NEW YORK--(BUSINESS WIRE)--April 15 has come and gone. Taxpayers hopefully have either filed their returns, requested a filing extension, or are entitled to an extension without requesting one. Some taxpayers, such as those overseas, military personnel in a combat zone, or persons in designated disaster areas, may have an automatic extension to file without the need for a request.
However, a number of outstanding issues could still have an impact on 2018 tax returns. Some taxpayers filing for an extension may have been intentionally waiting for some of those issues to be resolved. Taxpayers who have already filed may have to consider filing an amended return if they are impacted by continuing changes that retroactively apply to 2018 tax returns.
“Even if you have already filed your tax return, it is a good idea to stay alert for additional changes impacting 2018 tax returns,” said Mark Luscombe, JD, LLM, CPA and Principal Federal Tax Analyst for Wolters Kluwer Tax & Accounting. “Your tax professional can be a big help in alerting you to these additional changes as they occur throughout the year.”
Possible changes to watch for that could still impact 2018 tax returns include:
Expired Tax Provisions
Nearly 30 tax provisions expired at the end of 2017 and have not yet been renewed for 2018. Congress is still considering legislation to renew them retroactively for 2018. They include:
- Above-the-line deduction for tuition and fees
- Mortgage insurance premium deduction
- Exclusion for forgiveness of qualified residence indebtedness
- Nonbusiness energy property credit
- New qualified fuel cell motor vehicle credit
- 2-Wheeled plug-in electric vehicle credit
- Additional business energy credits
- Tax credits focused on specific industries or areas
- Excise tax credits
A number of errors were made in drafting the Tax Cuts and Jobs Act, most of the provisions of which were effective for 2018 tax returns. Congress is still working on enacting those technical corrections. Some are relatively minor, but a few have a potential significant impact on taxpayers. A couple getting the most attention are:
- Depreciation of Qualified Improvement Property: Property such as leasehold improvement property, retail improvement property, and restaurant property under prior law was depreciable over a 15-year period. The Tax Cuts and Jobs Act had intended to make this property eligible for immediate expensing, but instead made it subject to 39-year depreciation
- Net Operating Losses: The Tax Cuts and Jobs Act intended to ban the carryback of net operating losses for tax years starting after December 31, 2017. However, in another drafting error, the law banned the carryback for tax years ending after December 31, 2017, creating a retroactive application of the change for fiscal year taxpayers
Tax Cuts and Jobs Act Regulations
Treasury and the IRS are still working on finalizing many regulatory projects with respect to the Tax Cuts and Jobs Act. Under the law, those final regulations could be made retroactive to 2018 if adopted by June 22, 2019. The IRS has already indicated that some final regulations will not be applied to the 2018 tax year, but it is not certain that other regulations still to be finalized will not be given retroactive application.
As time passes, there will probably be greater pressure not to give retroactive application to further tax changes. However, as with expired provisions and technical corrections, some taxpayers are pushing for retroactive application. All taxpayers will need to stay alert for continuing developments with a possible impact on their 2018 tax returns.
About Wolters Kluwer
Wolters Kluwer Tax & Accounting is a leading provider of software solutions and local expertise that helps tax, accounting, and audit professionals research and navigate complex regulations, comply with legislation, manage their businesses and advise clients with speed, accuracy, and efficiency.
Wolters Kluwer Tax & Accounting is part of Wolters Kluwer (WKL), a global leader in professional information, software solutions, and services for the healthcare; tax and accounting; governance, risk and compliance; and legal and regulatory sectors. We help our customers make critical decisions every day by providing expert solutions that combine deep domain knowledge with advanced technology and services.
Wolters Kluwer reported 2018 annual revenues of €4.3 billion. The group serves customers in over 180 countries, maintains operations in over 40 countries, and employs approximately 19,000 people worldwide. The company is headquartered in Alphen aan den Rijn, the Netherlands.
Wolters Kluwer shares are listed on Euronext Amsterdam (WKL) and are included in the AEX and Euronext 100 indices. Wolters Kluwer has a sponsored Level 1 American Depositary Receipt (ADR) program. The ADRs are traded on the over-the-counter market in the U.S. (WTKWY).