Line items

HSA family coverage limit restored

With Rev. Proc. 2018-27, the IRS reversed its earlier reduction in the annual limitation on deductible contributions to health savings accounts (HSAs) for family coverage under a high-deductible health plan.

In May 2017, the IRS issued Rev. Proc. 2017-37, which prescribed 2018 inflation adjustments for HSAs, including a $6,900 limitation on contributions for family coverage. Then, in December, the legislation known as the Tax Cuts and Jobs Act (TCJA), P.L. 115-97, enacted a new basis for calculating annual cost-of-living adjustments under the Code, effective for calendar 2018. In March 2018 — well after taxpayers had made employer elections for 2018 HSA contributions — the IRS issued Rev. Proc. 2018-18, modifying 2018 inflation adjustments under the new calculation, including a new HSA family maximum contribution of $6,850, $50 less.

In Rev. Proc. 2018-27, noting taxpayer and employer burdens, particularly for taxpayers who had elected the higher maximum contribution, the IRS said taxpayers may treat $6,900 as the limitation for calendar 2018.

Life settlement reporting delayed

In Notice 2018-41, the IRS delayed new reporting requirements under Sec. 6050Y for life settlements and certain related life insurance transactions. The notice also provides transitional guidance on the reporting obligations, which were introduced by the TCJA. New Sec. 6050Y requires persons who acquire a life insurance contract or interest in a reportable policy sale to file a return with the IRS containing prescribed information about the policy and its acquirer and issuer. A reportable policy sale occurs where the acquirer has no substantial family, business, or financial relationship with the insured apart from the acquisition. The reporting requirements are effective for reportable policy sales occurring after Dec. 31, 2017; under the notice, reporting will not be required until final regulations are issued.

Payroll tax credit for small business research activities clarified

On its website (, the IRS clarified procedures by which qualified small business taxpayers may claim (for tax years after 2015) the Sec. 41(h) payroll tax credit for increasing research activities.

Eligible businesses cannot claim the credit until the first calendar quarter that begins after the date when they file an income tax return making the election to claim the credit against payroll taxes. Thus, the webpage states, they must allocate credit amounts on Form 8974, Qualified Small Business Payroll Tax Credit for Increasing Research Activities, by quarter against the employer's share of Social Security tax paid, starting with the calendar quarter that begins after they filed the income tax return making the election. The webpage provides instructions and examples for the first year a taxpayer makes the election and for subsequent years with a carryforward of unused credit from a prior year.

Where to find October’s flipbook issue

The Journal of Accountancy is now completely digital. 





2022 Payroll Update

Employees working remotely have created numerous issues for employers. The 2022 Payroll Update report provides insight on remote workforce tax issues, pandemic payroll issues and employer credits, and worker classification issues in the gig economy.