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Monday December 11, 2017

Bills / Cases / IRS

2018 Tax Table, Exemptions and Deductions

Rev. Proc. 2017-58; 2017-45 IRB 1

26 CFR 601.602: Tax forms and instructions.

(Also Part I, §§ 1, 23, 25A, 32, 36B, 42, 45R, 55, 59, 62, 63, 68, 125, 132(f),135, 137, 146, 147, 148, 151, 179, 213, 220, 221, 512, 513, 831, 877, 877A, 911, 2010, 2032A, 2503, 2523, 4161, 4261, 5000A, 6033, 6039F, 6323, 6334, 6601, 6651, 6652, 6695, 6698, 6699, 6721, 6722, 7345, 7430, 7702B, 9831; 1.148-5.)

Table of Contents

SECTION 1. PURPOSE
SECTION 2. CHANGES
SECTION 3. 2018 ADJUSTED ITEMS

Code Section

.01 Tax Rate Tables

1(a)-(e)

.02 Unearned Income of Minor Children Taxed as if Parent's Income ("Kiddie Tax").

1(g)

.03 Adoption Credit

23

.04 Lifetime Learning Credit

25A

.05 Earned Income Credit

32

.06 Refundable Credit for Coverage under a Qualified Health Plan

36B(f)(2)(B)

.07 Rehabilitation Expenditures Treated as Separate New Building

42(e)

.08 Low-Income Housing Credit

42(h)

.09 Employee Health Insurance Expense of Small Employers

45R

.10 Exemption Amounts for Alternative Minimum Tax

55

.11 Alternative Minimum Tax Exemption for a Child Subject to the "Kiddie Tax"

59(j)

.12 Certain Expenses of Elementary and Secondary School Teachers

62(a)(2)(D)

.13 Transportation Mainline Pipeline Construction Industry Optional Expense Substantiation Rules for Payments to Employees under Accountable Plans

62(c)

.14 Standard Deduction

63

.15 Overall Limitation on Itemized Deductions

68

.16 Cafeteria Plans

125

.17 Qualified Transportation Fringe Benefit

132(f)

.18 Income from United States Savings Bonds for Taxpayers Who Pay Qualified Higher Education Expenses

135

.19 Adoption Assistance Programs

137

.20 Private Activity Bonds Volume Cap

146(d)

.21 Loan Limits on Agricultural Bonds

147(c)(2)

.22 General Arbitrage Rebate Rules

148(f)

.23 Safe Harbor Rules for Broker Commissions on Guaranteed Investment Contracts or Investments Purchased for a Yield Restricted Defeasance Escrow

148

.24 Personal Exemption

151

.25 Election to Expense Certain Depreciable Assets

179

.26 Eligible Long-Term Care Premiums

213(d)(10)

.27 Medical Savings Accounts

220

.28 Interest on Education Loans

221

.29 Treatment of Dues Paid to Agricultural or Horticultural Organizations

512(d)

.30 Insubstantial Benefit Limitations for Contributions Associated With Charitable Fund-Raising Campaigns

513(h)

.31 Tax on Insurance Companies Other than Life Insurance Companies

831

.32 Expatriation to Avoid Tax

877

.33 Tax Responsibilities of Expatriation

877A

.34 Foreign Earned Income Exclusion

911

.35 Unified Credit Against Estate Tax

2010

.36 Valuation of Qualified Real Property in Decedent's Gross Estate

2032A

.37 Annual Exclusion for Gifts

2503; 2523

.38 Tax on Arrow Shafts

4161

.39 Passenger Air Transportation Excise Tax

4261

.40 Requirement to Maintain Minimum Essential Coverage

5000A

.41 Reporting Exception for Certain Exempt Organizations with Nondeductible Lobbying Expenditures

6033(e)(3)

.42 Notice of Large Gifts Received from Foreign Persons

6039F

.43 Persons Against Whom a Federal Tax Lien Is Not Valid

6323

.44 Property Exempt from Levy

6334

.45 Interest on a Certain Portion of the Estate Tax Payable in Installments

6601(j)

.46 Failure to File Tax Return

6651

.47 Failure to File Certain Information Returns, Registration Statements, etc.

6652

.48 Other Assessable Penalties With Respect to the Preparation of Tax Returns for Other Persons

6695

.49 Failure to File Partnership Return

6698

.50 Failure to File S Corporation Return

6699

.51 Failure to File Correct Information Returns

6721

.52 Failure to Furnish Correct Payee Statements

6722

.53 Revocation or Denial of Passport in Case of Certain Tax Delinquencies

7345

.54 Attorney Fee Awards

7430

.55 Periodic Payments Received under Qualified Long-Term Care Insurance Contracts or under Certain Life Insurance Contracts

7702B(d)

.56 Qualified Small Employer Health Reimbursement Arrangement

9831

SECTION 4. EFFECTIVE DATE

SECTION 5. DRAFTING INFORMATION

SECTION 1. PURPOSE


This revenue procedure sets forth inflation-adjusted items for 2018 for various provisions of the Internal Revenue Code of 1986 (Code) as amended as of October 19, 2017. To the extent amendments to the Code are enacted for 2018 after October 19, 2017, taxpayers should consult additional guidance to determine whether these adjustments remain applicable for 2018.

