WASHINGTON — The Internal Revenue Service today reminded U.S. citizens and resident aliens, including those with dual citizenship, that if they have a foreign bank or financial account, April 15, 2019, is the deadline to file their annual Report of Foreign Bank and Financial Accounts (FBAR). They should also check to see if they have a U.S. tax liability and a federal tax return filing requirement.

Here is a rundown of key points to keep in mind:

Deadline for reporting foreign accounts
The deadline for filing the FBAR is the same as for a federal income tax return. This means that the 2018 FBAR, Form 114, must be filed electronically with the Financial Crimes Enforcement Network (FinCEN) by April 15, 2019. FinCEN grants filers missing the April 15 deadline an automatic extension until Oct. 15, 2019, to file the FBAR. Taxpayers don’t file the FBAR with individual, business, trust or estate tax returns. Taxpayers who want to paper-file their FBAR must call the Financial Crimes Enforcement Network’s Regulatory Helpline to request an exemption from e-filing.

In general, the filing requirement applies to anyone who had an interest in, or signature or other authority, over foreign financial accounts whose aggregate value exceeded $10,000 at any time during 2018. Because of this threshold, the IRS encourages taxpayers with foreign assets, even relatively small ones, to check if this filing requirement applies to them. The form is only available through the BSA E-Filing System website.

Taxpayers with foreign financial accounts that report their accounts to the U.S Treasury Department should also visit the FBAR Fact Sheet posted on IRS.gov.

IRS ends Offshore Voluntary Disclosure Program (OVDP)
The IRS will continue to use tools besides voluntary disclosure to combat offshore tax avoidance, including taxpayer education, whistleblower leads, civil examination and criminal prosecution. The IRS continues to use streamlined filing compliance procedures that will remain in place and be available to eligible taxpayers. But, as with OVDP, the IRS said it may end the streamlined filing compliance procedures at some point. Full details of the OVDP and streamlined procedures are available at Options Available for U.S. Taxpayers with Undisclosed Foreign Financial Assets.

Most people abroad need to file
An income tax filing requirement generally applies even if a taxpayer qualifies for tax benefits, such as the Foreign Earned Income exclusion or the Foreign Tax credit, which substantially reduce or eliminate U.S. tax liability. These tax benefits are only available if an eligible taxpayer files a U.S. income tax return.

A special extended filing and payment deadline applies to U.S. citizens and resident aliens who live and work abroad. For U.S. citizens and resident aliens whose tax home and abode are outside the United States and Puerto Rico, the income tax filing and payment deadline is June 17, 2019. Taxpayers have two extra days because the normal extended deadline—June 15—falls on a Saturday this year.  The same applies for those serving in the military outside the U.S. and Puerto Rico on the regular due date of their tax return.

Interest, currently at the rate of 6 percent per year, compounded daily, will apply to any payment received after the regular April 15 deadline. See U.S. Citizens and Resident Aliens Abroad for details.

Nonresident aliens who received income from U.S. sources in 2018 also must determine whether they have a U.S. tax obligation. The filing deadline for nonresident aliens is April 15. See Taxation of Nonresident Aliens on IRS.gov.

Special income tax return reporting for foreign accounts and assets
In addition to the annual Report of Foreign Bank and Financial Accounts (FBAR) requirements outlined above, federal law requires U.S. citizens and resident aliens to report any worldwide income, including income from foreign trusts and foreign bank and securities accounts. In most cases, affected taxpayers need to complete and attach Schedule B to their tax return. Part III of Schedule B asks about the existence of foreign accounts, such as bank and securities accounts, and usually requires U.S. citizens to report these items for the country in which each account is located.

Also, separate from the foreign accounts reporting requirements above, certain taxpayers may also have to complete and attach to their return Form 8938, Statement of Specified Foreign Financial Assets. Generally, U.S. citizens, resident aliens and certain nonresident aliens must report specified foreign financial assets on this form if the aggregate value of those assets exceeds certain thresholds. See the instructions for this form for details.

Specified domestic entity reporting
Certain domestic corporations, partnerships and trusts that are considered formed for the purpose of holding (directly or indirectly) specified foreign financial assets must file Form 8938 if the total value of those assets exceeds $50,000 on the last day of the tax year or $75,000 at any time during the tax year.

For more information on specified domestic entity reporting, as well as the types of specified foreign financial assets that must be reported, see Do I need to file Form 8938, “Statement of Specified Foreign Financial Assets”? and its instructions.

