#Divorce or #separation may have an effect on #taxes

Taxpayers should be aware of tax law changes related to alimony and separation payments. These payments are made after a divorce or separation. The Tax Cuts and Jobs Act changed the rules around them, which will affect certain taxpayers when they file their 2019 tax returns next year.

Here are some facts that will help people understand these changes and who they will impact:

  • The law relates to payments under a divorce or separation agreement. This includes:
    • Divorce decrees.
    • Separate maintenance decrees.
    • Written separation agreements.

  • In general, the taxpayer who makes payments to a spouse or former spouse can deduct it on their tax return. The taxpayer who receives the payments is required to include it in their income.

  • Beginning Jan. 1, 2019, alimony or separate maintenance payments are not deductible from the income of the payer spouse, or includable in the income of the receiving spouse, if made under a divorce or separation agreement executed after Dec. 31, 2018. 

  • If an agreement was executed on or before Dec. 31, 2018 and then modified after that date, the new law also applies. The new law applies if the modification does these two things:
    • It changes the terms of the alimony or separate maintenance payments.
    • It specifically says that alimony or separate maintenance payments are not deductible by the payer spouse or includable in the income of the receiving spouse.

  • Agreements executed on or before Dec. 31, 2018 follow the previous rules. If an agreement was modified after that date, the agreement still follows the previous law as long as the modifications don’t do what’s described above.

More Information:
Publication 504, Divorced or Separated Individuals
Publication 5307, Tax Reform Basics for Individuals and Families

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Personal income tax up-to-date information for 2018 (Articles 22 and 30)

Select to view another year   – Year –  2018         2017  2016 2015 2014  2013  2012  2011  2010  2009 2008  2007  2006  2005  2004  2003  2002  2001     

The following changes were not reflected on the forms for 2018 when they went to print.

If any of the following updates impact a tax form that you are responsible for filing, and you have not yet filed such form, you must incorporate these updates when filing such form.

If you have already filed such form, and one of the following updates affects a calculation previously reported, you must file an amended form reflecting such update.

Select a tax form from the following list to identify the changes affecting that form. If a form is not listed, there have been no changes affecting that form.


IT-201, IT-203
IT-203-I
IT-205-I
IT-225-I
IT-196
IT-196-I
IT-203-X, IT-203-X-I


  • IT-225-ISee updated informationregarding a New York deduction for student loans discharged due to death or disability. As a result of the new law, the Subtraction modificationschart beginning on page 16 is corrected to include:The table below may contain content too wide for the screen. To view all of its content, please use the scrollbarat the bottom of the table, or scrollthe table itself if using a touch device.Subtraction Modification ChartModification 
    numberDescriptionReturnsIT-201IT-203IT-204IT-205S-134Student loans discharged due to death or disabilityXXX
  • IT-201, IT-203Form IT-201, line 77 should read as follows: 

    77        Amount overpaid 
    (if line 76 is more than line 62, subtract line 62 from line 76; see page 33)Form IT-203, line 67 should read as follows: 

    67        Amount overpaid 
    (if line 66 is more than line 59, subtract line 59 from line 66; see page 37)
  • IT-201-I, IT-203-IOn page 4 of the printed version of the paper form, the freefilelogo was omitted from the E-file your returnad. It is correct on the web version of the forms listed above.

    The NYS 529 college savings account Plan codechart in the instructions for Form IT-195, Allocation ofRefund, should read as follows:Plan code chart corrections Plan codeDescription552New York’s 529 College Savings Program Direct Plan553New York’s 529 Advisor Guided College Savings Program
  • IT-203-IForm IT-203-I, page 28, line 33 instructions should read as follows: 2. Use Form IT-196, New York Resident, Nonresident, and Part-Year Resident Itemized Deductions, and its instructions to compute your New York itemized deduction. Compare the Form IT-196, line 49 amount to your New York standard deduction amount from the standard deduction table. For greater tax savings, enter the larger of these amounts on line 33 and mark an in the appropriate box, Standard or Itemized.
  • IT-205-INote: See up-to-date information for 2018 Form IT-225-I, below, if you have any of these deductions:
    • IRC section 199A deduction;
    • deduction for foreign real property taxes;
    • deduction for taxes under IRC section 164 that was limited to $10,000; or
    • miscellaneous itemized deductions disallowed under IRC section 67(g).
  • IT-225-I