SECTION 2. CHANGES


.01 Section 202 of the Disaster Tax Relief and Airport and Airways Extension Act of 2017, Pub. L. 115-63, amended § 4261(k)(1)(A)(ii) of the Code (which governs the period of applicability of § 4261(b)(1), (c)(1), and (c)(3)). The effect of this amendment is to temporarily extend the passenger air transportation excise taxes of $3.00 for domestic travel, $12.00 for international travel, and $6.00 for departures beginning or ending in Alaska or Hawaii. These excise taxes apply to transportation taken through March 31, 2018. After this date, the taxes and rates will expire unless Congress renews them.

.02 Section 18001 of the 21st Century Cures Act, Pub. L. 114-255, amended § 9831 of the Code to add § 9831(d), Exception For Qualified Small Employer Health Reimbursement Arrangements. To qualify as a qualified small employer health reimbursement arrangement under § 9831(d), the arrangement must provide that the total amount of payments and reimbursements for any year cannot exceed $4,950 ($10,000 for family coverage). These amounts are adjusted for inflation for a calendar year beginning after 2016.

SECTION 3. 2018 ADJUSTED ITEMS


.01 Tax Rate Tables. For taxable years beginning in 2018, the tax rate tables under § 1 are as follows:

TABLE 1 — Section 1(a) — Married Individuals Filing Joint Returns and Surviving Spouses

If Taxable Income Is:

The Tax Is:

Not over $19,050

10% of the taxable income

Over $19,050 but not over $77,400

$1,905 plus 15% of the excess over $19,050

Over $77,400 but not over $156,150

$10,657.50 plus 25% of the excess over $77,400

Over $156,150 but not over $237,950

$30,345 plus 28% of the excess over $156,150

Over $237,950 but not over $424,950

$53,249 plus 33% of the excess over $237,950

Over $424,950 but not over $480,050

$114,959 plus 35% of the excess over $424,950

Over $480,050

$134,244 plus 39.6% of the excess over $480,050

TABLE 2 — Section 1(b) — Heads of Households

If Taxable Income Is:

The Tax Is:

Not over $13,600

10% of the taxable income

Over $13,600 but not over $51,850

$1,360 plus 15% of the excess over $13,600

Over $51,850 but not over $133,850

$7,097.50 plus 25% of the excess over $51,850

Over $133,850 but not over $216,700

$27,597.50 plus 28% of the excess over $133,850

Over $216,700 but not over $424,950

$50,795.50 plus 33% of the excess over $216,700

Over $424,950 not over $453,350

$119,518 plus 35% of the excess over $424,950

Over $453,350

$129,458 plus 39.6% of the excess over $453,350

TABLE 3 — Section 1(c) — Unmarried Individuals (other than Surviving Spouses and Heads of Households)

If Taxable Income Is:

The Tax Is:

Not over $9,525

10% of the taxable income

Over $9,525 but not over $38,700

$952.50 plus 15% of the excess over $9,525

Over $38,700 but not over $93,700

$5,328.75 plus 25% of the excess over $38,700

Over $93,700 but not over $195,450

$19,078.75 plus 28% of the excess over $93,700

Over $195,450 but not over $424,950

$47,568.75 plus 33% of the excess over $195,450

Over $424,950 not over $426,700

$123,303.75 plus 35% of the excess over $424,950

Over $426,700

$123,916.25 plus 39.6% of the excess over $426,700

TABLE 4 — Section 1(d) — Married Individuals Filing Separate Returns

If Taxable Income Is:

The Tax Is:

Not over $9,525

10% of the taxable income

Over $9,525 but not over $38,700

$952.50 plus 15% of the excess over $9,525

Over $38,700 but not over $78,075

$5,328.75 plus 25% of the excess over $38,700

Over $78,075 but not over $118,975

$15,172.50 plus 28% of the excess over $78,075

Over $118,975 but not over $212,475

$26,624.50 plus 33% of the excess over $118,975

Over $212,475 not over $240,025

$57,479.50 plus 35% of the excess over $212,475

Over $240,025

$67,122 plus 39.6% of the excess over $240,025

TABLE 5 — Section 1(e) — Estates and Trusts

If Taxable Income Is:

The Tax Is:

Not over $2,600

15% of the taxable income

Over $2,600 but not over $6,100

$390 plus 25% of the excess over $2,600

Over $6,100 but not over $9,300

$1,265 plus 28% of the excess over $6,100

Over $9,300 excess over $12,700

$2,161 plus 33% of the excess over $9,300

Over $12,700

$3,283 plus 39.6% of the excess over $12,700

.02 Unearned Income of Minor Children Taxed as if Parent's Income (the "Kiddie Tax"). For taxable years beginning in 2018, the amount in § 1(g)(4)(A)(ii)(I), which is used to reduce the net unearned income reported on the child's return that is subject to the "kiddie tax," is $1,050. This $1,050 amount is the same as the amount provided in § 63(c)(5)(A), as adjusted for inflation. The same $1,050 amount is used for purposes of § 1(g)(7) (that is, to determine whether a parent may elect to include a child's gross income in the parent's gross income and to calculate the "kiddie tax"). For example, one of the requirements for the parental election is that a child's gross income is more than the amount referenced in § 1(g)(4)(A)(ii)(I) but less than 10 times that amount; thus, a child's gross income for 2018 must be more than $1,050 but less than $10,500.

