Latest news with #MelanieLauridsen
Yahoo
30-05-2025
- Business
- Yahoo
AICPA opposes limitations on tax deductions
The American Institute of CPAs (AICPA) has reiterated its stance against the proposed limitations on state and local tax (SALT) deductions for specified service trades or businesses (SSTBs) in the One Big Beautiful Bill Act. The body sent a second letter to the Senate Finance and House Ways & Means Committees highlighting the need for modifications to the 'troubling' tax proposals. In the letter, the AICPA said: 'We are sensitive to the challenges in drafting a budget reconciliation bill that permanently extends tax provisions, enhances tax administrability, and balances the interests of individual and business taxpayers. 'While we support portions of the legislation, we do have significant concerns regarding several provisions in the bill, including one which threatens to severely limit the deductibility of SALT by certain businesses. This outcome is contrary to the intentions of the One Big Beautiful Bill Act, which is to strengthen small businesses and enhance small business relief.' The AICPA called for an allowance for business entities, including SSTBs, to deduct SALT paid or accrued in trade or business activities. This move aligns with the Tax Cuts & Jobs Act's original intent and has been sanctioned by the Internal Revenue Service. The current House version of the bill is criticised for unfairly targeting SSTBs by restricting their SALT deduction capabilities. The AICPA also addressed the risks of contingent fee arrangements in tax preparation, suggesting they could lead to abuse. They recommended removing an amendment that could permanently disallow business losses without offsetting business income. The letter warned against laws that financially harm businesses and discourage professional service-based business formation. The AICPA supported provisions in the bill, such as using section 529 plan funds for credential expenses, tax relief for natural disaster-affected individuals and businesses, and making the qualified business income deduction permanent. They also advocated for the preservation of the cash method of accounting and increasing the Form 1099-K reporting threshold. In addition, the AICPA endorsed permanent extensions of international tax rates and provisions that offer greater certainty and clarity. It also shared a list of endorsed legislation, principles of good tax policy, and a compendium of proposals for simplifying and technically amending the Internal Revenue Code. AICPA Tax Policy & Advocacy vice-president Melanie Lauridsen said: 'While we are grateful to Congress for many provisions in this bill, the unfair targeting of certain types of businesses creates inefficiencies in business decision-making and could result in negative, long-lasting impacts on the economy. 'We hope that Congress will consider our recommendations and make the necessary changes that will create parity between all businesses.' Earlier in May 2025, the AICPA submitted comments to the US Department of the Treasury and the Internal Revenue Service on proposed regulations concerning previously taxed earnings and profits and related basis adjustments. "AICPA opposes limitations on tax deductions" was originally created and published by The Accountant, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
02-04-2025
- Business
- Yahoo
AICPA backs bipartisan tax bills and more
The American Institute of CPAs (AICPA) has expressed its support for four bipartisan bills aimed at enhancing transparency and fairness for taxpayers. These bills recently featured in Senate discussions. The Electronic Filing and Payment Fairness Act, one of the endorsed bills, proposes the application of the 'mailbox rule' to electronic tax submissions. This change would allow the Internal Revenue Service (IRS) to acknowledge electronic payments and documents on the submission date rather than when they are received or reviewed. In a letter to the House of Representatives, the AICPA said that it views this as a positive step towards simplifying the submission process and protecting taxpayers from potential penalties. Another bill, the Filing Relief for Natural Disasters Act (FRNDA), seeks to expedite tax relief following natural disasters. Currently, federal disaster declarations, which can be delayed, are required before the IRS can offer tax relief. The FRNDA would enable the IRS to grant tax relief immediately after a state-level disaster declaration and would extend the mandatory federal filing extension from 60 to 120 days, giving taxpayers more time to file after a disaster. The Disaster related Extension of Deadlines Act (DREDA) aims to provide equal treatment for disaster victims in terms of tax refunds or credits. It proposes an extension of the filing period by the length of the disaster relief postponement, ensuring that affected taxpayers have the same opportunities as those unaffected by disasters. AICPA Tax Policy & Advocacy vice president Melanie Lauridsen 'The AICPA has long supported these proposals and will continue to work to advance comprehensive legislation that enhances IRS operations and improves the taxpayer experience. 'We are pleased to work closely with each of these Representatives on common-sense reforms that will benefit taxpayers, tax practitioners and tax administration and we're encouraged by their passage in the House. We look forward to continuing to work with Congress to improve the taxpayer experience.' Earlier in April 2025, the AICPA Accounting and Review Services Committee (ARSC) issued a clarification on the standard for financial statement preparation within client advisory services (CAS) engagements. The Statement on Standards for Accounting and Review Services (SSARS) No. 27 addresses the applicability of AR-C Section 70 to financial statements prepared as part of a consulting services engagement, providing further guidance to accountancy professionals. "AICPA backs bipartisan tax bills and more" was originally created and published by The Accountant, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site. Sign in to access your portfolio
New York Times
21-02-2025
- Business
- New York Times
Did You Sell Concert Tickets or Clothes? You May Owe Taxes.
