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Mid-Year Tax Update
Accounting Today Podcast Features NCCPAP President, Stephen Mankowski
Accounting Today editor-in-chief, Daniel Hood, recently interviewed NCCPAP President, Stephen Mankowski, CPA, to discuss some of the major tax changes, issues, concerns and uncertainty for individuals and businesses.


Podcast Highlights:
For the Average Taxpayer: One of the major issues that will affect the average taxpayer is a significant increase in the standard deduction. Associated with that, most taxpayers are not aware that personal exemptions are going away.

199A Deductions for Pass-Through Entities: Taxpayers with their own businesses or pass-through entities will encounter added complexities related to the 199A Deduction. We're still looking for guidance from the IRS regarding QBI/QBL (Qualified Business Income/Loss) and potential eligibility of an 'up to 20 percent' deduction.

Determination of Meals and Entertainment: Clients doing the bookkeeping themselves are looking to us for guidance, and we are looking to the IRS regarding the determination of meals and entertainment. While entertainment is no longer deductible, meals still are; therefore, there's some work to be done regarding how to treat the re-allocation to make sure things are classified properly.

IRS TRIO: Taxpayers, CPAs, and banks should align with the IRS TRIO (Tax Reform Implementation Office), a group of higher-level executives within the IRS representing various divisions. Their job is to oversee other departments regarding implementation of the new Tax Bill, in enough time for the software companies to make their changes, and for everyone else to be able to meet deadlines.

Where NCCPAP CPAs Can Shine: Overall, this is a great opportunity for CPAs to show their value and strategy to clients by helping clients think long-term. By starting to collect data now, looking for new opportunities, and meeting with clients, CPAs can begin to save taxpayers a lot of money over the next few years. Specifically, we'd like the taxpayer to meet with their tax professional as early as possible to see how the 199A Deduction may apply and what they can do to best take advantage not only this year, but potentially over the next 5-7 years. Even though it's now September, four months of data can go a long way in terms of planning. What we can do today, can have a long-term effect in future tax years even though practically, most taxpayers will wait and see what they "could have done" in 2018 tax season as a precedent for future year savings.

Please share this podcast with your clients and colleagues, so they understand that you are on top of the most pertinent issues in the industry.


Tax Cuts


  Recent Changes to Moving, Mileage, and Travel Expenses
The Tax Cuts and Jobs Act includes changes to moving, mileage and travel expenses:

  • Move-related vehicle expense
    • The new law suspends the deduction for tax years beginning after Dec. 31, 2017, through Jan. 1, 2026. During the suspension, no deduction is allowed for use of an auto as part of a move using the mileage rate listed in IRS Notice 2018-03.
    • This does not apply to members of the Armed Forces on active duty who move related to a permanent change of station.
  • Unreimbursed employee expenses
    • The Act also suspends all miscellaneous itemized deductions subject to the 2 percent of adjusted gross income floor. This change affects unreimbursed employee expenses such as uniforms, union dues and the deduction for business-related meals, entertainment and travel. For additional guidance, see IRS Notice 2018-42.
  • Standard mileage rates for 2018
    • The standard mileage rates for the use of a car, van, pickup or panel truck for 2018 remain:
      • 54.5 cents for every mile of business travel driven, a 1 cent increase from 2017.
      • 18 cents per mile driven for medical purposes, a 1 cent increase from 2017.
      • 14 cents per mile driven in service of charitable organizations, which is set by statute and remains unchanged.
  • Increased depreciation limits
    • The recent legislation also increases the depreciation limitations for passenger autos placed in service after Dec. 31, 2017, for purposes of computing the allowance under a fixed and variable rate plan.
    • The maximum standard automobile cost may not exceed $50,000 for passenger automobiles, trucks and vans placed in service after Dec. 31, 2017.
Many thanks to Sandy Zinman, CPA, Chair of the National Tax Committee, NCCPAP

Resources on IRS.gov help all taxpayers understand tax reform


IRS Tax Tip 2018-115

IRS.gov is a great place for taxpayers to visit when they have questions about the Tax Cuts and Jobs Act. The legislation, which was passed late last year, includes changes to many areas of the tax law. Here are some of the resources on IRS.gov that will help individual taxpayers, businesses and the tax community understand the law and its effect on their taxes:

  • Tax Reform Web Page. The Tax Reform page highlights what taxpayers need to know about the tax law changes and how these changes affect them. This page also links taxpayers and tax professionals to news releases, tax tips, publications, notices, and legal guidance related to the legislation.

  • Updated Withholding Calculator. The IRS encourages everyone to use the Withholding Calculator to perform a “Paycheck Checkup,” which is even more important this year because of the tax law changes. The calculator helps taxpayers determine if they’re having the right amount of tax withheld from their paychecks.

  • Updated Form W-4, Employee’s Withholding Allowance Certificate. Taxpayers who determine they need to make changes to their withholding can complete a Form W-4, which reflects the tax law changes. Employees will submit the completed Form W-4 to their employers.

  • Frequently Asked Questions. The IRS posted new FAQs to help people understand how to use the Withholding Calculator and the changes to the Withholding Tables.

More information about the tax law changes will be coming throughout the year. IRS.gov will be updated to reflect changes as they develop.


Tax Reform: Changes to Depreciation Affect Businesses Now

IRS Tax Reform Tax Tip 2018-68


As employers across the country celebrate National Small Business Week, the IRS reminds businesses that the passage of the Tax Cuts and Jobs Act may affect their depreciation deductions and taxes. Business taxpayers can generally depreciate tangible property except land, including buildings, machinery, vehicles, furniture and equipment. Changes to depreciation and how they will affect businesses may include:

•Businesses can immediately expense more under the new law; taxpayers may elect to expense the cost of any property and deduct it in the year the property is placed in service. •Maximum deduction increased from $500,000 to $1 million. •The phase-out threshold increased from $2 million to $2.5 million.
•The new law allows taxpayers to elect to include improvements made to nonresidential property. The improvements must have been made after the date the property was first placed in service.

These improvements include:
• Any improvement to a building’s interior
• Roofs
• Heating and air conditioning systems
• Fire protection systems
• Alarm and security systems

Improvements that do not qualify:
• Enlargement of the building
• Service to elevators or escalators
• Internal structural framework of the building

These changes apply to property placed in service in taxable years beginning after December 31, 2017.

Retirement Plans

Retirement Plans Can Make Harvey Loans


IR-2017-138
August 30, 2017
WASHINGTON --

The Internal Revenue Service today announced that 401(k)s and similar employer-sponsored retirement plans can make loans and hardship distributions to victims of Hurricane Harvey and members of their families.

Participants in 401(k) plans, employees of public schools and tax-exempt organizations with 403(b) tax-sheltered annuities, as well as state and local government employees with 457(b) deferred-compensation plans may be eligible to take advantage of these streamlined loan procedures and liberalized hardship distribution rules.

Retirement plans can provide this relief to employees and certain members of their families who live or work in disaster area localities affected by Hurricane Harvey and designated for individual assistance by the Federal Emergency Management Agency (FEMA). To qualify for this relief, hardship withdrawals must be made by Jan. 31, 2018.

More information


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