Wolters Kluwer Reviews Remaining Issues for 2018 Tax Returns
April 15 has come and gone. Taxpayers hopefully have either filed their returns, requested a filing extension, or are entitled to an extension without requesting one. Some taxpayers, such as those overseas, military personnel in a combat zone, or persons in designated disaster areas, may have an automatic extension to file without the need for a request.
Outstanding issues linger
A number of outstanding issues could still have an impact on 2018 tax returns. Some taxpayers filing for an extension may have been intentionally waiting for some of those issues to be resolved. Taxpayers who have already filed may have to consider filing an amended return if they are impacted by continuing changes that retroactively apply to 2018 tax returns.
Tax professionals stand ready
“Even if you have already filed your tax return, it is a good idea to stay alert for additional changes impacting 2018 tax returns,” said Mark Luscombe, JD, LLM, CPA and Principal Federal Tax Analyst for Wolters Kluwer Tax & Accounting. “Your tax professional can be a big help in alerting you to these additional changes as they occur throughout the year.”
Possible changes to watch for
Of the changes which may impact 2018 tax returns, they are as follows:
Expired Tax Provisions
Nearly 30 tax provisions expired at the end of 2017 and have not yet been renewed for 2018. Congress is still considering legislation to renew them retroactively for 2018. They include:
- Above-the-line deduction for tuition and fees
- Mortgage insurance premium deduction
- Exclusion for forgiveness of qualified residence indebtedness
- Non-business energy property credit
- New qualified fuel cell motor vehicle credit
- 2-Wheeled plug-in electric vehicle credit
- Additional business energy credits
- Tax credits focused on specific industries or areas
- Excise tax credits
The Tax Cuts and Jobs Act contained a number of errors, when originally drafted , of which most of the provisions were efffective for 2018 tax returns. Congress is still working on enacting those technical corrections. Some are relatively minor, but a few have a potential significant impact on taxpayers. A couple getting the most attention are:
- Depreciation of Qualified Improvement Property: Property such as leasehold improvement property, retail improvement property, and restaurant property under prior law was depreciable over a 15-year period. The Tax Cuts and Jobs Act had intended to make this property eligible for immediate expensing. Consequently, it made it subject to 39-year depreciation
- Net Operating Losses: The Tax Cuts and Jobs Act intended to ban the carry back of net operating losses for tax years starting after December 31, 2017. However, in another drafting error, the law banned the carry back for tax years ending after December 31, 2017, creating a retroactive application of the change for fiscal year taxpayers
Tax Cuts and Jobs Act Regulations
Treasury and the IRS are still working on finalizing many regulatory projects with respect to the Tax Cuts and Jobs Act. Consequently, if adopted by June 22, 2019, final regulations under the law could be made retroactive for 2018. Moreover, the IRS has already indicated that some final regulations will not be applied to the 2018 tax year, but it is still not certain that other regulations yet to be finalized will not be given retroactive application.
In conclusion, there will probably be greater pressure not to give retroactive application to further tax changes. Similarly, as with expired provisions and technical corrections, some taxpayers are pushing for retroactive application. All taxpayers will need to stay alert for continuing developments with a possible impact on their 2018 tax returns.
To read the original Business Wire press release click here.
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