If you sold personal items like concert tickets or used clothing online last year or received money for services through payment apps, you may get an unfamiliar tax form this year. A tax law change means most online marketplaces and payment apps must send the Internal Revenue Service a form called a 1099-K, with a copy to you, if you received more than $5,000 in payments for 'goods or services' in 2024. That's down from a threshold of $20,000 in payments and more than 200 transactions. (Starting in 2024, the number of transactions no longer matters.) 'As the threshold keeps going down, it catches more people,' said Melanie Lauridsen, vice president for tax policy and advocacy at the American Institute of Certified Public Accountants. Under the old cutoff, the forms mostly went to people running active businesses rather than to occasional or small-time sellers. 'This substantial drop in the reporting thresholds could result in millions more taxpayers receiving Forms 1099 this filing season than in prior years,' according to a blog post by Erin M. Collins, the national taxpayer advocate, who leads a group within the I.R.S. that works on behalf of taxpayers. Here's what to know about Form 1099-K: Who's eligible to receive Form 1099-K? If you bought several concert tickets, for example, and resold them online at a markup, you could potentially meet the 2024 threshold for getting the form, Ms. Collins said in an interview. Tickets for big-name concerts, she said, such as performances by Taylor Swift, have reportedly sold for more than $1,000 per ticket. If the seller made money, the gain is taxable. The rule doesn't apply to personal payments, like gifts or transfers of money to friends and family, the I.R.S. says. If you and a friend go to a concert, and your friend pays you for the ticket using a payment app, 'you should not receive a Form 1099-K for the reimbursement and, generally, it would not be taxable,' according to 'common situations' described on the agency's website. Similarly, if you dine out with friends and pay with a credit card, then have the others reimburse you for their share of the meal via Venmo or another app, that transaction doesn't count toward the reporting requirement, the I.R.S. says. It's possible that you could receive a form for such transactions in error — for instance, if someone mistakenly tagged payments to you as purchases rather than personal payments. With both Venmo and its parent, PayPal, for instance, transactions between consumer accounts are 'friends and family' by default unless the person paying designates them as goods and services. To help avoid a mix-up, the I.R.S. advises, 'be sure to note these types of payments as nonbusiness in the payment apps when possible.' CashApp says on its website that only users with designated business accounts who exceed the federal threshold will get 1099-K forms. You can check the website of your payment app or marketplace for information about its specific tax policies. What should you do if you get one of these forms? If you get a Form 1099-K this year, 'the No. 1 thing is, do not ignore it,' said Tom O'Saben, director of tax content and government relations with the National Association of Tax Professionals. 'Think about, why did you get it?' Just because you receive a form doesn't necessarily mean the full amount it shows is taxable, said Lisa Greene-Lewis, a certified public accountant and a spokeswoman for TurboTax. 'Don't panic when you see that amount on a 1099-K,' she said. If the amount reflects business income, you can deduct expenses for marketing, supplies, advertising and the like, she said. (Gig workers, freelancers and other self-employed people typically report income and expenses on Schedule C.) If you get a form because you sold used clothes on eBay or Poshmark, but sold them for less than you paid, you generally don't have to pay taxes on the payments you received. (Since you didn't make money on the sale, the amount isn't taxable.) In an attempt to simplify such situations when you file your 2024 tax return, the I.R.S. has included a new space at the top of Form 1040's Schedule 1 for reporting 'additional income and adjustments to income.' There, you can include amounts reported in error on a 1099-K or report personal items sold at a loss. As of Thursday, the I.R.S. had not updated all of its online information to reflect this change, but details can be found in the instructions for Schedule 1. If you expected to get a 1099-K but haven't yet, check on your provider's website to see if electronic versions are available. Forms should have been made available to users of online payment systems and marketplaces by Jan. 31, the I.R.S. says. What if I sold the goods for a loss? As with any information submitted on a tax form, it's wise to keep receipts and other documentation showing the amount you originally paid for the item — sometimes known as its 'basis,' said Andy Phillips, vice president of H&R Block's Tax Institute. Say you paid $6,000 for concert tickets and resold them online for $5,500, according to an example in Ms. Collins's blog. You'll get a Form 1099-K reporting gross payments of $5,500. But because you didn't make money on the tickets, you'll report the amount of $5,500 in the new space, and won't owe tax on that amount. Why is this change taking effect now? The change had been scheduled to take effect in 2022 at a threshold of just $600 as part of a plan to better track income from the gig economy that may not be reported to the I.R.S. The change was included in the American Rescue Plan legislation that Congress passed in 2021. The I.R.S., however, delayed the change by two years. A lobbying group representing payment apps like Venmo and CashApp and marketplaces including eBay and StubHub had opposed the change, and a government watchdog agency said the much lower threshold could confuse gig workers. Then, in November, the I.R.S. announced that it would stagger the arrival of the lower threshold over a few years, giving businesses and sellers time to adjust. For 2024 — the year covered by the tax return you are filing this year — it's $5,000. For 2025, the threshold will drop to $2,500. And in 2026 and years after, it will fall to $600. 'I think the I.R.S. listened, and that was appreciated,' said Ms. Collins, the taxpayer advocate. Do some states have lower reporting thresholds for 2024? Yes. At least five states set lower limits for receiving the form, according to PayPal. They are Maryland, Massachusetts, Vermont and Virginia, where it's $600, and Illinois, where it's more than $1,000 and four or more transactions. If you live in one of those states, or others with different rules, you may get a Form 1099-K even if you didn't exceed the federal threshold for 2024. In those cases, companies send the forms to state tax authorities, not to the I.R.S., according to PayPal. What if I had income from online sales but didn't get a 1099-K? Income of any type — even if it's beneath the threshold for getting a 1099-K form — should be reported on your tax return, Mr. O'Saben said. The 1099-K, and other similar forms, are intended to make the I.R.S. aware of the income, he said. But it's incorrect to assume that if a form isn't received, the income isn't taxable. Could the threshold for 1099-Ks be changed again? Modifying the federal thresholds would require action by Congress, Ms. Lauridsen said.
