IRS Updates Deductible Guidelines
The IRS has issued guidance on some of the changes brought about by the Tax Cuts and Jobs Act (TCJA) regarding certain deductible expenses. The rules for using the optional standard mileage rates in deducting costs of operating an automobile for business, charitable, medical or moving expense purposes have been updated. Taxpayers may opt to substantiate actual allowable expenses with adequate records. Rules vary for members of the Armed Services.
Medical Expenses May Be Tax Free Via FSA
The IRS today reminded eligible employees (self-employed are not eligible) that they may still have time to set up a health flexible spending arrangement (FSA) if their employer offers one. Employees may contribute up to $2,750 during the 2020 plan year not subject to federal income tax, Social Security tax or Medicare tax. Allowable expenses are those not covered by one’s health plan, and may include co-pays, deductibles, dental and vision care, eyeglasses and hearing aids. Unspent amounts may be forfeit. Talk to your employer for details.
National Tax Security Awareness Week Announced
Next week kicks off the fourth National Tax Security Awareness Week, in time for holiday shopping season. Security Summit partners continue to urge taxpayers, businesses and tax professionals to maintain their online security as identity thieves step up their efforts to steal personal and financial data. The Week will feature a series of educational materials to help protect individuals and businesses against identity theft. The effort will include a special social media effort on Twitter and Instagram with @IRSnews and #TaxSecurity.
Large Gifts Won’t Harm Estates After 2025
The Treasury Department and IRS today issued final regulations confirming that individuals taking advantage of the increased gift and estate tax exclusion amounts in effect from 2018 to 2025 will not be adversely impacted after 2025 when the exclusion amount drops to pre-2018 levels. The TCJA temporarily increased the basic exclusion amount (BEA) from $5 million to $10 million for tax years 2018 through 2025 (adjusted for inflation). In 2026, the BEA will revert to the 2017 level of $5 million as adjusted for inflation. Final regulations provide a special rule that allows an estate to compute its estate tax credit using the higher of the BEA applicable to gifts made during life or the BEA applicable on the date of death.