It’s tax time; well, not quite yet. There are significant actions yet to happen before 2019’s tax filing season can get underway. So, what’s going on?
In late 2017, the Tax Cuts and Jobs Act (TCJA) was signed into law creating an enormous impact on tax laws for 2017, 2018 and beyond. This legislation represents the most significant, widespread changes to existing tax law in over 30 years. The Treasury Department and Internal Revenue Service (IRS) released interpretive guidance throughout 2018 and they will continue to do so in the upcoming weeks and months.
The IRS estimates that implementation of the Act will require creating or revising approximately 450 forms, publications, and instructions; requiring modification of roughly 140 information technology systems to ensure accommodation of the newly revised tax forms. These forms and related publications must be revised and tested by the Information Technology department prior to being available to the public. Once the forms are released every tax software company will need to incorporate the new or revised forms into their software. Only then can 2018 tax year returns be finalized.
Already, there have been delays in some information typically released earlier by the IRS, such as tax brackets and annual changes to various thresholds and limits. In recent years, the IRS has opened tax filing season around the third or fourth week of January. The IRS just announced that this year’s filing season will open January 28. They also advised that they have a contingency plan in place to minimize the impact of the current stalemate on funding of the Federal government. Still, the shutdown is affecting many areas of the IRS’s operations, as more than 70,000 of their employees are currently furloughed.
As promised, the administration reduced the size of the individual income tax return (Form 1040) to the size of a large postcard. However, all previous supporting schedules and a few new ones must be completed to fill in lines on the new form. To further complicate matters, preparers will need additional time to work through the new 20% qualified business income deduction and other new provisions of the TCJA.
To learn more about the new Form 1040, click here.
JPS continues to stay abreast of the latest developments. Have questions? Contact us.
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Johnson Price Sprinkle PA is a 60+ year old accounting firm providing small to middle market businesses with tax, business consulting, audit, fraud, and technology solution services. With offices in Asheville, Boone, and Marion, NC, our CPAs and JPS team strive to provide personal service alongside technical expertise resulting in our clients’ long-term financial success. We also invest time and energy in our community, taking pride in doing what we can to make Western North Carolina a better place. JPS Mission: To Be Greater by positively impacting our Clients, People, Community and Profession.
Published January 4, 2019