Interest on Home Equity Loans Often Still Deductible Under New Law
FROM THE IRS | IR-2018-32 | February 21, 2018
The Internal Revenue Service advised taxpayers that in many cases they can continue to deduct interest paid on home equity loans.
Responding to many questions received from taxpayers and tax professionals, the IRS said that despite newly-enacted restrictions on home mortgages, taxpayers can often still deduct interest on a home equity loan, home equity line of credit (HELOC) or second mortgage, regardless of how the loan is labelled. The Tax Cuts and Jobs Act of 2017, enacted December 22, suspends from 2018 until 2026 the deduction for interest paid on home equity loans and lines of credit, unless they are used to buy, build or substantially improve the taxpayer’s home that secures the loan.
Scam Alert: IRS Urges Taxpayers to Watch Out for Erroneous Refunds; Beware of Fake Calls to Return Money to a Collection Agency
From the IRS | IR-2018-27 | February 13, 2018
The Internal Revenue Service warned taxpayers of a quickly growing scam involving erroneous tax refunds being deposited into their bank accounts. The IRS also offered a step-by-step explanation for how to return the funds and avoid being scammed.
Following up on a Security Summit alert issued February 2, the IRS issued this additional warning about the new scheme after discovering more tax practitioners’ computer files have been breached. In addition, the number of potential taxpayer victims jumped from a few hundred to several thousand in just days. The IRS Criminal Investigation division continues its investigation into the scope and breadth of this scheme.
These criminals have a new twist on an old scam. After stealing client data from tax professionals and filing fraudulent tax returns, these criminals use the taxpayers' real bank accounts for the deposit.
Some Taxpayers May Need Prior-Year Tax Data
FROM THE IRS | IR 2018-30 | February 19, 2018
The Internal Revenue Service reminded taxpayers who have changed tax software products that they may need information from their 2016 tax return to complete their taxes this year.
It’s always a good idea to keep copies of previously-filed tax returns. That recommendation is more important this year because, for some taxpayers, certain data from the 2016 tax return – the adjusted gross income -- will be required to validate their electronic signature on their 2017 tax return due April 17.
Pennsylvania Offers Guidance on Sales Tax Collections and Compliance for Online Sales
From the PA Department of Revenue | Tax Update | December 2017/January 2018
The Pennsylvania Department of Revenue has issued guidance on its website regarding the Marketplace Sales legislation that was passed last year by the General Assembly. The legislation clarifies current law to improve sales tax collections and compliance for online sales of items that are already taxable. This change resulted in a more efficient system for certain individuals and businesses. The ultimate goal is to help brick-and-mortar stores compete on an even playing field with online sellers.
Important Update to New Pennsylvania 1099-MISC Withholding Requirement
Act 43 of 2017 created a withholding obligation for certain payors of Pennsylvania-source income and lessees of Pennsylvania real estate to non-residents. It also expanded the requirements with respect to when a copy of Federal Form 1099-MISC is required to be filed with the Pennsylvania Department of Revenue.
In response to the PICPA's request to the DOR, the department has agreed to take the following actions:
For more information on the new PA 1099-MISC withholding tax requirements, click here to visit the Pennsylvania Department of Revenue's website.
- The 1099-MISC income subject to the withholding provisions of Act 43 of 2017 will not be subject to assessment for a failure to withhold for a period ending prior to July 1, 2018. However, when tax is withheld, it must be filed and remitted as required by law.
- The department expects that payors/lessors will file the related 1099-MISC, with boxes 16 and 17 completed, with the department timely in January 2019.
IRS Announces 2018 Pension Plan Limitations Not Affected by Tax Cuts and Jobs Act of 2017
From the IRS | IR-2018-19 | February 6, 2018
The Internal Revenue Service announced that the Tax Cuts and Jobs Act of 2017 does not affect the tax year 2018 dollar limitations for retirement plans announced in IR 2017-177 and detailed in Notice 2017-64.
The tax law provides dollar limitations on benefits and contributions under qualified retirement plans, and it requires the Treasury Department to annually adjust these limits for cost of living increases. Those adjustments are to be made using procedures that are similar to those used to adjust benefit amounts under the Social Security Act.