Report in U.S. dollars
Any income received, or deductible expenses paid in foreign currency must be reported on a U.S. tax return in U.S. dollars. Likewise, any tax payments must be made in U.S. dollars.

Both FinCen Form 114 and IRS Form 8938 require the use of a December 31 exchange rate for all transactions, regardless of the actual exchange rate on the date of the transaction. Generally, the IRS accepts any posted exchange rate that is used consistently. For more information on exchange rates, see Foreign Currency and Currency Exchange Rates.

Expatriate reporting
Taxpayers who relinquished their U.S. citizenship or ceased to be lawful permanent residents of the United States during 2018 must file a dual-status alien tax return, attaching Form 8854, Initial and Annual Expatriation Statement. A copy of the Form 8854 must also be filed with Internal Revenue Service, Philadelphia, PA 19255-0049, by the due date of the tax return (including extensions). See the instructions for this form and Notice 2009-85, Guidance for Expatriates Under Section 877A, for further details.

Choose Free File or e-file
U.S. citizens and resident aliens living abroad can use IRS Free File to prepare and electronically file their tax returns for free. This means both U.S. citizens and resident aliens living abroad with adjusted gross incomes (AGI) of $66,000 or less can use brand-name software to prepare their returns and then e-file them for free. A limited number of companies provide software that can accommodate foreign addresses.

A second option, Free File Fillable Forms, the electronic version of IRS paper forms, has no income limit and is best suited to people who are comfortable preparing their own tax return. Both the e-file and Free File electronic filing options are available until Oct. 15, 2019, for anyone filing a 2018 tax return. Check out the e-file link on IRS.gov for details on the various electronic filing options. Free File is not available to nonresident aliens required to file a Form 1040NR.

More information available
Any U.S. taxpayer here or abroad with tax questions can refer to the International Taxpayers page and use the online IRS Tax Map and the International Tax Topic Index to get answers. These online tools group IRS forms, publications and web pages by subject and provide users with a single-entry point to

Taxpayers who are looking for return preparers abroad should visit the Directory of Federal Tax Return Preparers with Credentials and Select Qualifications.

To help avoid delays with tax refunds, taxpayers living abroad should visit Helpful Tips for Effectively Receiving a Tax Refund for Taxpayers Living Abroad on IRS.gov.

More information on the tax rules that apply to U.S. citizens and resident aliens living abroad can be found in Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad, available on IRS.gov.

WASHINGTON — The Internal Revenue Service today urged taxpayers to file an accurate tax return on time, even if they owe but can’t pay in full. The IRS also recommends that taxpayers do a Paycheck Checkup early in 2019 to avoid having too much or too little tax withheld.

Most taxpayers are being affected by major tax law changes. While most will get a tax refund, others may find that they owe taxes. Those who owe may qualify for a waiver of the estimated tax penalty that normally applies. See Form 2210, Underpayment of Estimated Tax by Individuals, Estates and Trusts, and its instructions for details.

This news release is part of a series called the Tax Time Guide, a resource to help taxpayers file an accurate tax return. Additional help is available in Publication 17, Your Federal Income Tax, and the tax reform information page.

The filing deadline to submit 2018 tax returns is Monday, April 15, 2019, for most taxpayers. Because of the Patriots’ Day holiday on April 15 in Maine and Massachusetts and the Emancipation Day holiday on April 16 in the District of Columbia, taxpayers who live in Maine or Massachusetts have until April 17 to file their returns.

Checking on refunds

The IRS issues nine out of 10 refunds in less than 21 days. Using the “Where’s My Refund?” online tool, taxpayers can start checking on the status of their return within 24 hours after the IRS receives an e-filed return or four weeks after the taxpayer mailed a paper return. The tool has a tracker that displays progress through three phases: (1) Return Received; (2) Refund Approved; and (3) Refund Sent.

All that is needed to use “Where’s My Refund?” is the taxpayer’s Social Security number, tax filing status (such as single, married, head of household) and exact amount of the tax refund claimed on the return.

“Where’s My Refund?” is updated no more than once every 24 hours, usually overnight, so there’s no need to check the status more often.

Check withholding

The IRS encourages taxpayers to review their tax withholding using the IRS Withholding Calculator and make any needed adjustments early in 2019. Taxpayers should check their withholding each year and when life changes occur, such as marriage, childbirth, adoption or buying a home. Doing a Paycheck Checkup can help taxpayers avoid having too little or too much tax withheld from their paychecks. The IRS reminds taxpayers that they can generally control the size of their tax refund by adjusting their tax withholding.