.03 Adoption Credit. For taxable years beginning in 2018, under § 23(a)(3) the credit allowed for an adoption of a child with special needs is $13,840. For taxable years beginning in 2018, under § 23(b)(1) the maximum credit allowed for other adoptions is the amount of qualified adoption expenses up to $13,840. The available adoption credit begins to phase out under § 23(b)(2)(A) for taxpayers with modified adjusted gross income in excess of $207,580 and is completely phased out for taxpayers with modified adjusted gross income of $247,580 or more. (See section 3.19 of this revenue procedure for the adjusted items relating to adoption assistance programs.)

.04 Lifetime Learning Credit. For taxable years beginning in 2018, a taxpayer's modified adjusted gross income in excess of $57,000 ($114,000 for a joint return) is used to determine the reduction under § 25A(d)(2) in the amount of the Lifetime Learning Credit otherwise allowable under § 25A(a)(2).

.05 Earned Income Credit.

(1) In general. For taxable years beginning in 2018, the following amounts are used to determine the earned income credit under § 32(b). The "earned income amount" is the amount of earned income at or above which the maximum amount of the earned income credit is allowed. The "threshold phaseout amount" is the amount of adjusted gross income (or, if greater, earned income) above which the maximum amount of the credit begins to phase out. The "completed phaseout amount" is the amount of adjusted gross income (or, if greater, earned income) at or above which no credit is allowed. The threshold phaseout amounts and the completed phaseout amounts shown in the table below for married taxpayers filing a joint return include the increase provided in § 32(b)(3)(B)(i), as adjusted for inflation for taxable years beginning in 2018.

Item

Number of Qualifying Children

One

Two

Three or More

None

Earned Income Amount

$10,200

$14,320

$14,320

$6,800

Maximum Amount of Credit

$3,468

$5,728

$6,444

$520

Threshold Phaseout Amount (Single, Surviving Spouse, or Head of Household)

$18,700

$18,700

$18,700

$8,510

Completed Phaseout Amount (Single, Surviving Spouse, or Head of Household)

$40,402

$45,898

$49,298

$15,310

Threshold Phaseout Amount (Married Filing Jointly)

$24,400

$24,400

$24,400

$14,200

Completed Phaseout Amount (Married Filing Jointly)

$46,102

$51,598

$54,998

$21,000

The instructions for the Form 1040 series provide tables showing the amount of the earned income credit for each type of taxpayer.

(2) Excessive Investment Income. For taxable years beginning in 2018, the earned income tax credit is not allowed under § 32(i)(1) if the aggregate amount of certain investment income exceeds $3,500.

.06 Refundable Credit for Coverage under a Qualified Health Plan. For taxable years beginning in 2018, the limitation on tax imposed under § 36B(f)(2)(B) for excess advance credit payments is determined using the following table:

If the household income (expressed as a percent of poverty line) is:

The limitation amount for unmarried individuals (other than surviving spouses and eads of household) is:

The limitation amount for all other taxpayers is:

Less than 200%

$300

$600

At least 200% but less than 300%

$775

$1,550

At least 300% but less than 400%

$1,300

$2,600

.07 Rehabilitation Expenditures Treated as Separate New Building. For calendar year 2018, the per low-income unit qualified basis amount under § 42(e)(3)(A)(ii)(II) is $6,800.

.08 Low-Income Housing Credit. For calendar year 2018, the amount used under § 42(h)(3)(C)(ii) to calculate the State housing credit ceiling for the low-income housing credit is the greater of (1) $2.40 multiplied by the State population, or (2) $2,765,000.

.09 Employee Health Insurance Expense of Small Employers. For taxable years beginning in 2018, the dollar amount in effect under § 45R(d)(3)(B) is $26,700. This amount is used under § 45R(c) for limiting the small employer health insurance credit and under § 45R(d)(1)(B) for determining who is an eligible small employer for purposes of the credit.

