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The Senate Finance Committee (SFC) advanced President Donald Trump’s nomination of Charles Rettig for IRS Commissioner. The SFC approved the nomination on July 19 by a 14-to-13 party line vote.


President Donald Trump and House GOP tax writers discussed "Tax Cuts 2.0" in a July 17 meeting at the White House. The next round of tax cuts will focus primarily on the individual side of the tax code, both Trump and House Ways and Means Chair Kevin Brady, R-Tex., reiterated to reporters at the White House before the meeting.


House Republicans and the Trump Administration are working together to craft a tax cut "2.0"outline, the House’s top tax writer has said. House Ways and Means Committee Chairman Kevin Brady, R-Tex., told reporters during the week that House tax writers and the White House are currently working to finalize the "framework."


The Senate Finance Committee’s (SFC) leading Democrat has released a report critiquing Republicans’ 2017 overhaul of the tax code. The report, focusing primarily on international tax reform, was released by SFC ranking member Ron Wyden, D-Ore., on July 18.


Homeowners will be hurt financially by last year’s tax reform, according to a new House Democratic staff report. The report alleges that real estate developers will primarily benefit from the new tax law at the expense of homeowners.


The IRS has issued final regulations that target tax-motivated inversion transactions and certain post-inversion tax avoidance transactions. The final regulations retain the thresholds and substantiation requirements of the 2016 final, temporary and proposed regulations (the 2016 regulations), but make limited changes to the 2016 regulations to improve clarity and reduce unnecessary complexity and burdens on taxpayers. These changes also ensure that the final regulations do not impact cross-border transactions that are economically beneficial and not tax-motivated.


The Fifth Circuit vacated a tax preparer’s conviction for obstructing tax administration. The conviction was no longer valid in light of C.J. Marinello, SCt., 2018-1 ustc ¶50,192.


National Taxpayer Advocate Nina E. Olson has released her mid-year report to Congress. The report contains a review of the 2018 filing season, and identifies the priority issues the Taxpayer Advocate Service (TAS) will address during the upcoming fiscal year. It also includes the IRS’s responses to each of the 100 administrative recommendations made in the 2017 Annual Report to Congress.


With the massive overhaul of the individual tax in late 2017 many changes will benefit taxpayers in 2018.

For taxpayers 65 and older the standard deduction for a single filer will be $13,600 ($12,000 + $1,600 over age 64) and married filers will be either $25,300 or $26,600 if both taxpayers are over 64.

With most taxpayers, itemized deductions will be of no benefit for 2018 and beyond. It has been estimated that 2/3rds of taxpayers that did itemize in 2017 will not itemize in future years.

Internal Revenue Service information has been slowed by needs to make many changes in a short period of time. The Internal Revenue Service is just now releasing 2018 forms for review.

One planning strategy that will result in tax savings for taxpayers over age 70 ½ is to use IRA funds to pay their charitable contribution. The key to this strategy is that the funds come from IRA accounts (not 401‑K or Roth IRA) after the taxpayer has reached age 70 ½. The distribution must be paid from the IRA trustee directly to a qualified charity. The annual limit is $100,000.

The distribution is not reported as income and the charitable contribution is not deducted. The taxpayer retains the standard deduction. The tax savings is a benefit for lower bracket taxpayers as well as higher bracket taxpayers.

Here’s how it works by example with a $5,000 charitable contribution paid directly to the qualified charity vs $5,000 IRA paid to the taxpayer:

 

             Lower Bracket

                    Higher Bracket

 

W/O IRA Direct

  With IRA Direct

    W/O IRA Direct

With IRA Direct

Other Income

    $ 27,000

     $ 27,000

      $ 80,000

  $ 80,000

IRA Distribution

         5,000

               0

           5,000

             0

Taxable S.S Benefit

       12,000

         7,000

         20,400

     20,400

Total Income:

      44,000

      34,000

       105,400

   100,400

Standard Deduction

    (26,600)

    (26,600)

       (26,600)

   (26,600)

Taxable Income

      17,400

        7,400

        78,800

     73,800

 

 

 

 

 

Federal Tax

       1,740

          740

         9,215

       8,475

 

 

 

 

 

Savings – Federal

 

   $  1,000

 

$      740

As the example shows, the lower bracket taxpayer may realize more tax savings because the non‑reported IRA distribution reduces the taxable portion of the taxpayers social security benefit.

The point of the above example is that all contributions should be paid direct from IRA funds after the taxpayer reaches the age of 70 ½.