Depreciation Regulations Proposed

The IRS and Treasury Department proposed regulations on the new 100% depreciation deduction for businesses, which implement several provisions of the Tax Cuts and Jobs Act (TCJA). It is retroactive to property acquired and placed in service after September 27, 2017. Additionally, regulations were also proposed for a new provision which allows a 20% deduction of qualified business income for many sole proprietorships, partnerships, trusts and S corps, and on charitable contributions and state and local tax credits. The treasury and IRS welcome public comments, as these regulations are not yet finalized. More information at the links above.

IRS Issues Small Business Accounting Guidance

New tax law changes in the TCJA allow small businesses to use the cash method of accounting. This affects small business with 3-year average annual gross receipts of $25 million or less, exempting them from certain accounting rules for inventories, cost capitalization, and more.

IRS Urges “Paycheck Checkups”

The IRS is reminding taxpayers with children and other dependents to use the Withholding Calculator at IRS.gov to double check their withholding.  Key changes made to the Child Tax Credit by the TCJA in 2017 will affect 2018 returns. Additionally, taxpayers with dependents who can’t be claimed for the Child Tax Credit, taxpayers with high incomes or complex returns, and those who received a large refund this year, and employees who also participate in the sharing economy to do the same.

Clarity for Combat Zone Contract Workers

Certain contractors and employees of contractors supporting the US Armed Forces in designated combat zones may now qualify for the foreign earned income exclusion, thanks to the Bipartisan Budget Act of 2018. This exclusions is not automatic and eligible taxpayers must file appropriate forms. See here and Publication 3 for details.