Robinson & Isom, PLLC

07/20/2020

2020 SALES TAX HOLIDAYS INFORMATION

Sales Tax Holiday

For 2020 only, the Tennessee General Assembly has approved two separate sales tax holiday weekends. During these weekends, certain goods may be purchased tax free.
The first tax-free holiday weekend focuses on clothing and other back-to-school items. It begins at 12:01 a.m. on Friday, July 31 and ends Sunday, August 2 at 11:59 p.m. During this time, clothing, school supplies, and computers and other qualifying electronic devices may be purchased tax-free. Certain price restrictions apply.

Exempt items sold online are also eligible. Items must be purchased for personal use, not for business or trade.

Exempt:

General apparel that costs $200 or less per item, such as shirts, pants, socks, shoes, dresses, etc.

Not exempt:

Apparel items priced at more than $200 Items sold together, such as shoes, cannot be split up to stay beneath the $200 maximum Items such as jewelry, handbags, or sports and recreational equipment School Supplies

Exempt:

School and art supplies with a purchase price of $200 or less per item, such as binders, books, backpacks, crayons, paper, pens, pencils, and rulers, and art supplies such as glazes, clay, paints, drawing pads, and artist paintbrushes

Not exempt:

School and art supplies individually priced at more than $200

Items that are normally sold together cannot be split up to stay beneath the $200 maximum

Exempt:

Computers for personal use with a purchase price of $3,000 or less

Tablets, smart phones and electronic readers with a purchase price of $3,000 or less

Televisions and video game consoles with a purchase price of $3,000 or less

Not exempt:

Storage media, like flash drives and compact discs

Individually purchased software
Printer supplies
Household appliances
The second tax-free holiday weekend focuses on restaurant sales.

It begins at 12:01 a.m. on August 7 and ends Sunday, August 9 at 11:59 p.m.
During this time, the retail sale of food and drink by restaurants and limited service restaurants, as defined in Tenn. Code Ann. § 57-4-102, is exempt from sales tax.

State of Tennessee - TN.gov

10/12/2019

IRS Finalizes Safe Harbor for Rental Real Estate to Qualify as a Business for Qualified Business Income Deduction
September 24, 2019
The IRS recently finalized a safe harbor for certain interests in rental real estate, including interests in mixed-use property, to be treated as a trade or business for purposes of the qualified business income deduction under section 199A of the Internal Revenue Code.

The safe harbor is available for taxpayers looking to claim the section 199A deduction with respect to a “rental real estate enterprise.” For purposes of the safe harbor, a rental real estate enterprise is defined as an interest in real property - a single property or multiple properties - held to generate rental or lease income. The taxpayer or a relevant passthrough entity (RPE) relying on this revenue procedure must hold each interest directly or through an entity disregarded as an entity separate from its owner, such as a limited liability company with a single member.

The following requirements must be met by taxpayers or RPEs to qualify for the safe harbor:

Separate books and records are maintained to reflect income and expenses for each rental real estate enterprise.
For rental real estate enterprises that have been in existence less than four years, 250 or more hours of rental services are performed per year. For other rental real estate enterprises, 250 or more hours of rental services are performed in at least three of the past five years.
The taxpayer maintains contemporaneous records, including time reports, logs, or similar documents, regarding the following: hours of all services performed, description of all services performed, dates on which such services were performed and who performed the services.
The taxpayer or RPE attaches a statement to the return filed for the tax year(s) the safe harbor is relied upon.
If all requirements are met, an interest in rental real estate will be treated as a single trade or business for purposes of the section 199A deduction. If an interest in real estate fails to satisfy all the requirements of the safe harbor, it may still be treated as a trade or business for purposes of the section 199A deduction if it otherwise meets the definition of a trade or business in the section 199A regulations.

For more information, visit www.irs.gov/taxreform.

Information and guidance to taxpayers, businesses and the tax community on the new tax reform.

09/11/2019

Freelancers, others with side jobs in the gig economy may benefit from new online tool

IR-2019-149, September 4, 2019

WASHINGTON — The Internal Revenue Service said today that the new Tax Withholding Estimator tool includes a feature designed to make it easier for employees who also receive self-employment income to accurately estimate the right amount of tax to have taken out of their pay.

The estimator is an expanded, mobile-friendly online tool that replaced the Withholding Calculator, which since 2001 had offered workers an online method for checking their withholding. The old calculator lacked features geared to self-employed individuals; the new estimator made changes to address this important group.

The new tool offers self-employed individuals, workers, retirees and other taxpayers a more dynamic and user-friendly way to calculate the amount of income tax they want to have withheld from either wages or pension payments. With only a third of the year remaining, the IRS encourages these taxpayers – and others – to use the estimator to take a Paycheck Checkup as soon as possible to make sure they are having the right amount of tax withheld and avoid a surprise when they file next year.