For 2019, it’s important to review withholding and do a Paycheck Checkup. This is especially true for taxpayers who adjusted their withholding in 2018 – specifically in the middle or later parts of the year. And it’s also important for taxpayers who received a tax bill when they filed this year or want to adjust the size of their tax refund for next year.

How to make a tax payment

Taxpayers should visit the “Pay” tab on IRS.gov to see their payment options. Most tax software products give taxpayers various payment options, including the option to withdraw the funds from a bank account. These include:

• IRS Direct Pay offers taxpayers a free, fast, secure and easy way to make an electronic payment from their bank account to the U.S. Treasury.
• Use an approved payment processor to pay by credit or debit card for a fee.
• Mail checks or money orders made out to the U.S. Treasury.
• Make monthly or quarterly tax payments using IRS Direct Pay or through the Electronic Federal Tax Payment System.

Can’t pay a tax bill?

Everyone should file their 2018 tax return by the tax filing deadline regardless of whether they can pay in full. Taxpayers who can’t pay all their taxes have options including: 

• Online Payment Agreement — Individuals who owe $50,000 or less in combined income tax, penalties and interest and businesses that owe $25,000 or less in payroll tax and have filed all tax returns may qualify for an Online Payment Agreement. Most taxpayers qualify for this option and an agreement can usually be set up on IRS.gov in a matter of minutes.
• Installment Agreement — Installment agreements are paid by direct deposit from a bank account or a payroll deduction.
• Delaying Collection — If the IRS determines a taxpayer is unable to pay, it may delay collection until the taxpayer's financial condition improves.
• Offer in Compromise (OIC) — Taxpayers who qualify enter into an agreement with the IRS that settles their tax liability for less than the full amount owed.

Taxpayers can find answers to questions, forms and instructions and easy-to-use tools online at IRS.gov. They can use these resources to get help when it’s needed at home, at work or on the go.

More resources:

• IRS Podcast: Owe Taxes But Can’t Pay?
• FS-2019-5, What are the benefits of filing and paying my taxes on time?
• FS-2019-4, Tax withholding: How to get it right

WASHINGTON — The Internal Revenue Service today clarified the tax treatment of state and local tax refunds arising from any year in which the new limit on the state and local tax (SALT) deduction is in effect.

In Revenue Ruling 2019-11, posted today on IRS.gov, the IRS provided four examples illustrating how the long-standing tax benefit rule interacts with the new SALT limit to determine the portion of any state or local tax refund that must be included on the taxpayer’s federal income tax return. Today’s announcement does not affect state tax refunds received in 2018 for tax returns currently being filed.

The Tax Cuts and Jobs Act (TCJA), enacted in December 2017, limited the itemized deduction for state and local taxes to $5,000 for a married person filing a separate return and $10,000 for all other tax filers. The limit applies to tax years 2018 to 2025.

As in the past, state and local tax refunds are not subject to tax if a taxpayer chose the standard deduction for the year in which the tax was paid. But if a taxpayer itemized deductions for that year on Schedule A, Itemized Deductions, part or all of the refund may be subject to tax, to the extent the taxpayer received a tax benefit from the deduction.

Taxpayers who are impacted by the SALT limit—those taxpayers who itemize deductions and who paid state and local taxes in excess of the SALT limit—may not be required to include the entire state or local tax refund in income in the following year. A key part of that calculation is determining the amount the taxpayer would have deducted had the taxpayer only paid the actual state and local tax liability—that is, no refund and no balance due.

In one example described in the ruling, a single taxpayer itemizes and claims deductions totaling $15,000 on the taxpayer’s 2018 federal income tax return. A total of $12,000 in state and local taxes is listed on the return, including state and local income taxes of $7,000. Because of the limit, however, the taxpayer’s SALT deduction is only $10,000. In 2019, the taxpayer receives a $750 refund of state income taxes paid in 2018, meaning the taxpayer’s actual 2018 state income tax liability was $6,250 ($7,000 paid minus $750 refund). Accordingly, the taxpayer’s 2018 SALT deduction would still have been $10,000, even if it had been figured based on the actual $6,250 state and local income tax liability for 2018. The taxpayer did not receive a tax benefit on the taxpayer’s 2018 federal income tax return from the taxpayer’s overpayment of state income tax in 2018. Thus, the taxpayer is not required to include the taxpayer’s 2019 state income tax refund on the taxpayer’s 2019 return.