.10 Exemption Amounts for Alternative Minimum Tax. For taxable years beginning in 2018, the exemption amounts under § 55(d)(1) are:

Joint Returns or Surviving Spouses

$86,200

Unmarried Individuals (other than Surviving Spouses)

$55,400

Married Individuals Filing Separate Returns

$43,100

Estates and Trusts

$24,600

For taxable years beginning in 2018, under § 55(b)(1), the excess taxable income above which the 28 percent tax rate applies is:

Married Individuals Filing Separate Returns

$95,750

Joint Returns, Unmarried Individuals (other than surviving spouses), and Estates and Trusts

$191,500

For taxable years beginning in 2018, the amounts used under § 55(d)(3) to determine the phaseout of the exemption amounts are:

Joint Returns or Surviving Spouses

$164,100

Unmarried Individuals (other than Surviving Spouses)

$123,100

Married Individuals Filing Separate Returns and Estates and Trusts

$82,050

.11 Alternative Minimum Tax Exemption for a Child Subject to the "Kiddie Tax." For taxable years beginning in 2018, for a child to whom the § 1(g) "kiddie tax" applies, the exemption amount under §§ 55 and 59(j) for purposes of the alternative minimum tax under § 55 may not exceed the sum of (1) the child's earned income for the taxable year, plus (2) $7,650.

.12 Certain Expenses of Elementary and Secondary School Teachers. For taxable years beginning in 2018, under § 62(a)(2)(D) the amount of the deduction allowed under § 162 which consists of expenses paid or incurred by an eligible educator in connection with books, supplies (other than nonathletic supplies for courses of instruction in health or physical education), computer equipment (including related software and services) and other equipment, and supplementary materials used by the eligible educator in the classroom is $250.

.13 Transportation Mainline Pipeline Construction Industry Optional Expense Substantiation Rules for Payments to Employees under Accountable Plans. For calendar year 2018, an eligible employer may pay certain welders and heavy equipment mechanics an amount of up to $18 per hour for rig-related expenses that are deemed substantiated under an accountable plan if paid in accordance with Rev. Proc. 2002-41, 2002-1 C.B. 1098. If the employer provides fuel or otherwise reimburses fuel expenses, up to $11 per hour is deemed substantiated if paid under Rev. Proc. 2002-41.

.14 Standard Deduction.

(1) In general. For taxable years beginning in 2018, the standard deduction amounts under § 63(c)(2) are as follows:

Filing Status

Standard Deduction

Married Individuals Filing Joint Returns and Surviving Spouses (§ 1(a))

$13,000

Heads of Households (§ 1(b))

$9,550

Unmarried Individuals (other than Surviving Spouses and Heads of Households) (§ 1(c))

$6,500

Married Individuals Filing Separate Returns (§ 1(d))

$6,500

(2) Dependent. For taxable years beginning in 2018, the standard deduction amount under § 63(c)(5) for an individual who may be claimed as a dependent by another taxpayer cannot exceed the greater of (1) $1,050, or (2) the sum of $350 and the individual's earned income.

(3) Aged or blind. For taxable years beginning in 2018, the additional standard deduction amount under § 63(f) for the aged or the blind is $1,300. The additional standard deduction amount is increased to $1,600 if the individual is also unmarried and not a surviving spouse.

.15 Overall Limitation on Itemized Deductions. For taxable years beginning in 2018, the applicable amounts under § 68(b) are $320,000 in the case of a joint return or a surviving spouse, $293,350 in the case of a head of household, $266,700 in the case of an individual who is not married and who is not a surviving spouse or head of household, and $160,000 in the case of a married individual filing a separate return.

.16 Cafeteria Plans. For the taxable years beginning in 2018, the dollar limitation under § 125(i) on voluntary employee salary reductions for contributions to health flexible spending arrangements is $2,650.

.17 Qualified Transportation Fringe Benefit. For taxable years beginning in 2018, the monthly limitation under § 132(f)(2)(A) regarding the aggregate fringe benefit exclusion amount for transportation in a commuter highway vehicle and any transit pass is $260. The monthly limitation under § 132(f)(2)(B) regarding the fringe benefit exclusion amount for qualified parking is $260.

.18 Income from United States Savings Bonds for Taxpayers Who Pay Qualified Higher Education Expenses. For taxable years beginning in 2018, the exclusion under § 135, regarding income from United States savings bonds for taxpayers who pay qualified higher education expenses, begins to phase out for modified adjusted gross income above $119,550 for joint returns and $79,700 for all other returns. The exclusion is completely phased out for modified adjusted gross income of $149,550 or more for joint returns and $94,700 or more for all other returns.

.19 Adoption Assistance Programs. For taxable years beginning in 2018, under § 137(a)(2), the amount that can be excluded from an employee's gross income for the adoption of a child with special needs is $13,840. For taxable years beginning in 2018, under § 137(b)(1) the maximum amount that can be excluded from an employee's gross income for the amounts paid or expenses incurred by an employer for qualified adoption expenses furnished pursuant to an adoption assistance program for other adoptions by the employee is $13,840. The amount excludable from an employee's gross income begins to phase out under § 137(b)(2)(A) for taxpayers with modified adjusted gross income in excess of $207,580 and is completely phased out for taxpayers with modified adjusted gross income of $247,580 or more. (See section 3.03 of this revenue procedure for the adjusted items relating to the adoption credit.)

