New Hardship Exemptions for Individual Mandate

While the Tax Cuts and Jobs Act repealed the individual mandate penalty as of January 1, 2019, the requirement for individuals and their dependents to have minimum essential health coverage unless exempt or pay a penalty still applies for 2018 returns. However, the IRS has stated that certain hardship exemptions can be claimed for 2018…

No Profit Motive Without Charging for Work

Unless a taxpayer can demonstrate a profit motive, an activity is treated as a hobby. This means all income must be reported, but for 2018 through 2025, no deductions can be taken. The bar to deductions makes the profit motive determination essential in these years. One recent case illustrates that at a minimum, a taxpayer…

Financial Stress Is No Excuse for Nonfiling

Life’s ups and downs can disrupt things for taxpayers, but the Tax Court has made it clear that it’s no excuse for not filing tax returns. Take the following case where a taxpayer who worked in the financial services business was sailing along, earning over $400,000 a year. Then his income began to decline and…

IRS Interest Rates for Q1 2019 Increased

The interest rates on overpayments and underpayments are increased slightly for the first quarter of 2019, as compared with the rates for the prior quarter (Rev Rul. 2018-32). The rates are: Noncorporate overpayments and underpayments: 6% Corporate overpayments: 5% generally, but 3.5% for corporate overpayments exceeding $10,000 Corporate underpayments: 6% generally but 8% for large…

No Double Dipping for Vehicle Expenses

If you use your vehicle for business driving, you have a choice in how to handle your expenses. You can deduct your actual costs, including an allowance for depreciation (up to certain dollar limits) if you own the vehicle or your lease payments if you lease it. Or you can rely on an IRS-set mileage…

Social Security Changes for 2019

More than 62 million Social Security beneficiaries will receive a cost-of-living adjustment (COLA) of 2.8% starting with the December 2018 benefits, which are payable in January 2019. This COLA adjustment is higher than the 2% increase last year (Social Security Administration Press Release and Fact Sheet, 10/11/18; https://www.ssa.gov/news/press/factsheets/colafacts2019.pdf). However, for many Social Security recipients, the…