SECURE act

[ATSMAN]

Off the top of my head I can think of 3 taxpayers (one a family relative) that can now claim residential energy credit for converting to energy efficient gas heater by amending 2018. But I am sure I have more clients that qualify. The challenge is going to be going through old questionnaires and notes because they were not organized to search for that one particular item because it was moot last tax season.

I think a prudent and efficient way to approach this problem is to do those amendments of 2018 returns in the summer after tax season. I have a feeling that 2019 returns that claim these extenders may have to wait for the refunds or wait acceptance. Let's see what happens. BTW this may cause IRS to delay start of tax filing if the computer rejig is extensive.

[rbynaker]

I think a prudent and efficient way to approach this problem is to do those amendments of 2018 returns in the summer after tax season. I have a feeling that 2019 returns that claim these extenders may have to wait for the refunds or wait acceptance. Let's see what happens. BTW this may cause IRS to delay start of tax filing if the computer rejig is extensive.

I agree, this will likely be my approach as well. I haven't sent organizers out yet so I'm thinking of maybe adding an extra page asking about 2019 extender items and asking if folks can dig up their 2018 items as well. The problem is, in many ways that's taking a hammer to a screw. PMI, for example, if folks didn't have enough to itemize last year, PMI may or may not make any difference (and here in VA we'll be waiting for another 3-4 months for Richmond to decide whether or not they want to conform to these changes retroactively). If they were close (and I know of at least a couple who were and paid PMI) then it might tip them over to a Schedule A.

Just keep telling yourself (and your clients), "It's not my fault!" If you do have to amend make sure you get paid.

Rick

[ATSMAN]

Just keep telling yourself (and your clients), "It's not my fault!" If you do have to amend make sure you get paid.

Absolutely. I am not working for free! I was going to send my organizers after Christmas but now I must wait to get some clarification and approach this in a way to not make a complete mess for me. The last thing I want is confused clients burning my phone!

Hopefully I can manage the amendments during the summer time period and get some additional income.

[kathyc2]

My read on QCDs is that it's still 70 1/2 with the caveat that there's now a clawback if you take a QCD AND make a contribution to your IRA after 70 1/2. I struggled with trying to make sense of that section and it'll be interesting to see how/if the IRS tracks this stuff (new form?) Seems like you need to keep a tally of lifetime post 70 1/2 IRA contributions vs. lifetime QCDs. Looks like a mess! (See top of page 616 in link above). I'm not opposed to a new form, I've been wanting some sort of reporting mechanism for QCDs for a while now.

It's the same general concept of a 5 year lookback of distributions for those claiming RSC. I don't care so much about a new form, but wish the 1099R had a code for amount to charity. Some elderly clients get confused by correctly relaying the info to me.

[Rapid Robert]

"Distributions over the life or life expectancy of a non-spouse beneficiary are allowed if the beneficiary is a minor, disabled, chronically ill or not more than 10 years younger than the deceased IRA owner. For minors, the exception only applies until the child reaches the age of majority. At that point, the 10-year rule kicks in."

https://www.kiplinger.com/slideshow/...ngs/index.html

OK, so my comment still holds, except using age 28. If the IRA owner wishes for a large sum to be held in trust until the beneficiary is into their 30s or 40s, they now can only do this at the huge cost of having the trust pay the tax on nearly the entire amount. Otherwise, the full amount must be distributed to taxpayer by age 28. Nowadays, many 28-yr olds are hardly more mature or financially savvy than 18 yr olds.

[kathyc2]

Correct on Person A and B. The Uniform Lifetime Tables have a slightly higher percent; 3.65% for 70 year old and 3.9% for 72 year old. I haven't seen anything that the formula for tables changes.

I have retired clients that can take out more than their RMD's tax free for federal. I have limited success convincing them they should withdraw/convert to Roth the full amount that they can get out tax free. Since defer, defer, defer has been drummed into their brains forever, this will only make it worse.

[New York Enrolled Agent]

Correct on Person A and B. The Uniform Lifetime Tables have a slightly higher percent; 3.65% for 70 year old and 3.9% for 72 year old. I haven't seen anything that the formula for tables changes.

.

Kathy - see the proposed regulations - Reg-132210-18

[kathyc2]

I wish they would legislate something worthwhile, like after you have 2 million in retirement accounts, you can't any more to it.

And instead of having the stupid 10 year rule for all, make it apply to accounts that are over a certain threshold, say 500K or 1 million.

[Burke]

For reference, here's the law:
https://www.congress.gov/116/bills/h...6hr1865enr.pdf

From a tax perspective, we have our old familiar extenders, extended retroactively back to 2018. Some of my favorites:
Various energy credits
PMI deduction
Tuition & Fees deduction
COD exclusion on personal residence
Medical floor back to 7.5%.

Anyone want to volunteer to go through old threads for the past year where people asked about all these and were told they expired? Gotta love it when Congress retroactively makes liars out of everyone!
Rick

Wouldn't it be easier to just alert the clients in your newsletter or welcome letter to the changes, and let them give you the info instead of trying to go through all your returns/emails etc?

[ATSMAN]

Wouldn't it be easier to just alert the clients in your newsletter or welcome letter to the changes, and let them give you the info instead of trying to go through all your returns/emails etc?

Yes it would be easier but timing is the issue. We have not received guidance from IRS and the organizers are almost ready to be sent. I am holding it back until first week of January hoping we will get some guidance. My plan is to do the 1040X in the summer, but I know some clients may want it done sooner if they are going to get a refund.

[Rapid Robert]

Here is a link to a recent article that goes into more detail about what I mentioned in an earlier reply.

Inheriting a parent’s IRA or 401(k)? Here’s how the Secure Act could create a disaster

https://www.marketwatch.com/story/inheriting-a-parents-ira-or-401k-heres-how-the-secure-act-could-create-a-disaster-2019-12-26