and yard workers, are subject to payroll tax.
New Rules for Like-Kind Exchanges Under the Trump Tax Law
In the past, taxpayers have reaped the benefits of deferring gain on a sale by entering a like-kind exchange of personal property, such as vehicles including machinery and equipment (ie: farm machinery). The Tax Cuts and Jobs Act has eliminated this perk beginning January 1, 2018. Congress felt that taxpayers received the benefit of direct expensing through the use of 100% bonus depreciation and section 179 deductions, so they shouldn’t also be eligible to defer any gain or loss through a like-kind exchange. The new law applies to business property only and a gain deferral through a like-kind exchange is still allowed for real property. If you’re considering buying and selling real estate in the near future, contact us for help.
Is the IRS making your head spin?
Padgett of West Virginia is committed to helping you navigate the financial and compliance waters of running a small business, contact us today for more information on how we can help you plan for your dreams.