1. On page 5, above addition modification A-201, add the following:

A-120 IRC section 199A deduction

If an estate or trust was allowed a deduction under IRC section 199A in computing federal taxable income, then enter the amount of that deduction.

2. On page 13, above subtraction modification S-201, add the following:

S-138 State and local tax deduction other than state and local sales taxes and income taxes

If an estate or trust claimed a deduction for taxes under IRC section 164 that was limited to $10,000 as provided in IRC section 164(b)(6)(B), or that was denied under IRC section 164(b)(6)(A), then enter the amount of state and local taxes that the estate or trust was not able to deduct for federal income tax purposes because of such limitation or denial, other than state and local sales taxes and income taxes as described in Tax Law § 615(c)(1).

Note: In determining the makeup of the $10,000 of deduction claimed by the estate or trust under IRC section 164, it shall be presumed that the $10,000 first comprises the state and local income taxes (or sales taxes, if applicable) the estate or trust accrued or paid during the taxable year.

S-139 Miscellaneous itemized deductions

If an estate or trust had miscellaneous itemized deductions, as described in and limited by IRC section 67 (excluding the deductions described in section 67(e)), that the estate or trust was not able to deduct for federal income tax purposes due solely to IRC section 67(g), then enter the amount disallowed under IRC section 67(g).

3. Addition modifications chart beginning on page 15 is corrected to include:

Modification numberDescriptionReturns
IT-201IT-203IT-204IT-205
A-120IRC section 199A deductionX


4. Subtraction modifications chart beginning on page 16 is corrected to include:

Modification numberDescriptionReturns
IT-201IT-203IT-204IT-205
S-138State and local tax deduction other than state and local sales taxes and income taxes   X
S-139Miscellaneous itemized deductionsX
  • IT-196

    Form IT-196, lines 16, 17, and 18 should read as follows:

16        Gifts by cash or check (see instructions)

17        Other than by cash or check (see instructions)

18        Carryover from prior year (see instructions)

  • IT-196-I

1. On pages 3, 4, and 5, replace the entire Gifts to charity section with the following: 

Gifts to charity

Line 16

  • If you claimed an itemized deduction for gifts to charity by cash or check on your federal income tax return, enter the amount from federal Schedule A, line 11.

  • If you did not claim an itemized deduction for gifts to charity on your federal income tax return, compute the amount to enter on line 16 of Form IT-196 as if you had, using the 2018 instructions for federal Schedule A.

Line 17

  • If you claimed an itemized deduction for gifts to charity other than by cash or check on your federal income tax return, enter the amount from federal Schedule A, line 12.

  • If you did not claim an itemized deduction for gifts to charity on your federal income tax return, compute the amount to enter on line 17 of Form IT-196 as if you had, using the 2018 instructions for federal Schedule A.

Line 18

  • If you claimed an itemized deduction for gifts to charity on your federal income tax return and have a carryover from a prior year, enter the amount from federal Schedule A, line 13.

  • If you did not claim an itemized deduction for gifts to charity on your federal income tax return, compute the amount to enter on line 18 of Form IT-196 as if you had, using the 2018 instructions for federal Schedule A.




2. Form IT-196-I, page 17, line 24b for the Unreimbursed employee business expenses worksheet should read as follows:

Line 24b – If you leased a vehicle for a term of 30 days or more, you may have to reduce your deduction for vehicle lease payments by an amount called the inclusion amount.

For tax years beginning in 2018, all vehicles are subject to a single inclusion amount threshold for passenger automobiles leased and put into service in 2018.

