Office in Home, Tax Liability, Matching ID Numbers, Tax Proposal:
Is Office in Home Dead? Not So Fast!
Under the TCJA, employees can no longer claim the home office deduction. But if you run a business from your home or are otherwise self-employed, this deduction may still be available to you. You might qualify if part of your home is used exclusively and regularly for administrative or management activities and you don’t have another fixed location where you conduct these activities. You also might qualify if you physically meet with clients/customers there or you use a storage area in your home exclusively and regularly for business. Contact us for details.
Liability for Taxes
Married taxpayers who file a joint tax return are “jointly and severally liable” for the tax due on the return. However, spouses may be eligible for “innocent spouse” relief if they can prove they didn’t know about an understatement of tax. In one new case, the U.S. Tax Court ruled that a husband was granted relief from a portion of tax due on a joint return. His ex-wife had been arrested for embezzling from her employer. The court found the husband didn’t know about the embezzlement income and relied on his ex-wife to handle finances and taxes. (TC Memo 2018-115)
When Things Don’t Match
When employers provide employees with annual wage and tax statements (Forms W-2), they also report the data to the Social Security Administration (SSA). If the names and SS numbers don’t match SSA records, the taxpayers’ records can’t be properly credited. Reasons for errors include typos, unreported name changes, and inaccurate or incomplete employer records. To remedy the mismatch, the SSA announced, beginning in Spring 2019, it will send “Educational Correspondence” notices to employers to review and correct errors and to encourage reporting data online.
Taxation of capital gains could soon change. The Trump Administration may bypass Congress to grant a projected $100 billion tax cut (over a decade) to taxpayers with capital gains. Currently, the capital gains tax is applied to the difference between an asset’s value when it’s purchased and when it’s sold, regardless of inflation. The Administration may allow taxpayers to adjust the asset value for inflation at the time of the sale. U.S. Treasury Secretary Steven Mnuchin told the New York Times his department is studying the economic costs and the impact.
© 2018, all rights reserved.