Businesses Can Take These Steps After a Disaster

When disaster strikes, many business owners might find themselves needing to reconstruct records. This will help them prove a loss, which may be essential for tax purposes, getting federal assistance, or insurance reimbursement.

Here are tips for businesses that need to reconstruct their records:

● For information about income, business owners can get copies of filed federal, state and local tax returns. These include sales tax reports, payroll tax returns, and business licenses from the city or county. These will reflect gross sales for a given period.

● To create a list of lost inventories, business owners can get copies of invoices from suppliers. Whenever possible, the invoices should date back at least one calendar year.

● Owners should check their mobile phone or other cameras for pictures and videos of their building, equipment and inventory. In the absence of photographs or videos, sketch an outline of the inside and outside of the location to show, for example, where equipment and inventory was located.

Here are some of the tax changes coming as a result of the 2018 Tax Cuts and Jobs Act:

● Individual tax brackets are revised downward.

● Personal exemptions are eliminated.

● Alternative Minimum Tax exemption amounts are increased to $109,400 for Married Filing Jointly taxpayers and $70,300 for Single and Head of Household taxpayers.

● Standard deduction is increased to $24,000 for Married Filing Jointly taxpayers, $18,000 for Head of Household taxpayers, and $12,000 for Single taxpayers.

● Medical expense deduction is permitted for unreimbursed medical expenses over 7.5% of AGI.

● State and local tax, sales tax and property tax deductions are eliminated in excess of $10,000 (or $5,000 if Married Filing Separately).

● Mortgage interest is deductible only on debt not exceeding $750,000.

● Home equity debt interest deduction is eliminated unless it’s used to buy, build or improve taxpayer’s residence.

● Charitable deduction: Cash contribution limit is increased to 60% of AGI for public charities and certain private foundations.

● Miscellaneous itemized deductions subject to 2% of AGI is eliminated.

● Moving expense deduction/exclusion is eliminated (except for military relocations).

● Alimony deduction is eliminated and is no longer includible in the recipient’s income.

● Itemized deduction phaseout for high income taxpayers is eliminated.

● Child Tax Credit is increased to $2,000, $1,400 of which is refundable. Phaseout is increased to $400,000 for Married Filing Jointly taxpayers and $200,000 for all other taxpayers.

IRS Warns of “Tax Transcript” Email Scam

The Internal Revenue Service warns the public of a surge of fraudulent emails impersonating the IRS and using tax transcripts as bait to entice users to open documents containing malware.

The scam email pretends to be from the IRS. Such email carries a malicious attachment labeled “Tax Account Transcript” or something similar.

As a reminder, the IRS does not send unsolicited emails to the public, nor would it email a sensitive document such as a tax transcript, which is a summary of a tax return. The IRS urges taxpayers not to open the email or the attachment, and forward the scam email to phishing@irs.gov.