FOR BREAKING NEWS VISIT WWW.QNS.COM OCTOBER 11, 2018 • QUEENS BUSINESS • THE QUEENS COURIER 53
TAX TIPS
Tax
Strategy
BY JOHN SAVIGNANO, CPA
Let’s discuss some tax changes that were enacted at warp speed late
last year.
Can I deduct investment fees I pay this year?
No. The Schedule A write-off for these costs, IRA custodial fees paid
directly by the account owner, and the rest of the popular miscellaneous
deductions subject to the 2%-of-AGI threshold are now gone.
My employer paid for my cross-country move. Is the amount
taxable to me?
Generally, yes. It used to be that when you relocated for a new job, you
could deduct moving costs, or if your employer reimbursed you, the
payment was tax-free. Well, not anymore, except for active-duty military
personnel who move pursuant to military orders.
Is the new opportunity zone program up and running yet?
In part. This program, which is included in the new tax law, lets taxpayers
defer capital gains from the sale or exchange of business or personal
property, including stocks, by investing the proceeds in opportunity funds
to help low-income communities. Those who opt to take advantage of this
break have 180 days from the date of the sale to invest all or part of the gain
proceeds in a so-called qualified opportunity fund.
IRS is set to release proposed regulations on how this tax break will work.
An open question is whether gain deferral will automatically end in 2026,
when the break is set to expire. Tax and investment advisers hope the
guidance will address this concern plus provide clarity on key definitions
and other issues.
Is Schedule E rental income eligible for the 20% pass-through deduction?
It depends on whether the activity rises to the level of a trade or business.
The new tax break applies to qualified business income from a trade or
business. In proposed rules, IRS refers to the standard under the federal
tax code that generally govern the deductibility of trade or business
expenses.
Unfortunately, this standard is unclear in the context of a rental activity.
That’s because it’s based on facts and circumstances that are specific to
each taxpayer, and the issue hasn’t been resolved by case law. Some aspects
considered important: Type of property that is leased, extent of day-to-day
involvement by the lessor or the lessor’s agents, number of properties
rented and specific terms of the lease. Tax pros and others are pleading
with IRS to address this in final regulations. If the agency does not, then it
will be up to the courts to resolve it later.
Will Congress make permanent the individual tax provisions in the
new law?
Not this year. Most off the changes affecting individuals and small
businesses expire after 2025. House Republicans will act on a bill to make
the changes permanent. But the effort will die in the Senate. This won’s
stop GOPers from touting tax cuts, which some see as a campaign message
to entice voters in the midterm elections.
The phaseout of itemized deductions for upper-incomers is scrapped.
John Savignano is a partner with Savignano Accountants & Advisors
located at 47-46 Vernon Blvd., Second Floor, in Long Island City. If you
have any questions or require additional information, please call John at
718-707-0955.
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