Key Takeaways
- First Quarter Payments are also due Tuesday.
- House passes budget resolution needed to get 'Big Beautiful Bill' tax cuts underway.
- Spending cuts, energy credit disputes still stand in the way.
- China imposes 125% tariff.
- DeFi crypto reporting rules revoked.
- Bribing public officials as a bad tax move.
- National Poutine Day!
First quarter estimated tax payment deadline is April 15 - IRS:
Because federal income taxes are pay-as-you-go, the law requires individuals who don’t have taxes withheld to pay taxes as their income is received or earned throughout the year. Most people meet their tax obligations by having their taxes deducted from their paychecks, pension payments, Social Security benefits or certain other government payments including unemployment compensation.
Taxpayers who are self-employed or in the gig economy are generally required to make estimated tax payments. Likewise, retirees, investors and others frequently need to make these payments because a significant portion of their income is not subject to withholding.
It's not just your 1040 due next Tuesday. If you owe on your 2024 return, there's a good chance that you need to be making estimated tax payments for 2025 - or at least you need to have more withheld from your paycheck. Making the quarterly payments makes the April 15 deadline an annoyance, rather than a crisis.
IRS reminds taxpayers to access or create an IRS Online Account today - IRS. "The Internal Revenue Service reminds taxpayers that it’s not too late to access or create an individual IRS Online Account. An IRS Online Account makes it easy for people to quickly get the tax planning information they need."
This. Whether you need to confirm that you made your estimated payments, verify for a lender that you filed your returns timely, or get a copy of your W-2, having an IRS online account is a big time-saver. Learn more at the IRS Online Account for Individuals – Frequently asked questions page.
Taxes and Congress
House GOP adopts budget framework, paving the way for Trump’s ‘big, beautiful bill’ - Katherine Tully-McManus, Jennifer Scholtes, and Meredith Lee Hill, Politico:
...
Now Republicans on both sides of the Capitol can begin the even-heavier lift of writing — and then whipping support for — the behemoth package of tax cuts, military spending, energy policy, border security investments and more. That process will pit fiscal hawks against moderate Republicans as GOP leaders try to square their conflicting demands to protect safety-net programs like Medicaid while cutting trillions of dollars from that slice of the federal budget.
Thune on $1.5T in spending cuts: We’ll see! - Andrew Desiderio, Laura Weiss, Jake Sherman and John Bresnahan, Punchbowl News. "'We’ll see what’s achievable when it comes to [spending cuts],' Thune told us. 'We obviously have people in all different camps on how much we do in terms of savings. But in the end, it’s 51 and 218. That’s the math.'"
Not everyone is on board with spending cuts, as noted in the following items.
Intraparty Clash on Energy, Medicaid Is Next Tax Plan Hurdle - Doug Sword and Cady Stanton, Tax Notes ($):
Four Republican senators — Lisa Murkowski of Alaska, John Ream Curtis of Utah, Thom Tillis of North Carolina, and Jerry Moran of Kansas — wrote to Senate Majority Leader John Thune, R-S.D., on April 9 cautioning against a full-scale rollback of the provisions.
House Republicans pitch chamber’s top tax writer on sparing clean energy tax credits - Kelsey Brugger and Nico Portuondo, Politico. "House Conservative Climate Caucus Chair Mariannette Miller-Meeks met earlier this week with House Ways and Means Chair Jason Smith (R-Mo.) to underscore the importance of leaving intact many of those tax credits created by the Democrats’ 2022 climate law, the Iowa Republican said in an interview."
Spending cuts aren't the only challenge.
Republicans Navigate Hurdles to Trump Social Security Tax Pledge - Jack Fitzpatrick, Bloomberg ($):
But the law that created the budget reconciliation maneuver bars lawmakers from changing Social Security using that procedure. That’s prompting key GOP tax-writers — aiming to please Trump and advance his legislative agenda — to seek an end-around, cutting taxes for at least some Social Security beneficiaries without touching the program itself.
Tariff Fallout
China Caps Tariffs on US at 125%, Calls Trump Levies a ‘Joke’ - Josh Xiao, Bloomberg ($):
“Given that American goods are no longer marketable in China under the current tariff rates, if the US further raises tariffs on Chinese exports, China will disregard such measures,” according to the statement.
EU Delays Tariffs After Trump's 90-Day Hold - Josh White, Law360 Tax Authority ($). "Europe must diversify 'its trade partnerships' with countries that share the EU's commitment to free trade, according to von der Leyen. The commission is looking for ways to strengthen and protect the single market, she added."
EU could tax Big Tech if trade talks fail, says von der Leyen - Roula Khalaf, Henry Foy, and Andy Bounds, Financial Times:
But the Commission president warned she was ready to dramatically expand the transatlantic trade war to services if those talks failed, potentially including a tax on digital advertising revenues that would hit tech groups such as Meta, Google and Facebook.
