As this filing season begins you need to be aware of two new provisions (that were included in the Tax Cuts and Jobs Act) that go into effect for 2018. One may affect some of your clients that use an ITIN for their children and the other is an addition to the preparer due diligence requirements.
New Requirement for Child Tax Credit beginning in 2018
Beginning with 2018 federal returns in order for a child to be eligible for either the $2,000 child tax credit or the $500 family credit they must have a Social Security Number.
This change was part of the Tax Cuts and Jobs Act that increased the child tax credit (for tax years 2018 – 2025) to $2,000 for eligible children under 17 of which $1,400 may be refundable. Also, the earned income threshold will be $2,500 when calculating the refundable portion of the child tax credit.
A $500 nonrefundable credit was also added for children who are 17, 18, or for full time students ages 19-24 and other eligible dependents.
New paid preparer due diligence requirement for head of household status
Beginning with 2018 federal returns the Tax Cuts and Jobs Act added a requirement that preparer due diligence will apply to tax returns where the taxpayer uses the head of household filing status.
This means that additional questions will be added to the 2018 Form 8867 (Preparer’s Due Diligence Checklist) to ensure that paid preparers are performing their due diligence in determining that the taxpayer is eligible to file using the head of household filing status. Also the $510 penalty for any preparers where the IRS determines that they did not following the due diligence requirements will apply.
See the New Federal Tax Law Changes Included in the Tax Cuts and Jobs Act page in the Tax Resource Center on the Crosslinktax website.
2018 Depreciation Changes
October 18, 2018
2018 Tax Law Changes that are Directly Reported on Form 1040
October 3, 2018
IRS Tax Transcripts Changes
September 27, 2018
Revised 2018 Schedule A due to Tax Cuts and Jobs Act Changes to Itemized Deductions
August 29, 2018
2018 Expansion of Preparer Due Diligence Requirements
August 8, 2018
IRS Accepting Renewal Applications for ITINs Expiring at End of 2018
July 25, 2018