.20 Private Activity Bonds Volume Cap. For calendar year 2018, the amounts used under § 146(d) to calculate the State ceiling for the volume cap for private activity bonds is the greater of (1) $105 multiplied by the State population, or (2) $311,375,000.

.21 Loan Limits on Agricultural Bonds. For calendar year 2018, the loan limit amount on agricultural bonds under § 147(c)(2)(A) for first-time farmers is $534,600.

.22 General Arbitrage Rebate Rules. For bond years ending in 2018, the amount of the computation credit determined under the permission to rely on § 1.148-3(d)(4) of the proposed Income Tax Regulations is $1,700.

.23 Safe Harbor Rules for Broker Commissions on Guaranteed Investment Contracts or Investments Purchased for a Yield Restricted Defeasance Escrow. For calendar year 2018, under § 1.148-5(e)(2)(iii)(B)(1), a broker's commission or similar fee for the acquisition of a guaranteed investment contract or investments purchased for a yield restricted defeasance escrow is reasonable if (1) the amount of the fee that the issuer treats as a qualified administrative cost does not exceed the lesser of (A) $40,000, and (B) 0.2 percent of the computational base (as defined in § 1.148-5(e)(2)(iii)(B)(2)) or, if more, $4,000; and (2) the issuer does not treat more than $113,000 in brokers' commissions or similar fees as qualified administrative costs for all guaranteed investment contracts and investments for yield restricted defeasance escrows purchased with gross proceeds of the issue.

.24 Personal Exemption.

(1) For taxable years beginning in 2018, the personal exemption amount under § 151(d) is $4,150.

(2) Phaseout. For taxable years beginning in 2018, the personal exemption phases out for taxpayers with the following adjusted gross income amounts:

Filing Status

AGI — Beginning of Phaseout

AGI — Completed Phaseout

Married Individuals Filing Joint Returns and Surviving Spouses (§ 1(a))

$320,000

$442,500

Heads of Households (§ 1(b))

$293,350

$415,850

Unmarried Individuals (other than Surviving Spouses and Heads of Households) (§ 1(c))

$266,700

$389,200

Married Individuals Filing Separate Returns (§ 1(d))

$160,000

$221,250

.25 Election to Expense Certain Depreciable Assets. For taxable years beginning in 2018, under § 179(b)(1), the aggregate cost of any § 179 property that a taxpayer elects to treat as an expense cannot exceed $520,000. Under § 179(b)(2), the $520,000 limitation is reduced (but not below zero) by the amount the cost of § 179 property placed in service during the 2018 taxable year exceeds $2,070,000.

.26 Eligible Long-Term Care Premiums. For taxable years beginning in 2018, the limitations under § 213(d)(10), regarding eligible long-term care premiums includible in the term "medical care," are as follows:

Attained Age Before the Close of the Taxable Year

Limitation on Premiums

40 or less

$420

More than 40 but not more than 50

$780

More than 50 but not more than 60

$1,560

More than 60 but not more than 70

$4,160

More than 70

$5,200

.27 Medical Savings Accounts.

(1) Self-only coverage. For taxable years beginning in 2018, the term "high deductible health plan" as defined in § 220(c)(2)(A) means, for self-only coverage, a health plan that has an annual deductible that is not less than $2,300 and not more than $3,450, and under which the annual out-of-pocket expenses required to be paid (other than for premiums) for covered benefits do not exceed $4,600.

(2) Family coverage. For taxable years beginning in 2018, the term "high deductible health plan" means, for family coverage, a health plan that has an annual deductible that is not less than $4,600 and not more than $6,850, and under which the annual out-of-pocket expenses required to be paid (other than for premiums) for covered benefits do not exceed $8,400.

.28 Interest on Education Loans. For taxable years beginning in 2018, the $2,500 maximum deduction for interest paid on qualified education loans under § 221 begins to phase out under § 221(b)(2)(B) for taxpayers with modified adjusted gross income in excess of $65,000 ($135,000 for joint returns), and is completely phased out for taxpayers with modified adjusted gross income of $80,000 or more ($165,000 or more for joint returns).

.29 Treatment of Dues Paid to Agricultural or Horticultural Organizations. For taxable years beginning in 2018, the limitation under § 512(d)(1), regarding the exemption of annual dues required to be paid by a member to an agricultural or horticultural organization, is $166.

.30 Insubstantial Benefit Limitations for Contributions Associated with Charitable Fund-Raising Campaigns.

(1) Low cost article. For taxable years beginning in 2018, for purposes of defining the term "unrelated trade or business" for certain exempt organizations under § 513(h)(2), "low cost articles" are articles costing $10.90 or less.

