Parker and Associates LLC, CPAs

SENATOR QUERIES IRS ON PENALTY RELIEF FOR UNDERWITHHOLDING DUE TO THE TCJA In a letter to IRS Commissioner Charles Rettig dated January 3, Ranking Member of the Senate Finance Committee Ron Wyden (D-OR) expressed his concerns that due to the many changes by the Tax Cuts and Jobs Act (TCJA; P.L. 115-97, 12/22/2017), millions of taxpayers may have been underwithheld this past year and will face unexpected tax liability and penalties. Wyden asked the IRS Commissioner how IRS pl...ans to respond to taxpayers who have been underwithheld this filing season and whether he agreed that IRS should waive penalties for these taxpayers. Wyden's letter listed some of the many changes in the TCJA that might impact withholding. The TCJA repealed personal exemptions and many itemized deductions and capped the state and local income tax deduction at $10,000. Wyden cited a Government Accountability Office (GAO) report that estimated that nearly 30 million taxpayers could be underwithheld in 2018. Wyden's letter noted that due to the quick nature of the TCJA's implementation (enacted Dec. 22, 2017, effective Jan. 1, 2018), Treasury had to "jury-rig the current withholding allowance instead of properly revising the Form W-4 so that employees could update the number of allowances they claimed with their employers". Wyden stated that although taxpayers were encouraged to use the new IRS tax calculator to determine whether they were being underwithheld, a recent IRS Information Reporting Advisory Committee (IRPAC) report indicated that most taxpayers did not visit that IRS website and click through all the complicated steps. Wyden stated that a one-time penalty waiver for underwithholding would spare both taxpayers and IRS grief this coming filing season and give Treasury a reprieve to get withholding and the W-4 form right for the 2020 filing season. See more

Parsonage Allowances A minister’s compensation often includes a designated parsonage allowance. A parsonage allowance refers to the use of church owned housing, a housing allowance, or a rental allowance specifically provided as part of the compensation for the services performed as a minister of the gospel. Under Code Sec. 107(2) , a minister is entitled to exclude a personal allowance from gross income. At least one court has held that Code Sec. 107(2) is unconstitutiona...l because its purpose and effect is to provide financial assistance to one group of religious employees without any consideration for secular employees who are similarly situated to ministers. Thus, the court concluded that Code Sec. 107(2) violates the Establishment Clause of the first Amendment. The case has been appealed to the seventh Circuit court of Appeals. All written arguments (briefs) have been filed and oral arguments have been scheduled for October 24, 2018. We will update you as soon as we hear something.

Entertainment Expenses are Not Deductible but Business Meals Are The IRS announced that food and beverages might be entertainment but might also be food and beverage expenses associated with operating their trade or business. In the notice the IRS states that taxpayers may deduct 50 percent of an otherwise allowable business meal expense if the following conditions are met: (1) the expense is an ordinary and necessary expense paid or incurred during the tax year in carrying ...Continue reading

TAX REFORM? Simplifying the tax code, very possible. Hopefully by the end of the year. "This is a once-in-a-generation opportunity, and I guess it's probably something I could say that I'm very good at," President Trump said during remarks in Indiana. "I've been waiting for this for a long time. We're going to cut taxes for the middle class, make the tax code simpler and more fair for everyday Americans. And we are going to bring back the jobs and wealth that have left our country and most people thought left our country for good." Drastically lower rates for businesses. Fewer income tax rates for individuals. A much larger standard deduction and child tax credit. A repeal of the estate tax.