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WASHINGTON — The Internal Revenue Service issued proposed regulations today for a new provision allowing many owners of sole proprietorships, partnerships, trusts and S corporations to deduct 20 percent of their qualified business income.

The new deduction -- referred to as the Section 199A deduction or the deduction for qualified business income -- was created by the Tax Cuts and Jobs Act. The deduction is available for tax years beginning after Dec. 31, 2017. Eligible taxpayers can claim it for the first time on the 2018 federal income tax return they file next year.

The deduction is generally available to eligible taxpayers whose 2018 taxable incomes fall below $315,000 for joint returns and $157,500 for other taxpayers. It’s generally equal to the lesser of 20 percent of their qualified business income plus 20 percent of their qualified real estate investment trust dividends and qualified publicly traded partnership income or 20 percent of taxable income minus net capital gains.

Deductions for taxpayers above the $157,500/$315,000 taxable income thresholds may be limited. Those limitations are fully described in the proposed regulations.

Qualified business income includes domestic income from a trade or business. Employee wages, capital gain, interest and dividend income are excluded.

In addition, Notice 2018-64, also issued today, provides methods for calculating Form W-2 wages for purposes of the limitations on this deduction. More information may be found at www.IRS.gov.

Taxpayers may rely on the rules in these proposed regulations until final regulations are published in the Federal Register.

Every intelligent investor's portfolio must devote assets to aggressive growth.

No exceptions.

Because finding a winning aggressive growth stock isn't easy, I want to share with you how I do it...

I look for companies with products, technologies or other innovations that materially change the baseline assumptions for doing business in an industry.

These are the companies seeking to hit one out of the park by finding The Next Big Thing.

You see, I have a knack for this. I don't mean to brag, but in my years with StreetAuthority, I've picked more triple-digit gainers than just about any other analyst.

A few years ago, for example, I recommended AuthenTec, a company beginning to dominate the market for biometric readers -- fingerprint scanners on personal electronic devices.

Not too long afterward, Apple agreed to buy the company.

Readers who followed my advice saw a total gain of 228%.

Another example: CalAmp (Nasdaq: CAMP), a maker of wireless communications hardware, rose 290% after I recommended it.

That's just the tip of the iceberg.

And I've done it by following three simple rules that any investor can follow.

Rule No. 1: Be realistic to the point of hyper-rationality I lost track years ago of how many clinical trials I've read about various drugs.

But do you know something? At the end of every report, I wanted to buy every one of the stocks behind those drugs. The studies are detailed and educational. They set up the problem and then offer a unique solution. The science, the explanation, the data and the financials are always very appealing.

But these early-stage drug-development companies are very risky. Heck, they are damn risky. No matter how good the initial trials look, there is no guarantee of approval, and a negative action by the Food and Drug Administration can cut a small drug company's stock price in half quicker than you can say Jack Robinson.

The other side of that coin, of course, is that the FDA (or one of its international counterparts) could rule in the drug's favor, in which case the little company's stock price chart resembles a space shuttle launch.

Now, the world's leading drug companies spend tens of BILLIONS a year looking for new drugs. But the FDA may only approve, say, 50 new drugs in a given year. But according to the Pharmaceutical Research and Manufacturers of America, only 1 in 10,000 of the compounds studied by drug companies becomes a product for sale on the pharmacy shelf.

How does an investor mitigate this risk? Research, research and more research.

I began my career as a journalist, and I learned there was no substitute for good old-fashioned shoe-leather reporting.

WASHINGTON — As part of a larger effort to help taxpayers, the Internal Revenue Service plans to streamline the Form 1040 into a shorter, simpler form for the 2019 tax season.

The new 1040 – about half the size of the current version -- would replace the current Form 1040 as well as the Form 1040A and the Form 1040EZ.  The IRS circulated a copy of the new form and will work with the tax community to finalize the streamlined Form 1040 over the summer.

This new approach will simplify the 1040 so that all 150 million taxpayers can use the same form. The new form consolidates the three versions of the 1040 into one simple form. At the same time, the IRS will still obtain the information from each taxpayer needed to determine their tax liability or refund. 

The new Form 1040 uses a “building block” approach, in which the tax return is reduced to a simple form. That form can be supplemented with additional schedules if needed. Taxpayers with straightforward tax situations would only need to file this new 1040 with no additional schedules.

Since more than nine out of 10 taxpayers use software or a tax preparer, the IRS will be working with the tax community to prepare for the streamlined Form 1040. This will also help ensure a smooth transition for people familiar with software products and the interview process used to prepare tax returns.

Taxpayers who owed additional tax when they filed their federal return earlier this year should do a “paycheck checkup” as soon as possible. The IRS Withholding Calculator and Publication 505, Tax Withholding and Estimated Tax, can help these taxpayers do a checkup and avoid another possibly bigger tax bill next year.