Among other things, the estimator allows a user to enter any self-employment income, including income from side gigs or the sharing economy, in addition to wages or pensions. The user is then alerted that they may qualify for several special tax benefits, including the self-employment health insurance deduction or the deduction for contributions to a Simplified Employee Pension (SEP), Savings Incentive Match Plans for Employees (SIMPLE) or other qualified retirement plan. The estimator automatically calculates the self-employment tax and the self-employment tax deduction and incorporates these into its overall tax liability estimate.

The enhancement for self-employed people is just one of many new features offered by the Tax Withholding Estimator. Others include:

Plain language throughout to improve taxpayer understanding.
The ability to target either a tax due amount close to zero or a refund amount.
A new progress tracker to help a user know how much more information they need to enter.
The ability to go back and forth through the steps, correct previous entries and skip questions that don't apply.
Tips and links to help the user quickly determine if they qualify for various tax credits and deductions.
Automatic calculation of the taxable portion of any Social Security benefits.
The new estimator also makes it easier to enter wages and withholding for each job held as well as jobs held by a spouse. Users can separately enter pensions and other sources of income. At the end of the process, the tool makes specific withholding recommendations for each job and spouse's job, including incorporating any self-employment income entered into the estimator.

The estimator then automatically links to the appropriate withholding form. For employees, the link goes to Form W-4, Employee's Withholding Allowance Certificate (PDF), which they can then fill out and submit to their employer. Similarly, for pension recipients, the link is to Form W-4P, Withholding Certificate for Pension or Annuity Payments, which is submitted to the pension payor. Remember, don't send these forms to the IRS.

The new tool can help anyone, including self-employed people, doing tax planning for the last few months of the year. The IRS urges everyone to do a Paycheck Checkup and review their withholding for 2019. This is especially important for anyone who faced an unexpected tax bill or a penalty when they filed earlier this year. It's also a critical step for those who made withholding adjustments in 2018 or had a major life change, such as marriage, childbirth, adoption or buying a home.

Those most at risk of having too little tax withheld include those who itemized in the past but now take the increased standard deduction, as well as two wage earner households, employees with non-wage sources of income and those with complex tax situations.

Anyone who changes their withholding in the middle or latter part of this year should do another Paycheck Checkup in January of 2020. That will help ensure that they have the right amount of tax withheld, on a full-year basis, for all of 2020.

The IRS sponsors a free two-hour webinar on the Tax Withholding Estimator. The webinar will take place on Thursday, September 19 at 2 p.m. Eastern time. To sign up, visit the webinars page on IRS.gov.

09/11/2019

Due Dates for 2019 Estimated Tax Payments

Payment When Income Earned in 2019 Due Date

1st Payment Jan 1 to Mar 31 April 15, 2019
2nd Payment Apr 1 to May 31 June 17, 2019
3rd Payment Jun 1 to Aug 31 September 16, 2019
4th Payment Sept 1 to Dec 31 January 15, 2020

08/22/2019

IRS Automatically Waives Estimated Tax Penalty for Eligible 2018 Filers

August 14, 2019
The IRS recently announced it is automatically waiving the estimated tax penalty for the more than 400,000 eligible taxpayers who already filed their 2018 federal income tax returns but did not claim the waiver.

The IRS will apply the waiver to tax accounts of all eligible taxpayers, so there is no need to contact the IRS to apply for or request the waiver.

Earlier this year, the IRS lowered the usual 90 percent penalty threshold to 80 percent to help taxpayers whose withholding and estimated tax payments fell short of their total 2018 tax liability. The agency also removed the requirement that estimated tax payments be made in four equal installments, as long as they were all made by Jan. 15, 2019. The 90 percent threshold was initially lowered to 85 percent on Jan. 16 and further lowered to 80 percent on March 22.

The automatic waiver applies to any individual taxpayer who paid at least 80 percent of their total tax liability through federal income tax withholding or quarterly estimated tax payments but did not claim the special waiver available to them when they filed their 2018 return earlier this year.

Over the next few months, the IRS will mail copies of notices CP21 granting this relief to affected taxpayers. Any eligible taxpayer who already paid the penalty will also receive a refund check about three weeks after their CP21 notice.

For those yet to file, the IRS urges every eligible taxpayer to claim the waiver on their return. This includes those with tax-filing extensions due to run out on Oct. 15, 2019. The quickest and easiest way is to file electronically and take advantage of the waiver computation built into their tax software package. Those who choose to file on paper can fill out Form 2210 and attach it to their 2018 return.

For more information, visit www.irs.gov.

07/26/2019

The 2019 tax-free holiday weekend takes place the last weekend in July. It begins at 12:01 a.m. on Friday, July 26 and ends Sunday, July 28 at 11:59 p.m.

From July 26 through July 28, state and local taxes will not be collected on clothing, school and school art supplies that cost $100 or less per item and computers that cost $1,500 or less.