By: Eric R. Elmore
The 2019 tax filing season has finally concluded, and not a moment too soon. Americans filed the first full year of income under the Tax Cuts and Jobs Act of 2017 (“TCJA”), the most sweeping revamp of the tax code in more than 30 years. Today’s post is a snapshot of the blogs that were most read by our subscribers over the course of the filing season. It’s a good indication of what was on the minds of our readers while filing their returns. Did any of these play out in your tax planning?
Most outside the world of accounting and finance don’t know there are two “tax seasons” per year. The spring deadlines are well known, these deadlines get all the press. The fall deadlines for extended returns, however, are not often discussed even though, at times, they can be as busy as the spring deadlines, and sometimes even busier. For the sake of this post, we’ll use the time period of February 1, 2019, through October 15, 2019, to measure our five most-read posts:
Clare Porreca gave us clear insight into the common practice of converting a primary residence into a rental property, from a tax perspective. At the time the post was published, the real estate market was in a slight decline. However, the ease of promoting rentals to global audiences through such websites as Airbnb, HomeAway and VRBO, makes the prospect even more appealing.
In her blog post, Clare discusses three main ideas: tax reporting, deductability of rental losses and the exclusion of the gain on the sale of property.
As substantiation of donations has become more scrutinized by the IRS, this question has been a rallying cry for the value of donations across the board—not just bags of clothes. People, more and more, are donating property like cars, boats, furniture and the like. The idea is to get the proper paperwork substantiating your donation from the accepting organization, and document your file with more than a guess as to the value of your donation.
Adele Kilgus helps our readers ensure compliance by outlining what the substantiating paperwork should include. She gives little-known tips like photographing items and keeping the photos with your tax records.
Nothing gets the attention of taxpayers like a new, but little-known, reporting requirement that packs a huge penalty for failing to comply. Such was the case for Form 1065, U.S. Return of Partnership Income. Chris Catarino dove into this item buried in the form’s instructions. The instructions now require partnerships to report each partners' tax basis capital, which was not the case in previous years. For partnerships with multiple partners this penalty could quickly get out of hand. And, figuring these numbers out is not easy.
Chris talks about the possible need for partnerships to conduct tax basis studies to accurately report on the form. But he also talks about other ways to meet compliance.
The so-called “20% pass-though deduction” in Section 199A of the tax code is certainly one of the most talk-about changes of TCJA, especially for those businesses that qualified for the deduction. It is also among the most complex sections of the “simplified” Internal Revenue Code. One of the biggest questions became how to elect to aggregate your trades or businesses in order to maximize the qualified business income deduction.
Dan Marques and Lana Goldina took on this complex issue and thoughtfully helped readers understand it more completely. As Dan and Lana say in the post, “Complexity is not a street to walk down alone!” Heed their warning and read up if this area of the tax code impacts your business(es).
With all the talk about a possible recession in 2020, people are looking for ways to weather an economic storm. Among the ways to do so may be to make withdrawals from retirement plans such as 401(k)s or IRAs. Though most advisors, including The Tax Warriors®, guard against this move, some hardship cases may call for it as a last resort. Sherri Sorbello talks to our readers about the exceptions to avoid the 10% penalty for early withdrawals. Her post is the most-read post The Tax Warriors® at Drucker & Scaccetti have ever written, with more than 150,000 views. Sadly, this may be an indicator of pending rough economic times.
Sherri discusses rollovers, medical expenses, higher education expenses, first-time home purchases and other reasons for withdrawals and how they impact the 10% penalty. Hopefully you will never need this blog. But if you or someone you know does; it is a good place to start.
As you can see, the range of our readers' interests is wide. It is, however, a good indication of what concerned them over the last tax season. Are these the areas that concerned you? Are there others? Let us know. We’re happy to take feedback from you on topics we should write about. Let us know what you would like us to write about by commenting below.
If there are specific situations you’d like to discuss with one of our advisors that can better position you for 2019’s tax filings, contact us. We are always prepared to help.