Trump’s Trade Math Ignores a Major Export: American Services - Konrad Putzier and Alana Pipe, Wall Street Journal. "While the U.S. buys more goods from abroad than it sells, the opposite is true for services, which include everything from streaming subscriptions to financial advice. Trump left these service exports out of his tariff math, but they are being pulled into his trade wars. "
Main Street left as collateral damage in Trump’s tariff war - Katherine Hapgood, Politico. "Even with Trump announcing on Wednesday a 90-day pause in massive reciprocal tariffs, imports from China, on which many small businesses rely, will be subject to duties of up to 125 percent. Imports from the rest of the world are also subject to a 10 percent tariff, and sectoral tariffs, such as an additional 25 percent on steel and aluminum imports, are still in place."
Mark your calendars. Chad Martin and Chris Criddle of Eide Bailly will present an HLB International webinar on tariffs April 23 at 11:00 a.m. U.S. Central Time. Register here.
Tax Administration
Trump Signs Repeal of IRS Crypto Reporting Requirements - Tyrah Burris, Tax Notes ($):
The regulations were issued by the IRS and Treasury under the Biden administration in December 2024 and would have applied to digital asset sales after January 1, 2027.
Circuit Court Won’t Pause Order Allowing Mass Firings - Kristen Parillo, Tax Notes ($). "In a 2-1 ruling issued April 10 in Maryland v. Department of Agriculture, the Fourth Circuit panel denied the states’ April 9 motion to re-enjoin the Trump administration from firing probationary employees without notice while the states seek a rehearing en banc of the panel’s April 9 order."
IRS-ICE Deal Could Cost $25B In Tax Revenue, Report Says - Natalie Olivo, Law360 Tax Authority ($):
Undocumented immigrants could become less likely to file taxes due to the deal between the IRS and the U.S. Department of Homeland Security's Immigration and Customs Enforcement agency, according to a report published Tuesday by the Budget Lab, Yale's nonpartisan policy research center. Immigrants may also move to jobs that are less likely to withhold taxes, the report said.
ERC Update
IRS Provides Helpful Instructions for Wage Expenses and ERC - Kristine Tidgren, Ag Docket:
IRS instructed taxpayers who followed the guidance but later had their ERC claim denied or reduced to amend the return for the year the wages were paid to deduct the corresponding wage expense. Taxpayers who did not reduce their wage expense when they filed their ERC claim were instructed to amend the return for the year the wages were paid to eliminate the corresponding wage expense once their ERC claim was paid. See IRS Notice 2021-49. Although laborious, this guidance was workable until the three-year limitations period began to run for amending business returns.
Blogs and Bits
Tax filing extension details for taxpayers with an already disaster-extended deadline - Kay Bell, Don't Mess With Taxes. "The tax deadline countdown clock is ticking away (literally, there over in the ol’ blog’s right column). With just days to file your Form 1040 slipping away, many of us will determine the best move is to file for an extension."
Sixth Circuit Reverses Tax Court; Forfeiture Did Not Trigger Additional Taxes for Felon - Parker Tax Pro Library. "The Sixth Circuit reversed the Tax Court and held that the forfeiture of funds from a taxpayer's individual retirement account (IRA) to the IRS did not result in constructive income to the taxpayer because the forfeiture order at issue granted the IRS ownership of the IRA. Thus, when the IRS withdrew the funds from the taxpayer's IRA, it was not taking the taxpayer's money to discharge a debt, it was simply transferring its own money and, under Code Sec. 408(d)(1), the IRS thus qualified as the payee."
ICYMI: State Tax News & Views: Tax-Free NIL Deals and the Final Four. "Do states need to not tax NIL money to keep their college athletic programs competitive?"
Bozo Tax Tip #2: The Eternal Hobby Loss - Russ Fox, Taxable Talk. "If your business loses money year-after-year, and you’re not making any efforts to change it, and you get a lot of personal enjoyment out of the business, beware! Your “business” might be a hobby. Yes, circumstances can cause any business to fail (and the IRS knows this). But when your business is losing money every year and you make no effort to change your business, at least on the surface you’re looking like a hobby. The eternal hobby loss is a good way to head to an IRS audit."
Head they win, bribe you lose
Tax Court OKs Nix Of Deduction For Funds Seized After Bribe - Jack McLoone, Law360 Tax Authority ($). "An Ohio man can't claim a loss for the $856,000 seized from his corporation after he pled guilty to his role in a bribery scheme, the U.S. Tax Court said Thursday, affirming the Internal Revenue Service's disallowance because the loss was due to a criminal penalty."
Crime really doesn't pay. Tax Court Judge Copeland gives the background (taxpayer name omitted, emphasis added):
The taxpayer paid his net income a wholly-owned S corporation, zeroing out his schedule C. The S corporation then paid wages to the taxpayer. The taxpayer argued that the S corporation, HCM, should get to deduct proceeds that were seized as a result of the conviction. Judge Copeland was unconvinced:
That seems harsh - he picked up the income, but when the income is forfeited, he gets no deduction. It just goes to show that you need to consult your tax pro before you start an illegal bribery scheme. Or maybe just don't do that sort of thing.
What day is it?
It's National Poutine Day! Not recommended for weight loss.