See the ruling for details on all four examples.

Today’s ruling has no impact on state or local tax refunds received in 2018 and reportable on 2018 returns taxpayers are filing this season. For information, including worksheets for reporting these refunds, see the 2018 instructions for Form 1040, U.S. Individual Income Tax Return, and Publication 525, Taxable and Nontaxable Income. 

For information about other TCJA provisions, visit IRS.gov/taxreform.

WASHINGTON — As part of its ongoing security review, the Internal Revenue Service announced today that starting May 13 only individuals with tax identification numbers may request an Employer Identification Number (EIN) as the “responsible party” on the application.

An EIN is a nine-digit tax identification number assigned to sole proprietors, corporations, partnerships, estates, trusts, employee retirement plans and other entities for tax filing and reporting purposes.

The change will prohibit entities from using their own EINs to obtain additional EINs. The requirement will apply to both the paper Form SS-4, Application for Employer Identification Number, and online EIN application.

Individuals named as responsible party must have either a Social Security number (SSN) or an individual taxpayer identification number (ITIN). By making the announcement weeks in advance, entities and their representatives will have time to identify the proper responsible official and comply with the new policy.

The Form SS-4 Instructions provide a detailed explanation of who should be the responsible party for various types of entities. Generally, the responsible party is the person who ultimately owns or controls the entity or who exercises ultimate effective control over the entity. In cases where more than one person meets that definition, the entity may decide which individual should be the responsible party.

Only governmental entities (federal, state, local and tribal) are exempt from the responsible party requirement as well as the military, including state national guards.

There is no change for tax professionals who may act as third-party designees for entities and complete the paper or online applications on behalf of clients.

The new requirement will provide greater security to the EIN process by requiring an individual to be the responsible party and improve transparency. If there are changes to the responsible party, the entity can change the responsible official designation by completing Form 8822-B, Change of Address or Responsible Party. A Form 8822-B must be filed within 60 days of a change.

WASHINGTON — The Internal Revenue Service today provided additional expanded penalty relief to taxpayers whose 2018 federal income tax withholding and estimated tax payments fell short of their total tax liability for the year.
 
The IRS is lowering to 80 percent the threshold required to qualify for this relief. Under the relief originally announced Jan. 16, the threshold was 85 percent. The usual percentage threshold is 90 percent to avoid a penalty.

“We heard the concerns from taxpayers and others in the tax community, and we made this adjustment in an effort to be responsive to a unique scenario this year,” said IRS Commissioner Chuck Rettig. “The expanded penalty waiver will help many taxpayers who didn’t have enough tax withheld. We continue to urge people to check their withholding again this year to make sure they are having the right amount of tax withheld for 2019.”

This means that the IRS is now waiving the estimated tax penalty for any taxpayer who paid at least 80 percent of their total tax liability during the year through federal income tax withholding, quarterly estimated tax payments or a combination of the two.
 
Today’s revised waiver computation will be integrated into commercially-available tax software and reflected in the forthcoming revision of the instructions for Form 2210, Underpayment of Estimated Tax by Individuals, Estates, and Trusts.

Taxpayers who have already filed for tax year 2018 but qualify for this expanded relief may claim a refund by filing Form 843, Claim for Refund and Request for Abatement and include the statement “80% Waiver of estimated tax penalty” on Line 7.  This form cannot be filed electronically.

Today’s expanded relief will help many taxpayers who owe tax when they file, including taxpayers who did not properly adjust their withholding and estimated tax payments to reflect an array of changes under the Tax Cuts and Jobs Act (TCJA), the far-reaching tax reform law enacted in December 2017.
 
The IRS and partner groups conducted an extensive outreach and education campaign throughout 2018 to encourage taxpayers to do a “Paycheck Checkup” to avoid a situation where some might have had too much or too little tax withheld when they file their tax returns. If a taxpayer did not submit a revised W-4 withholding form to their employer or increase their estimated tax payments, they may have not had enough tax withheld during the tax year.
 
Additional information

Because the U.S. tax system is pay-as-you-go, taxpayers are required, by law, to pay most of their tax obligation during the year, rather than at the end of the year. This can be done by either having tax withheld from paychecks or pension payments, or by making estimated tax payments.
 
