The Treasury Inspector General for Tax Administration (TIGTA) released a report providing interim results for the 2018 federal tax filing season. As of March 2, 2018, the Internal Revenue Service (IRS) had received approximately 61 million tax returns and issued over 48 million refunds totaling almost $148 billion.
In September, 2017, the Internal Revenue Service (IRS) issued a directive to tax examiners concerning research expenditures for business entity taxpayers with assets of at least $10 million and that follow Generally Accepted Accounting Principles (GAAP) to prepare certified financial statements and records for research costs following ASC 730. Taxpayers are provided a federal credit for increasing research activities under IRC Section 41; the state of California has decided to follow the same directive for California business entity taxpayers.
The California Franchise Tax Board (FTB) has updated certain aspects of tax return filing starting with returns for tax year 2017. The standard deduction for taxpayers filing as single increased to $4,236; for taxpayers who are married filing jointly, the new standard deduction is $8,472. Personal exemptions were also raised to $114 and $228, respectively.
The IRS Large Business and International division (LB&I) is rolling out a series of campaigns focused on specific compliance issues. The division analyzed extensive data as well as suggestions from IRS compliance employees and the tax community to improve large business compliance activities.
California Senate Bill No. 807, introduced February 17, 2017, proposes various tax credits and exemptions aimed at attracting and retaining educators. Legislators hope to offer qualifying taxpayers a credit against their net tax equal to qualified costs paid or incurred in a given year to earn a full teaching credential. Taxpayers who have taught in a classroom for at least five years would be exempt from paying state taxes on that income.
The Franchise Tax Board announced it will be accepting applications for the California Competes Tax Credit from March 6 through March 27, 2017. The credit is available to businesses that relocate to California or stay and expand within the state. During Fiscal Year 2016/2017, credits totaling $243.3 million will be available for allocation during three application periods.
The Internal Revenue Service announced plans to change how it processes tax returns in 2017 regarding the Earned Income Tax Credit and the Additional Child Tax Credit. Due to the Protecting Americans from Tax Hikes Act of 2015 (PATH Act) enacted on December 18, 2015, taxpayers who claim the EITC or ACTC on their tax returns must wait until February 15 to receive their credit or refund. The IRS may not release a partial refund. This change, effective January 1, 2017, is meant to combat loss of revenue due to identity theft and refund fraud. For more information, click here.
The Treasury Inspector General for Tax Administration (TIGTA) released an audit report on May 19, 2016 in which it claims that "billions of dollars in potentially improper payments will continue to go unaddressed unless the Internal Revenue Service (IRS) is allowed expanded error correction authority," referring to the Earned Income Tax Credit (EITC) Program. The Office of Management and Budget (OMB) considers the EITC the IRS' only high-risk revenue program. According to the TIGTA report, "The IRS estimates that 23.8 percent ($15.6 billion) of EITC payments were issued improperly in Fiscal Year 2015."
Filing tax returns can be stressful, which is one reason many taxpayers hire a trusted professional to handle their returns for them. But what happens if your tax preparer turns out to be less trustworthy than you thought?
Taxpayers in the United States with valid Social Security numbers may be eligible for a federal Earned Income Tax Credit if they meet certain criteria. The Internal Revenue Service has created an online "EITC Assistant" to help you determine if you are one of these qualifying taxpayers.