Creating a Rising Tide of Support
Monday April 23, 2018
IRS Tips on How to Find a Qualified Tax Preparer
As tax-filing season moves into high gear, many taxpayers realize they will need professional assistance to complete their 2017 tax returns. In IR-2018-41 and FS-2018-5, the IRS offered tips on selecting a paid tax preparer.
Last year, taxpayers filed 149 million individual tax returns. Paid tax preparers completed 83 million of the total 149 million returns.
How should you select a qualified tax preparer? The Service offers several specific tips.
Unlimited representation is permitted for licensed attorneys, CPAs and enrolled agents. These professionals complete a bar exam (attorneys), the Uniform CPA Exam (CPAs) or a Special Enrollment Exam (enrolled agents). They also must fulfill continuing education requirements.
You can research tax preparers on www.IRS.gov/chooseataxpro. Taxpayers can look up PTIN holders through the IRS Directory of Federal Tax Return Preparers with Credentials and Select Qualifications. You may search by name, zip code or type of credential. Although the IRS provides this list of tax preparers, it does not endorse any specific preparer.
DAF Grants by Private Foundations
In Notice 2017-73, the Service asked the philanthropy community for comments on whether grants from private foundations to donor advised funds should be regulated.
The Notice requests comments on DAF grant purposes and asks, "Whether, consistent with Sec. 4942 and its purposes, a transfer of funds by a private foundation to a DAF should be treated as a qualifying distribution only if the DAF sponsoring organization agrees to distribute the funds for Sec. 170 (c)(2)(B) purposes, or to transfer the funds to its general fund within a certain timeframe."
On March 5, Sean Parnell, Vice President for Public Policy of the Philanthropy Roundtable, responded.
The Philanthropy Roundtable represents 660 philanthropists, family foundations and community foundations. The membership of the roundtable supports a wide range of charitable causes.
Parnell offered specific examples of private foundation grants to DAFs for seven purposes.
IRS Updates 2018 Tax Table, Exemptions and Deductions
In Rev. Proc. 2017-58; 2017-45 IRB 1 (19 Oct 2017), the IRS published tax tables, exemptions and deduction limits for 2018. With a low rate of inflation for the mid-2016 to mid-2017 base period, most changes were modest.
Following the passage of the Tax Cuts and Jobs Act (TCJA) in December of 2017, many of the earlier tables, exemptions and limits were updated. In addition, some tax numbers were indexed with the traditional consumer price index (CPI) and others with the "chained" CPI. In Rev. Proc. 2018-18; 2018-10 IRB 1 (5 Mar 2018), the IRS published updated tax tables, exemptions and deduction limits for 2018.
Two changes affect estate planning and charitable giving. The 2018 estate basic exemption amount was initially $5,600,000, but the TCJA doubled the base amount from $5 million to $10 million. Initial reports suggested a basic exemption amount of $11,200,000, but the final calculated 2018 number is $11,180,000.
The token gift numbers are also updated in Rev. Proc. 2018-18. Charities are permitted to transfer token gift premiums to donors who make gifts above a specific level. In 2018, a donor who makes a gift over $54.00 may receive a premium with the logo or other identification of the nonprofit valued at $10.80 or less. Donors who make larger gifts may receive a premium up to 2% of the value of the gift, with a limit of $108.
Applicable Federal Rate of 3.0 for March -- Rev. Rul. 2018-6; 2018-10 IRB 1 (16 Feb 2018)
The IRS has announced the Applicable Federal Rate (AFR) for March of 2018. The AFR under Section 7520 for the month of March is 3.0%. The rates for February of 2.8% or January of 2.6% also may be used. The highest AFR is beneficial for charitable deductions of remainder interests. The lowest AFR is best for lead trusts and life estate reserved agreements. With a gift annuity, if the annuitant desires greater tax-free payments the lowest AFR is preferable. During 2018, pooled income funds in existence less than three tax years must use a 1.4% deemed rate of return. Federal rates are available by clicking here.
Published March 9, 2018