Usually, a penalty applies at tax filing if too little is paid during the year. This penalty is an interest based amount approximately equivalent to the federal interest on the amount not paid in a timely manner. Normally, the penalty would not apply for 2018 if tax payments during the year met one of the following tests:

• The person’s tax payments were at least 90 percent of the tax liability for 2018 or
• The person’s tax payments were at least 100 percent of the prior year’s tax liability, in this case from 2017. However, the 100 percent threshold is increased to 110 percent if a taxpayer’s adjusted gross income is more than $150,000, or $75,000 if married and filing a separate return.

For waiver purposes only, today’s relief lowers the 90 percent threshold to 80 percent. This means that a taxpayer will not owe a penalty if they paid at least 80 percent of their total 2018 tax liability. If the taxpayer paid less than 80 percent, then they are not eligible for the waiver and the penalty will be calculated as it normally would be, using the 90 percent threshold. For further details, see Notice 2019-25, posted today on IRS.gov.
 
Like last year, the IRS urges everyone to take a Paycheck Checkup and review their withholding for 2019. This is especially important for anyone now facing an unexpected tax bill when they file. This is also an important step for those who made withholding adjustments in 2018 or had a major life change to ensure the right tax is still being withheld. Those most at risk of having too little tax withheld from their pay include taxpayers who itemized in the past but now take the increased standard deduction, as well as two-wage-earner households, employees with nonwage sources of income and those with complex tax situations.
 
To help taxpayers get their withholding right in 2019, the updated Withholding Calculator is now available on IRS.gov.

The IRS has many useful resources for anyone interested in learning more about tax reform, including Publication 5307, Tax Reform: Basics for Individuals and Families, and Publication 5318, Tax Reform What’s New for Your Business. For other tips and resources, visit IRS.gov/taxreform or check out the Get Ready page on IRS.gov.

WASHINGTON – The Internal Revenue Service today renewed its effort to encourage taxpayers to review their tax withholding using the IRS Withholding Calculator and make any needed adjustments early in 2019.

Doing a Paycheck Checkup can help taxpayers avoid having too little or too much tax withheld from their paychecks. The IRS reminds taxpayers that they can generally control the size of their refund by adjusting their tax withholding.

This news release is part of a series called the Tax Time Guide, a resource to help taxpayers file an accurate tax return. Additional help is available in Publication 17, Your Federal Income Tax, and the tax reform information page.

Withholding
The federal income tax is a pay-as-you-go tax. Taxpayers pay the tax as they earn or receive income during the year. Employers generally use withholding tables to determine how much tax to withhold from their employees’ paychecks and then pay it to the IRS. Workers who are not subject to withholding, such as those working in the gig or shared economy, should make quarterly estimated tax payments to pay their tax during the year.

When to check withholding
Taxpayers should check their withholding each year and when life changes occur, such as marriage, childbirth, adoption or buying a home.

For 2019, it’s important to review withholding and do a Paycheck Checkup. This is especially true for taxpayers who adjusted their withholdings in 2018 – specifically in the middle or later parts of the year. And it’s also important for taxpayers who received a tax bill when they filed this year or want to adjust the size of their refund for next year.

A withholding table shows payroll service providers and employers how much tax to withhold from employee paychecks, given each employee’s wages, marital status, and the number of withholding allowances they claim.

The IRS makes annual updates to the withholding tables for inflation, tax rates, tax tables and cost of living adjustments. This annual withholding guidance helps employers make changes to their payroll systems. However, the withholding tables can’t fully factor in all changes for all taxpayers, and only employees know other variables that can affect the tax they owe, such as other household income, credits and deductions that might reduce tax. As a result, some taxpayers could have paid too much tax last year and will get a refund, or too little tax if they did not increase their withholding or pay more estimated tax in 2018.

IRS Withholding Calculator
The IRS Withholding Calculator can help taxpayers get their tax withholding right. Checking withholding can protect against having too little tax withheld and then facing an unexpected tax bill or penalty at tax time next year. A taxpayer may prefer to have less tax withheld upfront and receive more in their paycheck. And, some people may choose to have their employer withhold more money from their paycheck. Others may choose to make higher or more tax payments than required and receive the overpayment – or refund – when they file their tax return. This is an individual taxpayer choice.

When using the calculator, it’s helpful to have a completed 2018 tax return available. For more details see Tax withholding: How to get it right.