Following the Tax Cuts and Jobs Act, which was passed last year, there are many changes to the tax law that could affect these taxpayers. Doing a checkup now will help them make sure their current tax withholding is in line with their 2018 tax situation.

Here are some things for these taxpayers to keep in mind:

These taxpayers may not have had enough taxes withheld from their pay throughout 2017, causing them to owe in 2018.

If they continue to have too little withheld from their paychecks the rest of this year, they could find themselves in the same situation again next year.

They might even end up with a larger tax bill when they file their 2018 return next year.

It’s important to remember that if a taxpayer underpays their tax too much, penalties and interest can apply.

The Withholding Calculator can help taxpayers apply the new law to their situation. The results from the calculator can help them make an informed decision about whether to change their withholding this year.

These taxpayers need to adjust their withholding as soon as possible for an even withholding amount throughout the rest of the year.

Waiting means there are fewer pay periods to withhold the necessary federal tax, which could have a bigger effect on each paycheck.

Taxpayers with more complex situations might find that using Publication 505 is a better option for figuring their withholding than using the Withholding Calculator. Publication 505 works better for employees who owe self-employment tax, the alternative minimum tax, or tax on unearned income from dependents. It can also help those who receive non-wage income such as dividends, capital gains, rents and royalties.

As you are  meeting with your clients this year you should make them aware of some of the 2018  changes that will or may affect their federal return for next year.

Here are some of the changes that go  into effect in 2018 from the Tax Cuts and Jobs Act:

 Standard  Deduction will be increased to $12,000 for single individuals and $24,000 for  married filing joint filers.

 Exemptions  are no longer applicable.

 Child  tax credit was increased to $2,000 for eligible children under 17 of which  $1,400 may be refundable.

 A  $500 nonrefundable credit will be available for eligible children that are 17,  18 or full time students ages 19 -24 and other eligible dependents.

 Itemized  deduction for taxes on Schedule A will be limited to $10,000.

 Job  expenses and miscellaneous itemized deductions subject to 2% AGI floor will no  longer be deductible on Schedule A. This includes employee business expenses  that were reported on Form 2106 such as vehicle expenses, travel expenses,  meals and entertainment, job education, etc.

 For  2018 only casualty losses that occur in a presidentially declared disaster zone  will be deductible as an itemized deduction on Schedule A.

 An  itemized deduction for mortgage interest will only be allowed for a taxpayer’s  principal home.

 An  itemized deduction will no longer be allowed for interest on a home equity  loan.

WASHINGTON — The Internal Revenue Service urges taxpayers with expired Individual Taxpayer Identification Numbers (ITINs) to renew them as soon as possible. Tax returns with expired ITINs will face processing delays and affected taxpayers may lose eligibility for key tax benefits until the ITIN is renewed.

An ITIN is used by anyone who has tax-filing or payment obligations under U.S. tax law but is not eligible for a Social Security number. Under a series of provisions established by the Protecting Americans from Tax Hikes (PATH) Act enacted by Congress in December 2015, ITINs not used on a tax return at least once in the past three years were set to expire.

Also, ITINs with certain middle digits expired, requiring the taxpayer to renew, in order to continue using the ITIN to file a federal tax return.

Those with middle digits of 70, 71, 72 or 80 (Example: 9NN-70-NNNN or 9NN-80-NNNN) expired on Dec. 31, 2017. ITINs that have middle digits 78 or 79 expired Dec. 31, 2016, but taxpayers can still renew them.

Who Should Renew an ITIN?

Taxpayers with ITINs that expired at the end of 2017 and who need to file a tax return in 2018 must submit a renewal application. Others do not need to take any action.

ITINs with middle digits 70, 71, 72, or 80 (For example: 9NN-70-NNNN) need to be renewed if the taxpayer will have a filing requirement in 2018.

Taxpayers whose ITINs expired due to lack of use should only renew their ITIN if they will have a filing requirement in 2018.

Taxpayers who are eligible for, or who have, an SSN should not renew their ITIN, but should notify IRS both of their SSN and previous ITIN, so that their accounts can be merged.

Taxpayers whose ITINs have middle digits 78 or 79 that had already expired and were never renewed should renew their ITIN if they will have a filing requirement in 2018.

How to Renew an ITIN

To renew an ITIN, taxpayers must complete a Form W-7 and submit all required documentation. Although a Form W-7 is usually attached to the tax return, a taxpayer is not required to attach a federal tax return to their ITIN renewal application.

There are three ways to submit the W-7 application package:

Mail the Form W-7, along with original identification documents or copies certified by the issuing agency, to the IRS address listed on the Form W-7 instructions. The IRS will review the identification documents and return them within 60 days.

Taxpayers have the option to work with Certified Acceptance Agents (CAAs) authorized by the IRS to help them apply for an ITIN. CAAs can certify all identification documents for primary and secondary taxpayers and certify that an ITIN application is correct before submitting it to the IRS for processing. CAAs can also certify passports and birth certificates for dependents. This saves taxpayers from mailing original documents to the IRS.

