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The IRS has recently issued new limits on qualifying pensions and retirement related accounts (see IRS Notice 2018-83.) The new amounts, which are a cost-of-living adjustment, become effective January 1, 2019.

Current Law:

The Tax Cuts and Jobs Act of 2017 limits individual taxpayer's state and local tax (SALT), itemized deduction to $10,000 (including real estate taxes). The previous law allowed an unlimited deduction. This change may be detrimental to many individual taxpayers who relied heavily on these deductions in the past.

State Work-Arounds:

Some states have considered "work-arounds" to combat this limitation. Select states (California, Connecticut, Illinois, New York and New Jersey, thus far) have created state

Taxpayers who have healthcare coverage under a High Deductible Health Plan (HDHP) may qualify for tax relief from the Internal Revenue Service.

HDHPs, health insurance plans with lower premiums and higher deductibles than a traditional health plan, are a requirement for having a health savings account.

The IRS announced today that it was going to end the Offshore Voluntary Disclosure Program (OVDP) by September 28, 2018.  The Service is giving taxpayers just over six months’ notice of the program closure to allow any taxpayers who wish to do so the opportunity to take advantage of the program before then.

The current program has been in place since 2014 and is, actually, a modified version of the one that was originally launched in 2012.  The programs have afforded taxpayers to voluntarily resolve past non-compliance issues related to unreported foreign financial assets, as well as failures to file foreign information returns. 

The IRS recently announced additional requirements for taxpayers and tax professionals to verify their identities when they call as part of security efforts.

Taxpayers and professionals should have the following documents ready when they call:

• Social Security numbers and birth dates for those who were named on the tax return in question
• An Individual Taxpayer Identification Number (ITIN) letter if the taxpayer has one in lieu of a Social Security number (SSN)
• Filing status – Single, Head of Household, Married Filing Joint or Married Filing Separate
• The prior-year tax return. Telephone assistors may need to verify taxpayer identity with information from the return before answering certain questions
• A copy of the tax return in question
• Any IRS letters or notices received by the taxpayer

Many folks faced the new year with a fresh-start mindset, new goals, and a handful of resolutions. For some, 2017 is still at the top-of-mind with credit card balance carry-overs and a loan or two. For others, the new year brings ideas of travel, home renovations, or major purchases. 

Regardless of the intent, oftentimes folks think they can simply borrow or withdraw from their 401(k) to pay for these things when their bank account is not liquid.  After all, the money is theirs and just “sitting” untouched.  So why not tap into the account – life is short, right?

Some taxpayers receive emails that appear to be from the Taxpayer Advocacy Panel (TAP) about a tax refund. These emails are a phishing scam, trying to trick victims into providing personal and financial information.

 Do not respond or click any link. If you receive this scam, forward it to phishing@irs.gov and note that it seems to be a scam phishing for your information.

TAP is a volunteer board that advises the IRS on systemic issues affecting taxpayers. It never requests, and does not have access to, any taxpayer’s personal and financial information.