Change withholding by submitting a new Form W-4
Taxpayers can use the results from the IRS Withholding Calculator to determine if they should complete a new Form W-4, Employee’s Withholding Allowance Certificate. The calculator will recommend the number of allowances to claim on this form and, if needed, the amount of additional federal income tax to have withheld each pay period. Employees submit the completed Form W-4 to their employer, not the IRS.

Those who need to adjust their withholding should do so as soon as possible. Workers whose income is not subject to tax withholding should also plan to pay tax throughout the year. See Form 1040-ES to find out more.

Tax Cuts and Jobs Act
When taxpayers file their 2018 tax return, they may notice significant changes from the Tax Cuts and Jobs Act (TCJA) including lowered tax rates, increased standard deductions, suspension of personal exemptions, increased Child Tax Credit and limited or discontinued deductions.

The IRS has online resources that can help taxpayers understand how the TCJA affects them and their withholding.

Whether at home, at work or on the go, taxpayers can find answers to questions, forms and instructions and easy-to-use tools online at IRS.gov.

WASHINGTON — The Internal Revenue Service wants business owners and the self-employed to know that a publication on IRS.gov has information they can use to learn which recent tax-law changes impact their bottom line.

This news release is part of a series called the Tax Time Guide, a resource to help taxpayers file an accurate tax return. Additional help is available in Publication 17, Your Federal Income Tax, and the tax reform information page.

Publication 5318, Tax Reform: What’s New for Your Business, is a 12-page electronic document. Pub. 5318 provides a general overview of many of the Tax Cuts and Jobs Act (TCJA) changes enacted in December 2017 that impact business taxes.

Publication 5318 includes sections on:

• Qualified Business Income Deduction 
• Depreciation
• Business related losses
• Business related exclusions and deductions 
• Business credits 
• S corporations 
• Farm provisions 
• Miscellaneous provisions

A few key provisions include:

Qualified Business Income Deduction

Many individuals, including owners of sole proprietorships, partnerships, and S corporations and beneficiaries of trusts and estates, may be entitled to a deduction of up to 20 percent of qualified business income (QBI), plus up to 20 percent of their qualified real estate investment trust (REIT) dividends and qualified publicly traded partnership (PTP) income. Generally, this deduction is the lesser of the combined QBI, REIT dividend, and PTP income amounts, or 20 percent of taxable income minus the taxpayer’s net capital gain. Claimed on Form 1040, Line 9, the new deduction is generally available to eligible taxpayers whose 2018 taxable incomes fall below $315,000 for joint returns and $157,500 for other taxpayers. The deduction may also be available for those whose incomes are above these levels but additional limitations may apply.

Temporary 100 percent expensing (bonus depreciation)

Businesses can write off most depreciable business assets in the year they placed them in service. The 100-percent depreciation deduction (bonus depreciation) generally applies to depreciable business assets and certain other property. Machinery, equipment, computers, appliances and furniture generally qualify. The deduction is generally allowable for qualifying property acquired and placed in service after Sept. 27, 2017, and before Jan. 1, 2023. For more information, see Publication 946, How to Depreciate Property.

Expensing depreciable business assets

A taxpayer may elect to expense the cost of any section 179 property and deduct it in the year the property is placed into service. The new law increased the maximum deduction from $500,000 to $1 million. It also increased the phase-out threshold from $2 million to $2.5 million. After 2018, the $1 million and $2.5 million thresholds will be adjusted for inflation.

Business related losses

For most taxpayers, a net operating loss (NOL) arising in tax years ending after Dec. 31, 2017 can only be carried forward. Certain NOLs of farming businesses and insurance companies (other than life insurance) can still be carried back two years. The deduction of NOLs arising in tax years beginning after Dec. 31, 2017, is limited to 80 percent of taxable income, determined without any NOL deduction. This 80 percent limitation does not apply to insurance companies (other than life insurance). Rules for existing or pre-2018 NOLs remain the same.

Taxpayers can find answers to questions, forms and instructions and easy-to-use tools online at IRS.gov. No appointment required and no waiting on hold.

WASHINGTON — The Internal Revenue Service issued proposed regulations under section 250 of the Internal Revenue Code, which offers domestic corporations deductions for foreign-derived intangible income (FDII) and global intangible low-taxed income. Section 250, as well as section 951A dealing with global intangible low-taxed income, was added by the 2017 Tax Cuts and Jobs Act (TCJA).