In advance, taxpayers can call 844-545-5640 and make an appointment at a designated IRS Taxpayer Assistance Center instead of mailing original identification documents to the IRS. When making an appointment, be sure to indicate that this involves an ITIN renewal application.

IRS YouTube Videos: Claiming EITC or ACTC? Your Refund May Be Delayed -- English | Spanish

WASHINGTON — The Internal Revenue Service and its partners across the country remind taxpayers about the Earned Income Tax Credit (EITC) on EITC Awareness Day. Today marks the 12th year of this awareness campaign to alert millions of low- and moderate-income workers who may be missing out on this significant tax credit.

There are more than 250 total outreach events and activities scheduled to promote EITC Awareness around the country.

Millions of taxpayers who earned $53,930 or less during 2017 may qualify for EITC for the first time, making awareness critical. Local officials and community organizations nationwide hold events on EITC Awareness Day highlighting this key tax benefit.

Workers, self-employed individuals and farmers who earned $53,930 or less last year could receive larger refunds if they qualify for the EITC. Eligible families with three or more qualifying children could get a maximum credit of up to $6,318.

For those without a qualifying child, they could get up to $510. Unlike most deductions and credits, the EITC is refundable. This means those eligible may get a refund from the IRS even if they owe no tax. In 2017, almost 27 million taxpayers received over $65 billion in EITC. The average amount of EITC received was $2,445.

The IRS recommends that all workers who earned $54,000 or less learn about EITC eligibility and use the EITC Assistant to find out if they qualify. The tool, available in English and Spanish, helps users determine their filing status, if they have a qualifying child or children, if they qualify to receive the EITC and estimates the amount of the credit they may get. If an individual doesn’t qualify for the EITC, the Assistant explains why. The worker can print a summary of the results and keep the summary with his or her tax records.

The IRS reminds taxpayers to be sure they have valid Social Security numbers for themselves, their spouse, if filing a joint return, and for each qualifying child. They must have these SSNs before they file their return and before the due date of the return, including extensions. For most people, the due date of the return is April 17, 2018. Most taxpayers can extend the due date for their 2017 tax return to Oct. 15, 2018. There are special rules for those in the military or for those out of the country.

How to Claim the EITC

To get the EITC, workers must file a tax return and claim the credit. Free tax preparation help is available online and through volunteer organizations. Those eligible for the EITC have these options:

Free File on IRS.gov. Free brand-name tax software is available that leads taxpayers through a question and answer format to help prepare the tax return and claim credits and deductions, if they are eligible. Free File also provides online versions of IRS paper forms, an option called Free File Fillable Forms, best suited for taxpayers comfortable preparing their own returns.

Free tax preparation sites. EITC-eligible workers can seek free tax preparation at thousands of Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) sites. To locate the nearest site, use the search tool on IRS.gov or the IRS2go smartphone application.

Be sure to bring along all required documents and information.

Refunds

By law the IRS cannot issue refunds before mid-February for tax returns that claim the EITC or the Additional Child Tax Credit (ACTC). The IRS must hold the entire refund — even the portion not associated with EITC or ACTC. This change helps ensure taxpayers receive the refund they deserve and gives the agency more time to detect and prevent errors and fraud.

The IRS expects the earliest EITC/ACTC related refunds to be in taxpayer bank accounts or debit cards starting Feb. 27, 2018, if they chose direct deposit and there are no issues with the tax return.

Avoid Errors: Get It Right

Taxpayers are responsible for the accuracy of their tax return even if someone else prepares it for them. The EITC rules are complicated and the IRS urges taxpayers to seek help to make sure they are eligible by visiting a free tax return preparation site, using Free File software, or from a paid tax professional. Be sure to choose a tax preparer wisely. Errors can have lasting impact on future eligibility to claim EITC and leave taxpayers with a penalty.

Taxpayers should be sure to reply promptly to any letter from the IRS requesting additional information about EITC. If taxpayers need assistance or have questions, call the number on the IRS letter.

Beware of Scams

Beware of scams that claim to increase the EITC refund. Scams that create fictitious qualifying children or inflate income levels to get the maximum EITC could leave taxpayers with a penalty.

Taxpayers who had an EITC claim reduced or denied for any reason other than a mathematical or clerical error must file Form 8862, Information to Claim Earned Income Credit after Disallowance, to claim the credit.

IRS.gov is a valuable first stop to help taxpayers get it right this filing season. Information on other tax credits are also available such as the Child Tax Credit.

Related items:

FS-2018-01, Qualifying for the Earned Income Tax Credit

IRS.gov/eitc, Detailed EITC eligibility rules

EITC Central at www.eitc.irs.gov, Helpful resources for IRS partners and anyone interested in spreading the word about this benefit.

Pub. 596, Earned Income Credit (EIC)