Under pressure from members of Congress, the IRS agreed to provide relief from the underpayment of estimated tax penalty due to the changes brought about by TCJA and concerns taxpayers may be under- withheld. The IRS indicated they would provide an 85% safe harbor. Most commentators believed that meant replacing the “90%” in the normal 90% of the current year’s tax liability safe harbor with “85%”.
Under the Tax Cuts & Jobs Act (TCJA), and beginning in 2018, a child’s tax on unearned income is no longer based upon the parent’s taxable income for federal purposes. However, California has not conformed to that change. So, for 2018 here is how kiddie tax is handled for Federal and California purposes.
One of the most difficult tasks tax practitioners are facing this tax season is the determination of whether their clients’ rentals rise t the level of trade or business for purposes of the Sec 199A deduction.