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Archive for October, 2017

2018 Federal Inflation Adjustments

Posted by taxguru on October 25, 2017

Every year, some parts of the tax code, such as the beginning and ending points for the various personal income tax brackets, are adjusted for the change in the government’s official Consumer Price Index (CPI) as of August 31.  This is supposed to prevent “bracket creep,” where people whose income is just keeping pace with inflation are pushed into the higher percentage brackets.

Not all tax related amounts in the Tax Code adjust automatically for inflation.  There are scores of tax related figures in the Tax Code that do not ever get adjusted and have been the same for several decades, waiting for an official Act of Congress to be adjusted for the effects of inflation.

As has been the tradition, tax publishers are the first to do the calculations and release the inflation adjustments for the next year.  IRS will release their official inflation adjustments for 2018 in the next month or so, assuming those IRS employees are still around in IRS HQ.

The first such report with 2018 adjusted amounts that I have come across is this 16 page pdf from Thomson Reuters.

Projected 2018 Inflation-Adjusted Tax Brackets and Other Key Figures

As I have done in previous years, I will post links to other such reports, as I learn about them.

Update 10/25/2017:  IRS has announced their official inflation adjustment figures in the following two news releases.

IRS Announces 2018 Pension Plan Limitations; 401(k) Contribution Limit Increases to $18,500 for 2018

In 2018, Some Tax Benefits Increase Slightly Due to Inflation Adjustments, Others Unchanged

One key adjustment that I didn’t mention earlier is the fact that, after several years at $14,000, the annual Gift Tax exclusion will rise to $15,000 per donor per donee for 2018.  This exemption is only increased in $1,000 increments, so it normally takes a few years of cumulative inflation before it’s enough to trigger the $1,000 increase.

Posted in inflation | Comments Off on 2018 Federal Inflation Adjustments

Filing Extension for Calif WildFire Victims

Posted by taxguru on October 13, 2017

This has been a terrible past few months for huge disasters.

As I expected, IRS has just announced that they are giving the victims of the current California wildfires the same extended due date as they earlier provided for hurricane victims, January 31, 2018 for their 2016 tax returns, which would otherwise have been due in by this coming Monday, October 16.

IRS Gives Tax Relief to Victims of California Wildfires; Extension Filers Have Until Jan. 31 to File

As this announcement explains, this special extension applies to individuals and businesses located in the fire area, as well as those who reside outside the fire zone, who have been helping to fight the inferno and assist in the relief efforts.

As with any disaster of this magnitude, the Tax Code allows the unreimbursed loss to be deducted on either the current year’s (2017) tax returns or on the previous year’s (2016).  I explained more about how this process works in my post on Hurricane Harvey tax breaks


Update 10/13/2017
: As is their normal practice, the California FTB has announced their agreement to honor the IRS’s extended 2016 filing deadlines (until 1/31/18)  for those who have been affected by the current wildfires, as well as the recent hurricanes.

California Taxpayers Impacted by Wildfires Receive More Time to File, Pay

Posted in disaster, extensions | Comments Off on Filing Extension for Calif WildFire Victims

Is this some kind of joke?

Posted by taxguru on October 5, 2017

Unfortunately not.

IRS awards multimillion-dollar fraud-prevention contract to Equifax

IRS top brass continue to dig themselves even deeper down the untrustworthiness hole they have been in for the past few years.  This really boosts our confidence in giving IRS all of our personal financial and other information; not.  What could go wrong?  Unfortunately, when taxpayers’ private info falls into the wrong hands due to these idiots, there’s nothing we can do about it.  IRS, as well as all government employees, can’t be sued for stupidity.    

 

I also considered some other headlines for this hard to believe news.

The Blind leading the blind

Dumb and Dumber

Stupid is as stupid does

Posted in IRS | Comments Off on Is this some kind of joke?