Douglas Tax Blog. U.S.A.
With the recently passed tax bill, alot of work stands in front of the IRS and tax resolution industry. Changing the Internal Revenue Code involves more than just changing some forms. It involves changes to IRS computer programs, changes to tax tables, and deductions, along with expenses to figure out what is owed. It is also a daunting task for the tax preparation industry, in trying to figure out all the changes in time to prepare the 2017 tax returns, which begin in earnest in January.
It also impacts the tax resolution industry, as many of the changes in tax preparation can alter how tax resolution is determined by the IRS. Making sense of all of these changes takes time, and in some cases it takes clarification in any grey areas, or guidance from the IRS, so that the rule changes are crystal clear to both the tax preparation and tax resolution services industries. Getting guidance from the IRS in January will be crucial to this effort.
Some changes in the tax bill are retroactive to 2017, such as a lower amount needed for a medical expense deduction. The IRS will have to put these changes into the new forms for this next tax filing season. Many of the new changes will start in 2018, which will allow the tax preparation and tax resolution industry to wade thru the Internal Revenue Code to determine what those changes are, and obtain guidance when needed.
It seems the area that will be hardest to digest and will need the most attention moving forward is regarding pass thru income and entities, such as partnerships where income comes from pass thru, taxed thru the individual rate. The new law creates a 20% deduction for pass thru income and includes changes to prevent people from wiggling out under false circumstances. The regulations are extensive and will certainly need guidance for clarification. Expect cases that go to court over differing opinions as well. A new tax bill may be difficult at first, but with effort , it can be managed just as the prior tax act was.