Interest Rates to Remain the Same for Second Quarter 2019:
The interest rates for tax overpayments and underpayments for the quarter beginning on 4/1/19 will be the same as the prior quarter. For noncorporate taxpayers, the rate for both underpayments and overpayments will be 6%. The 6% rate also applies to estimated tax underpayments for the second quarter of 2019. For corporations, the overpayment rate will be 5%, with a 3.5% rate applicable to overpayments exceeding $10,000. The underpayment rate for corporations will be 6%, except for large corporate underpayments, which will be 8%. Rev. Rul. 2019-5 and News Release IR 2019-21 .
IRS waives penalty for many whose tax withholding and estimated tax payments fell short in 2018
WASHINGTON — The Internal Revenue Service announced today that it is waiving the estimated tax penalty for many taxpayers whose 2018 federal income tax withholding and estimated tax payments fell short of their total tax liability for the year.
The IRS is generally waiving the penalty for any taxpayer who paid at least 85 percent of their total tax liability during the year through federal income tax withholding, quarterly estimated tax payments or a combination of the two. The usual percentage threshold is 90 percent to avoid a penalty.
The waiver computation announced today will be integrated into commercially-available tax software and reflected in the forthcoming revision of Form 2210 and instructions.
This relief is designed to help taxpayers who were unable to properly adjust their withholding and estimated tax payments to reflect an array of changes under the Tax Cuts and Jobs Act (TCJA), the far-reaching tax reform law enacted in December 2017.
IRS Reopens Transcript Service Despite Government Shutdown: Despite the government shutdown, the IRS has resumed processing requests for transcript information made through the Income Verification Express Service (IVES) program. This is a fee-based program used primarily by mortgage lenders to confirm a borrower’s income during the loan application process.
Despite the government shutdown, the Internal Revenue Service today confirmed that it will process tax returns beginning January 28, 2019 and provide refunds to taxpayers as scheduled.
The IRS will begin accepting all business tax returns at 9 a.m. Eastern on January 8, 2019.
Pennsylvania Sets Interest Rates on Underpayments and Overpayments
The Pennsylvania Department of Revenue has announced that the rate of interest on underpayments of Pennsylvania tax for the year commencing January 1, 2019 is 6%, and the rate of interest on overpayments for tax year 2019 is 4%. Interest Rate Notice, Pa. Dept. Rev., Pa. Bull. Doc. No. 19-2018, Pa. Bull. Vol. 48, No. 52, 12/28/2018
The Maryland Comptroller’s Office has set the interest rate for refunds and delinquent taxes for calendar year 2019 at 11%.
The IRS has released the 2019 version of Form W-4(Employee’s Withholding Allowance Certificate) and instructions. Initial plans called for substantial revisions to the form to take into account provisions of the Tax Cuts and Jobs Act. However, after considering feedback from the payroll and tax communities, the IRS decided to postpone the form’s makeover until the 2020 tax year. Therefore, the 2019 form is similar to the 2018 version. However, the Form W-4 Deductions, Adjustments, and Additional Income Worksheet has been updated to reflect the increase in the annual withholding allowance from $4,150 to $4,200 in 2019. Also, the worksheet has been updated for the increase in the standard deduction for 2019 from (1) $24,000 to $24,400 for joint filers and surviving spouses; (2) $18,000 to $18,350 for heads of household; and (3) $12,000 to $12,200 for single filers and married individuals filing separately. The 2019 Form W-4 can be accessed at www.irs.gov/pub/irs-pdf/fw4.pdf .
Last year’s Tax Cuts and Jobs Act made significant changes to the tax law that affect small businesses. The IRS posted two new resources on IRS.gov to help taxpayers understand how these changes affect their bottom line.
This electronic publication covers many of the TCJA provisions that are important for small and medium-sized businesses, their owners, and tax professionals to understand. This concise publication includes sections about:
- Corporate tax provisions
- Qualified business income deduction
- Depreciation: Section 168 and 179 modifications
- Business-related losses, exclusions and deductions
- Business credits
- S corporations
- Farm provisions
https://www.irs.gov/tax-reform-small-business-initiative this one-stop shop highlights important tax reform topics for small businesses. Users can link to several resources, which are grouped by topic:
- New deduction for qualified businesses
- Deductions, depreciation and expensing
- Employer deduction for certain fringe benefits
- Like-kind exchanges
- Real estate rehabilitation tax credit
- Changes in accounting periods and methods of accounting
- Corporate methods of accounting
- Blended federal income tax
- Employer credit for paid family and medical leave
- Farmers and ranchers
Under IRC Sec. 30D(e)(2), the credit for new qualified plug-in electric drive motor vehicles is phased out over a period of four calendar quarters once the total number of qualifying vehicles sold by a manufacturer after 2009 reaches 200,000. In a recent Notice, the IRS announced that Tesla, Inc. reached this limit during the calendar quarter ending 9/30/18. Therefore, qualifying Tesla vehicles are eligible for the full $7,500 credit if they are purchased before 1/1/19. A reduced credit of $3,750 applies to vehicles purchased from 1/1/19 through 6/30/19. On 7/1/19, the credit will be reduced to $1,875 for the remainder of the year. After 12/31/19, no credit will be available. Notice 2018-96 and News Release IR 2018-252.