It took 8 years, but the IRS finally updated the Per Diem Rules!

photo of person holding pen

Photo by Acharaporn Kamornboonyarush on Pexels.com

 

Wondering when the Per Diem Revenue Procedure was ever going to be updated? Well the IRS just updated it! Click the following link to go to new IRS Revenue Procedure 2019-48 which addresses per diems.  This replaces IRS Revenue Procedure 2011-47.

https://www.irs.gov/pub/irs-drop/rp-19-48.pdf

Nice Try – Enjoy Your Audit in 2 Years

audit

With the removal of job expenses under tax reform I have seen this scheme just like I predicted after the new tax laws were passed. It’s summed up in one really lame statement I heard:

“I make myself a 1099 worker by filing exempt from tax withholding for my W2 job and then claim all my travel expenses on a Schedule C, Self Employment Form. All my friends do it!!”

Nice try…..

When Taxes are Lower – Refunds are Lower

refund

A good recent article

U.S. Treasury’s Mnuchin says tax refunds are flat from last year

By Susan Thomas and Jason Lange

WASHINGTON (Reuters) – Tax refunds to Americans so far in 2019 are flat compared to the same period last year, U.S. Treasury Secretary Steven Mnuchin said on Thursday.

Mnuchin, who was speaking at a hearing in the U.S. House of Representatives on Trump’s 2020 budget proposal, did not provide specifics on the dollar value of refunds made this year.

“Tax refunds are flat on last year”, he said.

Previously released Treasury data has showed the government has refunded $142.4 billion to taxpayers this year through March 1, down 3.5 percent from a year earlier. The average refund made, at $3,068, was 0.7 percent higher than a year earlier.

A soft trend for tax refunds could present a messaging challenge for the Trump administration, which has been touting a tax cut enacted last as a major boost to household finances.

While tax rates have fallen for most households, for some Americans their annual rebate is a palpable interaction with the tax code.

Mnuchin said refunds should actually fall when tax obligations fall. Many Americans pay more taxes than they owe over the course of the year. If they were able to estimate exactly what they owe and instructed employers to withhold just that, they would not get a refund at the end of the tax year.

“The fact that refunds are the same means in essence that people did not adjust their holding enough to take advantage of the tax act”, Mnuchin said, referring to the tax law enacted last year. “Because taxes are down refunds should be down.”

Basic Tax Math – Part 7 – State Taxation, Domicile and Your License

The place most travelers and tax practitioners stumble when dealing with multistate taxation, is separating the concepts of permanent residence / domicile and a tax residence. The two are entirely different yet frequently referred to synonymously because they are often at the same place.

A permanent residence is a legal concept, often referred to as one’s domicile. If you want to know someone’s permanent residence, just ask to see their driver’s license, car registration and voter registration. Each of these connections tie an individual to a state, and more particularly, a community within the state. The permanent residence, domiciliary state has the right to tax an individual’s global income regardless of where they earn it and how many days they spend within the state.

This concept of permanent residence and domicile spills into  the understanding of “residency” as it is applied to professional practice licenses. If a registered nurse holds a compact license, their primary license which grants the right to practice in other compact states is based on their permanent residence and domicile.  In granting this license,  it is expected that the nurse will continue to reside  in the state.  This is the reason so many state tax agencies and professional practice boards  share information with one another.  The licensing agency  checks a tax return as a way to confirm a taxpayer’s continued  residence in the state and right to hold a residence license – the state tax agency will use the roster of professional practice licenses  as an hunting/discovery tool tool to ensure that those  benefiting from residency in the state  are paying their share of taxes.

The cross-referencing of professional practice licenses and state tax returns started many years ago with California leading the way. Gradually,  it spread to almost every state in the nation.  About six years ago we did a survey  of every  nursing board  and state tax agency in the nation, asking whether they actively cross referenced data the for their own purposes. The answer was unanimous – they can and will when necessary.

This is why it is imperative for a multistate traveling professional  to file their state returns with the proper residency status. Every tax return leaves a cookie trail. When it comes to the states , the last thing you want is a series of annual returns that have no domiciliary consistency. Otherwise, the cookie trail can meander into the state taxation abyss where eager trolls endowed with the power to assess tax delinquencies await to harvest tax dollars from those that wander.

The Abyss