(2) Other insubstantial benefits. For taxable years beginning in 2018, under § 170, the $5, $25, and $50 guidelines in section 3 of Rev. Proc. 90-12, 1990-1 C.B. 471 (as amplified by Rev. Proc. 92-49, 1992-1 C.B. 987, and modified by Rev. Proc. 92-102, 1992-2 C.B. 579), for the value of insubstantial benefits that may be received by a donor in return for a contribution, without causing the contribution to fail to be fully deductible, are $10.90, $54.50, and $109, respectively.

.31 Tax on Insurance Companies Other than Life Insurance Companies. For taxable years beginning in 2018, under § 831(b)(2)(A)(i) the amount of the limit on net written premiums or direct written premiums (whichever is greater) is $2,300,000 to elect the alternative tax for certain small companies under § 831(b)(1) to be taxed only on taxable investment income.

.32 Expatriation to Avoid Tax. For calendar year 2018, under § 877A(g)(1)(A), unless an exception under § 877A(g)(1)(B) applies, an individual is a covered expatriate if the individual's "average annual net income tax" under § 877(a)(2)(A) for the five taxable years ending before the expatriation date is more than $165,000.

.33 Tax Responsibilities of Expatriation. For taxable years beginning in 2018, the amount that would be includible in the gross income of a covered expatriate by reason of § 877A(a)(1) is reduced (but not below zero) by $713,000.

.34 Foreign Earned Income Exclusion. For taxable years beginning in 2018, the foreign earned income exclusion amount under § 911(b)(2)(D)(i) is $104,100.

.35 Unified Credit Against Estate Tax. For an estate of any decedent dying in calendar year 2018, the basic exclusion amount is $5,600,000 for determining the amount of the unified credit against estate tax under § 2010.

.36 Valuation of Qualified Real Property in Decedent's Gross Estate. For an estate of a decedent dying in calendar year 2018, if the executor elects to use the special use valuation method under § 2032A for qualified real property, the aggregate decrease in the value of qualified real property resulting from electing to use § 2032A for purposes of the estate tax cannot exceed $1,140,000.

.37 Annual Exclusion for Gifts.

(1) For calendar year 2018, the first $15,000 of gifts to any person (other than gifts of future interests in property) are not included in the total amount of taxable gifts under § 2503 made during that year.

(2) For calendar year 2018, the first $152,000 of gifts to a spouse who is not a citizen of the United States (other than gifts of future interests in property) are not included in the total amount of taxable gifts under §§ 2503 and 2523(i)(2) made during that year.

.38 Tax on Arrow Shafts. For calendar year 2018, the tax imposed under § 4161(b)(2)(A) on the first sale by the manufacturer, producer, or importer of any shaft of a type used in the manufacture of certain arrows is $0.51 per shaft.

.39 Passenger Air Transportation Excise Tax. For calendar year 2018, the tax under § 4261(b)(1) on the amount paid for each domestic segment of taxable air transportation is $4.20. For calendar year 2018, the tax under § 4261(c)(1) on any amount paid (whether within or without the United States) for any international air transportation, if the transportation begins or ends in the United States, generally is $18.30. Under § 4261(c)(3), however, a lower amount applies under § 4261(c)(1) to a domestic segment beginning or ending in Alaska or Hawaii, and the tax applies only to departures. For calendar year 2018, the rate is $9.20.

.40 Requirement to Maintain Minimum Essential Coverage. For calendar year 2018, the applicable dollar amount used to determine the penalty under § 5000A(c) for failure to maintain minimum essential coverage is $695.

.41 Reporting Exception for Certain Exempt Organizations with Nondeductible Lobbying Expenditures. For taxable years beginning in 2018, the annual per person, family, or entity dues limitation to qualify for the reporting exception under § 6033(e)(3) (and section 5.05 of Rev. Proc. 98-19, 1998-1 C.B. 547), regarding certain exempt organizations with nondeductible lobbying expenditures, is $115 or less.

.42 Notice of Large Gifts Received from Foreign Persons. For taxable years beginning in 2018, § 6039F authorizes the Treasury Department and the Internal Revenue Service to require recipients of gifts from certain foreign persons to report these gifts if the aggregate value of gifts received in the taxable year exceeds $16,111.

.43 Persons Against Whom a Federal Tax Lien Is Not Valid. For calendar year 2018, a federal tax lien is not valid against (1) certain purchasers under § 6323(b)(4) who purchased personal property in a casual sale for less than $1,570, or (2) a mechanic's lienor under § 6323(b)(7) who repaired or improved certain residential property if the contract price with the owner is not more than $7,840.

.44 Property Exempt from Levy. For calendar year 2018, the value of property exempt from levy under § 6334(a)(2) (fuel, provisions, furniture, and other household personal effects, as well as arms for personal use, livestock, and poultry) cannot exceed $9,380. The value of property exempt from levy under § 6334(a)(3) (books and tools necessary for the trade, business, or profession of the taxpayer) cannot exceed $4,690.

.45 Interest on a Certain Portion of the Estate Tax Payable in Installments. For an estate of a decedent dying in calendar year 2018, the dollar amount used to determine the "2-percent portion" (for purposes of calculating interest under § 6601(j)) of the estate tax extended as provided in § 6166 is $1,520,000.