These proposed regulations provide guidance on both the computation of the deductions available under section 250 and determination of FDII. In addition, the proposed regulations provide rules for the computation of FDII in the consolidated return context. Proposed guidance on the computation of global intangible low-taxed income was published in the Federal Register on Oct. 10, 2018.

New reporting rules requiring the filing of Form 8993, Section 250 Deduction for Foreign-Derived Intangible Income and Global Intangible Low-Taxed Income, are also described in the proposed regulations.

Treasury and IRS welcome public comments on these proposed regulations. For details on submitting comments, see the proposed regulations.

Updates on the implementation of the TCJA can be found on the Tax Reform page of IRS.gov.

WASHINGTON — The Internal Revenue Service today reminded taxpayers that, in most cases, Monday, April 1, 2019, is the date by which persons who turned age 70½ during 2018 must begin receiving payments from Individual Retirement Accounts (IRAs) and workplace retirement plans.

This news release is part of a series called the Tax Time Guide, a resource to help taxpayers file an accurate tax return. Additional help is available in Publication 17, Your Federal Income Tax, and the tax reform information page.

Two payments in the same year

The payments, called required minimum distributions (RMDs), are normally made by the end of the year. Those persons who reached age 70½ during 2018 are covered by a special rule, however, that allows first-year recipients of these payments to wait until as late as April 1, 2019, to get the first of their RMDs. The April 1 RMD deadline only applies to the required distribution for the first year. For all following years, including the year in which recipients were paid the first RMD by April 1, the RMD must be made by Dec. 31.

A taxpayer who turned 70½ in 2018 (born July 1, 1947, to June 30, 1948) and receives the first required distribution (for 2018) on April 1, 2019, for example, must still receive the second RMD by Dec. 31, 2019.  To avoid having both amounts included in their income for the same year, the taxpayer can make their first withdrawal by Dec. 31 of the year they turn 70½ instead of waiting until April 1 of the following year.

Types of retirement plans requiring RMDs

The required distribution rules apply to owners of traditional, Simplified Employee Pension (SEP) and Savings Incentive Match Plans for Employees (SIMPLE) IRAs but not Roth IRAs while the original owner is alive. They also apply to participants in various workplace retirement plans, including 401(k), 403(b) and 457(b) plans.

An IRA trustee must either report the amount of the RMD to the IRA owner or offer to calculate it for the owner. Often, the trustee shows the RMD amount on Form 5498 in Box 12b. For a 2018 RMD, this amount is on the 2017 Form 5498 normally issued to the owner during January 2018.

Some can delay RMDs

Though the April 1 deadline is mandatory for all owners of traditional IRAs and most participants in workplace retirement plans, some people with workplace plans can wait longer to receive their RMD. Employees who are still working usually can, if their plan allows, wait until April 1 of the year after they retire to start receiving these distributions. See Tax on Excess Accumulation in Publication 575. Employees of public schools and certain tax-exempt organizations with 403(b) plan accruals before 1987 should check with their employer, plan administrator or provider to see how to treat these accruals.

IRS online tools and publications can help

Many answers to questions about RMDs can be found in a special frequently asked questions section at IRS.gov. Most taxpayers use Table III (Uniform Lifetime) to figure their RMD. For a taxpayer who reached age 70½ in 2018 and turned 71 before the end of the year, for example, the first required distribution would be based on a distribution period of 26.5 years. A separate table, Table II, applies to a taxpayer married to a spouse who is more than 10 years younger and is the taxpayer’s only beneficiary. Both tables can be found in the appendices to Publication 590-B.

Taxpayers can find answers to questions, forms and instructions and easy-to-use tools online at IRS.gov. They can use these resources to get help when it’s needed, at home, at work or on the go.

WASHINGTON — Kicking off the annual “Dirty Dozen” list of tax scams, the Internal Revenue Service today warned taxpayers of the ongoing threat of internet phishing scams that lead to tax-related fraud and identity theft.

The IRS warns taxpayers, businesses and tax professionals to be alert for a continuing surge of fake emails, text messages, websites and social media attempts to steal personal information. These attacks tend to increase during tax season and remain a major danger of identity theft.

To help protect taxpayers against these and other threats, the IRS highlights one scam on 12 consecutive week days to help raise awareness. Phishing schemes are the first of the 2019 “Dirty Dozen” scams.

“Taxpayers should be on constant guard for these phishing schemes, which can be tricky and cleverly disguised to look like it’s the IRS,” said IRS Commissioner Chuck Rettig. “Watch out for emails and other scams posing as the IRS, promising a big refund or personally threatening people. Don’t open attachments and click on links in emails. Don’t fall victim to phishing or other common scams.”