You may have an inclusion amount for a passenger automobile if:
the lease term began in:and the vehicle’s fair market value on the first day of the lease exceeded:
2018$50,000

For tax years prior to 2018, see inclusion tables below.

You may have an inclusion amount for a passenger automobile if:
the lease term began in:and the vehicle’s fair market value on the first day of the lease exceeded:
2014, 2015, 2016, or 2017$19,000
You may have an inclusion amount for a truck or van if:
the lease term began in:and the vehicle’s fair market value on the first day of the lease exceeded:
2014, 2015, 2016, or 2017$19,500

See the 2018 IRS Publication 463, Travel, Gift, and Car Expenses, to determine your inclusion amount.

Update to the 2018 #Form_IT-196, #New_York_Resident, Nonresident, and Part-Year Resident #Itemized #Deductions, and its instructions

The Department of Taxation and Finance has posted a form update that impacts individuals who itemized deductions on their 2018 return and reported a deduction for gifts to charity. Lines 16, 17, and 18 of the 2018 Form IT-196, and the related instructions on pages 3 through 5 of the 2018 Form IT-196-I, were updated to reflect changes that were part of the 2019-2020 New York State Budget. If you already filed your 2018 return, you should file an amended returnif this update results in a change to your refund or tax due. For more information, visit Personal income tax up-to-date informationfor 2018 (Articles 22, and 30)

#Taxpayers should be on the #lookout for new versions of these two #scams

With scam artists hard at work all year, taxpayers should be on the lookout for a surge of evolving phishing emails and telephone scams.

Taxpayers should watch for new versions of two tax-related scams. One involves Social Security numbers related to tax issues. The other threatens taxpayers with a tax bill from a fictional government agency. Here are some details about these scams to help taxpayers recognize them:

The SSN scheme

  • The latest twist includes scammers claiming to be able to suspend or cancel the victim’s Social Security number. This scam is similar to and often associated with the IRS impersonation scam.

  • It is yet another attempt by con artists to frighten taxpayers into returning robocall voicemails.

  • Scammers may mention overdue taxes in addition to threatening to cancel the taxpayer’s SSN.

Fake tax agency

  • This scheme involves a letter threatening an IRS lien or levy. 

  • The scammer mails the letter to the taxpayer.

  • The lien or levy is based on bogus overdue taxes owed to a non-existent agency.

  • The fake agency is called the “Bureau of Tax Enforcement.” There is no such agency.
     
  • The lien notification scam also likely references the IRS to confuse potential victims into thinking the letter is from a legitimate agency.

Both these schemes show classic signs of being scams. The IRS and its Security Summit partners – the state tax agencies and the tax industry – remind everyone to stay alert to scams that use the IRS or reference taxes. Being alert is especially important in late spring and early summer as tax bills and refunds arrive.

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Tips for #taxpayers who make #money from a #hobby

Many people enjoy hobbies that are also a source of income. From painting and pottery to scrapbooking and soap making, these activities can be sources of both fun and finances. Taxpayers who make money from a hobby must report that income on their tax return.

If someone has a business, they operate the business to make a profit. In contrast, people engage in a hobby for sport or recreation, not to make a profit. Taxpayers should consider nine factors when determining whether their activity is a business or a hobby. They should base their determination on all the facts and circumstances of their activity.

If a taxpayer receives income for an activity that they don’t carry out to make a profit, the expenses they pay for the activity are miscellaneous itemized deductions and can no longer be deducted. The taxpayer must still report the income they receive on Schedule 1, Form 1040, line 21.

More Information:
Publication 334, Tax Guide for Small Business
Publication 525, Taxable and Nontaxable Income
Publication 529, Miscellaneous Deductions
Publication 535, Business Expenses 
Publication 17, Your Federal Income Tax
About Schedule C, Profit or Loss from Business
Estimated Taxes

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#IRS issues guidance on the #tax on the net investment income of certain #private #colleges and #universities

WASHINGTON — The Internal Revenue Service today issued proposed regulations for the new 1.4 percent excise tax on the net investment income of certain private colleges and universities.