.46 Failure to File Tax Return. In the case of any return required to be filed in 2019, the amount of the addition to tax under § 6651(a) for failure to file a tax return within 60 days of the due date of such return (determined with regard to any extensions of time for filing) shall not be less than the lesser of $215 or 100 percent of the amount required to be shown as tax on such returns.

.47 Failure to File Certain Information Returns, Registration Statements, etc. For returns required to be filed in 2019, the penalty amounts under § 6652(c) are:

(1) for failure to file a return required under § 6033(a)(1) (relating to returns by exempt organization) or § 6012(a)(6) (relating to returns by political organizations):

Scenario

Daily Penalty

Maximum Penalty

Organization (§ 6652(c)(1)(A))

$20

Lessor of $10,000 or 5% of gross receipts of the organization for the year.

Organization with gross receipts exceeding $1,049,000 (§ 6652(c)(1)(A))

$100

$52,000

Managers (§ 6652(c)(1)(B))

$10

$5,000

Public inspection of annual returns and reports (§ 6652(c)(1)(C))

$20

$10,000

Public inspection of applications for exemption and notice of status (§ 6652(c)(1)(D))

$20

No Limits

(2) for failure to file a return required under § 6034 (relating to returns by certain trust) or § 6043(b) (relating to terminations, etc., of exempt organizations):

Scenario

Daily Penalty

Maximum Penalty

Organization or trust (§ 6652(c)(2)(A))

$10

$5,000

Managers (§ 6652(c)(2)(B))

$10

$5,000

Split-Interest Trust (§ 6652(c)(2)(C)(ii))

$20

$10,000

Any trust with gross receipts exceeding $262,000 (§ 6652(c)(2)(C)(ii))

$100

$52,000

(3) for failure to file a disclosure required under § 6033(a)(2):

Scenario

Daily Penalty

Maximum Penalty

Tax-exempt entity (§ 6652(c)(3)(A))

$100

$52,000

Failure to comply with written demand (§ 6652(c)(3)(B)(ii))

$100

$10,000

.48 Other Assessable Penalties With Respect to the Preparation of Tax Returns for Other Persons. In the case of any failure relating to a return or claim for refund filed in 2019, the penalty amounts under § 6695 are:

Scenario

Per Return or Claim for Refund

Maximum Penalty

Failure to furnish copy to taxpayer (§ 6695(a))

$50

$26,000

Failure to sign return (§ 6695(b))

$50

$26,000

Failure to furnish identifying number (§ 6695(c))

$50

$26,000

Failure to retain copy or list (§ 6695(d))

$50

$26,000

Failure to file correct information returns (§ 6695(e)) item in return

$50 per return and

$26,000

Negotiation of check (§ 6695(f))

$520 per check

No limit

Failure to be diligent in determining eligibility for child tax credit, American opportunity tax credit, and earned income credit (§ 6695(g))

$520 per return

No limit

.49 Failure to File Partnership Return. In the case of any return required to be filed in 2019, the dollar amount used to determine amount of the penalty under § 6698(b)(1) is $200.

.50 Failure to File S Corporation Return. In the case of any return required to be filed in 2019, the dollar amount used to determine amount of the penalty under § 6699(b)(1) is $200.

.51 Failure to File Correct Information Returns. In the case of any failure relating to a return required to be filed in 2019, the penalty amounts under § 6721 are:

(1) for persons with average annual gross receipts for the most recent three taxable years of more than $5,000,000, for failure to file correct information returns are:

Scenario

Penalty Per Return

Calendar Year Maximum

General Rule (§ 6721(a)(1))

$270

$3,282,500

Corrected on or before 30 days after required filing date (§ 6721(b)(1))

$50

$547,000

Corrected after 30th day but on or before August 1 (§ 6721(b)(2))

$100

$1,641,000

(2) for persons with average annual gross receipts for the most recent three taxable years of $5,000,000 or less, for failure to file correct information returns are:

Scenario

Penalty Per Return

Calendar Year Maximum

General Rule (§ 6721(d)(1)(A))

$270

$1,094,000

Corrected on or before 30 days after required filing date (§ 6721(d)(1)(B))

$50

$191,000

Corrected after 30th day but on or before August 1 (§ 6721(d)(1)(C))

$100

$547,000

(3) for failure to file correct information returns due to intentional disregard of the filing requirement (or the correct information reporting requirement) are:

Scenario

Penalty Per Return

Calendar Year Maximum

Return other than a return required to be filed under §§ 6045(a), 6041A(b), 6050H, 6050I, 6050J, 6050K, or 6050L (§ 6721(e)(2)(A))

Greater of (i) $540, or (ii) 10% of aggregate amount of items required to be reported correctly

No limit

Return required to be filed under §§ 6045(a), 6050K, or 6050L (§ 6721(e)(2)(B))

Greater of (i) $540, or (ii) 5% of aggregate amount of items required to be reported correctly

