On Friday February 9th the ‘Bi-partisan Budget Act of 2018′ was signed into law. This legislation extends and modifies numerous tax provisions that cover tax year 2017. It also contains disaster relief for victims of the California wildfires and special relief provisions for Puerto RIco.
While the IRS digests all of it’s implications for affected taxpayers and the tax community, here are a few things to consider. Taxpayers in California wildfire areas will receive tax relief for early retirement plan distributions, a longer period of time to repay wildfire distributions and increased loan amounts from a qualified employer plan.
For Earned Income and child tax credits, the act allows qualified individuals to utilize their 2016 earned income amount if it is greater than their current year earned income. To qualify, a taxpayer must have resided in one of the California wildfire disaster areas between October 8th 2017 and December 31st of the same year.
Additionally, a new tax Form 1040SR will be created for seniors over 65 years of age that will as simple as the 1040EZ form, but will allow for reporting of Social Security and retirement distributions.
For a comprehensive analysis visit journalofaccountancy.com or click here.