The proposed regulations define several of the terms necessary for educational institutions to determine whether the section 4968 excise tax applies to them. 

The tax applies to any private college or university that has at least 500 full-time tuition-paying students (more than half of whom are located in the U.S.) and that has assets other than those used in its charitable activities worth at least $500,000 per student. An estimated 40 or fewer institutions are affected. 

For affected institutions, the guidance clarifies how to determine net investment income, including how to include the net investment income of related organizations and how to determine an institution’s basis in property.

These proposed regulations incorporate the interim guidance provided in Notice 2018-55, that for property held by an institution at the end of 2017, generally allows the educational institution to use the property’s fair market value at the end of 2017 as its basis for figuring the tax on any resulting gain.

Updates on the implementation of this and other TCJA provisions can be found on the Tax Reform page of IRS.gov.

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Beware of #fake_charities


IRS cautions taxpayers on scams involving disasters, charitable causes and encourages taxpayers to donate to recognized charities to help disaster victims. #IRS’ annual “Dirty Dozen” also lists a variety of common scams taxpayers may encounter.

Understanding Disaster Relief Tax Law and Contribution Deductibility
The IRS offers two courses – Disaster Relief – Parts 1 and II – for charitable organizations providing disaster relief. Topics include how charities may provide disaster relief, deductibility of contributions and tax treatment of relief recipients. Organizationleadership and volunteers should review the Tax-Exempt Organization Workshop that includes important information on the benefits, limitations and expectations of tax-exempt organizations.

Revisions made to IRS Online Registration System for 501(c)(4) Certification
Organizations required to submit Form 8976, Notice of Intent to Operate Under Section 501(c)(4), will notice a new look and improved navigation at the Online Registration System for 501(c)(4) Certification webpage.

Revenue Procedure 2019-22 
This revenue procedure modifies Revenue Procedure 75-50 to allow a third method for private schools to satisfy the requirement contained in Section 4.03 of the revenue procedure by using its primary publicly accessible Internet homepage to publicize the school’s racially nondiscriminatory policy.

Register for 2019 IRS Nationwide Tax Forums 
The IRS reminds tax professionals to sign up for this summer’s 2019 IRS Nationwide Tax Forums. Tax professionals attending can earn up to 19 continuing education credits.


If you have a technical or procedural question about Exempt Organizations, visit the Charities and Nonprofits homepage on IRS.gov.

If you have a specific question about exempt organizations, call EO Customer Account Services at 877-829-5500.

#Educators can claim #deduction to get money back for classroom #expenses

Educators may be able to deduct unreimbursed expenses on their tax return. This deduction can put money right back in the pockets of eligible teachers and other educators.

Here are some things to know about this deduction:

  • Educators can deduct up to $250 of trade or business expenses that were not reimbursed. As teachers prepare for the next school year, they should remember to keep receipts after making any purchase to support claiming this deduction.

  • The deduction is $500 if both taxpayers are eligible educators and file their return using the status married filing jointly. These taxpayers cannot deduct more than $250 each.

  • Qualified expenses are amounts the taxpayer paid themselves during the tax year.
    • Examples of expenses the educator can deduct include:
    • Professional development course fees
    • Books
    • Supplies
    • Computer equipment, including related software and services
    • Other equipment and materials used in the classroom

  • Taxpayers claim the deduction on Form 1040 or Form 1040NR. The taxpayer should remember to complete and attach Form 1040, Schedule 1 to their return.

  • To be considered an eligible educator, the taxpayer must be a kindergarten through grade 12 teacher, instructor, counselor, principal or aide. They must also work at least 900 hours a school year in a school that provides elementary or secondary education as determined under state law.

 
More Information:
Topic Number 458: Educator Expense Deduction 
Publication 17, Your Federal Income Tax for Individuals 
Form 1040NR Instructions

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