No limit

Return required to be filed under § 6050I(a) (§ 6721(e)(2)(C))

Greater of (i) $27,350, or (ii) amount of cash received up to $109,000

No limit

Return required to be filed under § 6050V (§ 6721(e)(2)(D))

Greater of (i) $540, or (ii) 10% of the value of the benefit of any contract with respect to which information is required to be included on the return

No limit

.52 Failure to Furnish Correct Payee Statements. In the case of any failure relating to a statement required to be furnished in 2019, the penalty amounts under § 6722 are:

(1) for persons with average annual gross receipts for the most recent three taxable years of more than $5,000,000, for failure to file correct information returns are:

Scenario

Penalty Per Return

Calendar Year Maximum

General Rule (§ 6722(a)(1))

$270

$3,282,500

Corrected on or before 30 days after required filing date (§ 6722(b)(1))

$50

$547,000

Corrected after 30th day but on or before August 1 (§ 6722(b)(2))

$100

$1,641,000

(2) for persons with average annual gross receipts for the most recent 3 taxable years of $5,000,000 or less, for failure to file correct information returns are:

Scenario

Penalty Per Return

Calendar Year Maximum

General Rule (§ 6722(d)(1)(A))

$270

$1,094,000

Corrected on or before 30 days after required filing date (§ 6722(d)(1)(B))

$50

$191,000

Corrected after 30th day but on or before August 1 (§ 6722(d)(1)(C))

$100

$547,000

(3) for failure to file correct payee statements due to intentional disregard of the requirement to furnish a payee statement (or the correct information reporting requirement) are:

Scenario

Penalty Per Return

Calendar Year Maximum

Statement other than a statement required under §§ 6045(b), 6041A(e) (in respect of a return required under § 6041A(b)), 6050H(d), 6050J(e), 6050K(b), or 6050L(c) (§ 6722(e)(2)(A))

Greater of (i) $540, or (ii) 10% of aggregate amount of items required to be reported correctly

No limit

Payee statement required under §§ 6045(b), 6050K(b), or 6050L(c) (§ 6722(e)(2)(B))

Greater of (i) $540, or (ii) 5% of aggregate amount of items required to be reported correctly

No limit

.53 Revocation or Denial of Passport in Case of Certain Tax Delinquencies. For calendar year 2018, the amount of a serious delinquent tax debt under § 7345 is $51,000.

.54 Attorney Fee Awards. For fees incurred in calendar year 2018, the attorney fee award limitation under § 7430(c)(1)(B)(iii) is $200 per hour.

.55 Periodic Payments Received under Qualified Long-Term Care Insurance Contracts or under Certain Life Insurance Contracts. For calendar year 2018, the stated dollar amount of the per diem limitation under § 7702B(d)(4), regarding periodic payments received under a qualified long-term care insurance contract or periodic payments received under a life insurance contract that are treated as paid by reason of the death of a chronically ill individual, is $360.

.56 Qualified Small Employer Health Reimbursement Arrangement. For tax years beginning in 2018, to qualify as a qualified small employer health reimbursement arrangement under § 9831(d), the arrangement must provide that the total amount of payments and reimbursements for any year cannot exceed $5,050 ($10,250 for family coverage).

SECTION 4. EFFECTIVE DATE


.01 General Rule. Except as provided in section 4.02, this revenue procedure applies to taxable years beginning in 2018.

.02 Calendar Year Rule. This revenue procedure applies to transactions or events occurring in calendar year 2018 for purposes of sections 3.07 (rehabilitation expenditures treated as separate new building), 3.08 (low-income housing credit), 3.13 (transportation mainline pipeline construction industry optional expense substantiation rules for payments to employees under accountable plans), 3.20 (private activity bonds volume cap), 3.21 (loan limits on agricultural bonds), 3.22 (general arbitrage rebate rules), 3.23 (safe harbor rules for broker commissions on guaranteed investment contracts or investments purchased for a yield restricted defeasance escrow), 3.32 (expatriation to avoid taxes), 3.35 (unified credit against estate tax), 3.36 (valuation of qualified real property in decedent's gross estate), 3.37 (annual exclusion for gifts), 3.38 (tax on arrow shafts), 3.39 (passenger air transportation excise tax), 3.40 (requirement to maintain minimum essential coverage), 3.43 (persons against whom a federal tax lien is not valid), 3.44 (property exempt from levy), 3.45 (interest on a certain portion of the estate tax payable in installments), 3.53 (revocation or denial of passport in case of certain tax delinquencies), 3.54 (attorney fee awards), and 3.55 (periodic payments received under qualified long-term care insurance contracts or under certain life insurance contracts).

SECTION 5. DRAFTING INFORMATION


The principal author of this revenue procedure is William Ruane of the Office of Associate Chief Counsel (Income Tax & Accounting). For further information regarding this revenue procedure, contact Mr. Ruane at (202) 317-4718 (not a toll-free call).


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