The IRS also urges taxpayers to learn how to protect themselves by reviewing safety tips prepared by the Security Summit, a collaborative effort between the IRS, state revenue departments and the private-sector tax community.

“Taking some basic security steps and being cautious can help protect people and their sensitive tax and financial data,” Rettig said.

New variations on phishing schemes

The IRS continues to see a steady stream of new and evolving phishing schemes as criminals work to victimize taxpayers throughout the year. Whether through legitimate-looking emails with fake, but convincing website landing pages, or social media approaches, perhaps using a shortened URL, the end goal is the same for these con artists: stealing personal information.

In one variation, taxpayers are victimized by a creative scheme that involves their own bank account. After stealing personal data and filing fraudulent tax returns, criminals use taxpayers' bank accounts to direct deposit tax refunds. Thieves then use various tactics to reclaim the refund from the taxpayer, including falsely claiming to be from a collection agency or the IRS. The IRS encourages taxpayers to review some basic tips if they see an unexpected deposit in their bank account.

Schemes aimed at tax pros, payroll offices, human resources personnel

The IRS has also seen more advanced phishing schemes targeting the personal or financial information available in the files of tax professionals, payroll professionals, human resources personnel, schools and organizations such as Form W-2 information. These targeted scams are known as business email compromise (BEC) or business email spoofing (BES) scams.

Depending on the variation of the scam (and there are several), criminals will pose as:

• a business asking the recipient to pay a fake invoice
• as an employee seeking to re-route a direct deposit
• or as someone the taxpayer trusts or recognizes, such as an executive, to initiate a wire transfer.

The IRS warned of the direct deposit variation of the BEC/BES scam in December 2018, and continues to receive reports of direct deposit scams reported to phishing@irs.gov. The Direct Deposit and other BEC/BES variations should be forwarded to the Internet Crime Complaint Center (IC3). The IRS requests that Form W-2 scams be reported to: phishing@irs.gov (Subject: W-2 Scam). 

Criminals may use the email credentials from a successful phishing attack, known as an email account compromise, to send phishing emails to the victim’s email contacts. Tax preparers should be wary of unsolicited email from personal or business contacts especially the more commonly observed scams, like new client solicitations.

Malicious emails and websites can infect a taxpayer’s computer with malware without the user knowing it. The malware downloads in the background, giving the criminal access to the device, enabling them to access any sensitive files or even track keyboard strokes, exposing login victim’s information.

For those participating in these schemes, such activity can lead to significant penalties and possible criminal prosecution. Both the Treasury Inspector General for Tax Administration (TIGTA), which handles scams involving IRS impersonation, and the IRS Criminal Investigation Division work closely with the Department of Justice to shut down scams and prosecute the criminals behind them.

Tax professional alert

Numerous data breaches across the country mean the tax preparation community must be on high alert to unusual activity, particularly during the tax filing season. Criminals increasingly target tax professionals, deploying various types of phishing emails in an attempt to access client data. Thieves may use this data to impersonate taxpayers and file fraudulent tax returns for refunds.

As part of the Security Summit initiative, the IRS has joined with representatives of the software industry, tax preparation firms, payroll and tax financial product processors and state tax administrators to combat identity theft refund fraud to protect the nation's taxpayers.

The Security Summit partners encourage tax practitioners to be wary of communicating solely by email with potential or existing clients, especially if unusual requests are made. Data breach thefts have given thieves millions of identity data points including names, addresses, Social Security numbers and email addresses. If in doubt, tax practitioners should call to confirm a client’s identity.

Reporting phishing attempts

If a taxpayer receives an unsolicited email or social media attempt that appears to be from either the IRS or an organization closely linked to the IRS, such as the Electronic Federal Tax Payment System (EFTPS), they should report it by sending it to phishing@irs.gov. Learn more by going to the Report Phishing and Online Scams page on IRS.gov.

Tax professionals who receive unsolicited and suspicious emails that appear to be from the IRS and/or are tax-related (like those related to the e-Services program) also should report it to: phishing@irs.gov.

The IRS generally does not initiate contact with taxpayers by email to request personal or financial information. This includes any type of electronic communication, such as text messages and social media channels

IRS YouTube Videos:

• Phishing-Malware – English | Spanish | ASL
• Dirty Dozen – English | Spanish | ASL