Anthony Sykes & Company

At this point it is well known that the Tax Cuts and Jobs Act reduced the top tax rates. It also made provision for up to 20% of Qualified Business Income to be deducted from a Taxpayer’s income tax liability. What is less well known is that the criteria to reach this threshold is found in Section 199A of the Internal Revenue Code, a specific area of the TCJA .          Since there are rules that govern the subject of Qualified Business Income, this means that not everyone can claim it . It also means that this is not a completely straightforward, cut and dry area of Tax Reform. Certain requirements of businesses and individuals need to be met.  If you have not done so already, please consult a Qualified Tax Professional to see if this provision will impact you in any way.

Thanks to an IRS announcement, retirement accounts will be able to grow at a much faster rate in 2019. For the first time since 2013, the limit on annual contributions will go up on traditional and Roth IRA’s by $500 each. This is being done to reflect changes in inflation, but it will have big consequences for 2019.           These adjustments can lead to a Taxpayer adding up to $19,000 a year to their Government Thrift Savings plan. When it comes to IRA’s this change creates the ability to save an extra $1,000 every year. This can potentially lead to a lot of extra money gaining interest, all tax free. Now is as good a time as any to start retirement savings and take advantage of this opportunity, which will only benefit you in the end.

This is the time of year when many businesses are hiring seasonal employees, or simply increasing the hours for staff already on the payroll. Because of these changes, some may not realize how this influx of income can affect their overall tax responsibility. When getting a new job, no matter how long you are working there, a Form W-4 must always be completed. This form details the amount an employer should keep from an employee’s paycheck. Thanks to recent IRS guidance, we know that it will not be changed by the Tax Cuts and Jobs Act until 2020 at the earliest.          When it comes to a job that involves tips, it is a good practice to keep a log of the amount, and date of the tip. All tip income must be reported and keeping good records makes the tax return process that much easier. Sometimes, the amount made from a seasonal job will not be high enough to end up owing income tax. Often it is students and other young people who are getting their first job...

        You may be surprised to find out that the IRS, and state income tax agencies, do not communicate very well with each other. This has been true for many years. However, a recent review has shown that this has led to almost $300 million in taxes going unpaid. When there is confusion, certain individuals can slip through the cracks.           The IRS response to this problem is the State Audit Program. This program creates a way for state agencies and the IRS to share information and make sure that tax laws are followed. In theory, this would be a great way to stop tax cheats and make sure everyone paid their fair share. In reality, this program is voluntary, and it takes a lot of work for government organizations to work together and share. While this program is being streamlined, the state and Federal governments are getting closer to being able to work together and enforce tax law.