7 Major Tax Changes to Know for this Tax Season
The tax season is finally here and tax rules and regulations continue to change rapidly. We monitor those tax changes so that we can keep you informed as et the best tax advantages available, while also being protected from tax changes that can create risks and problems.
Here are 7 major tax topics to keep in mind as this season begins:
2023 Standard Deduction and Retirement Contributions
The standard deduction for all filings statuses have increased.
Single: $13,850 / Married Filing Joint: $27,000 / Head of Household: $20,800
For 2023, individuals may contribute up to $22,500 to a 401K retirement contribution. The annual contribution limit for IRAs is $6.500 and for individuals over 50 years old the limit is $7,500. And, the amount individuals may contribute to a SIMPLE retirement account increased to $15,500. Remember that some retirement accounts can be funded up until the filing due date, April 15, 2024. If you haven’t already contributed, you may still have time.
New 1099-K Requirements Postponed
The IRS postponed a new rule that was supposed to take effect this year. The rule would have caused many millions of people to receive 1099's for money received via digital payment services such as Venmo, CashApp and PayPal due to a new threshold at $600. For now, previous thresholds you have nothing to worry about.
New Reporting Requirement for Businesses
FinCEN (a government agency whose long name is Financial Crimes Enforcement Network) has put in place a new requirement for small business entities. Entities such as LLC's and corporations, must now file a "Beneficial Ownership Information Report" that gives FinCEN information about who owns and who controls those business entities. If you own or control part or all of an LLC or corporation that has 20 or fewer full-time employees, please let us know so that we can direct you in the best ways. Penalties for non-compliance with this new rule are extremely severe.
Save Energy and Save on Taxes
"Green energy" tax credits for homeowners, landlords, and vehicle owners have changed and, in some cases, improved. If you invested money into solar panels, energy efficient windows or doors, electric vehicle(s), or anything else related to green energy, please provide the details of what you purchased including the date of purchase, and the amount invested to your so that we can maximize any applicable tax breaks.
Self-service at the IRS
The IRS is trying to empower taxpayers to "self-service" more of your needs on their website, rather than needing to call IRS by phone. You can now view much of your own tax information such as past due tax amounts, income amounts for each year you filed taxes, etc. by starting an IRS Online Account and logging into it: https://www.irs.gov/payments/your-online-account
Student Loans
Student loan repayments have started up again after the COVID-induced "pause" in repayment requirements. To lighten the burden, IRS has a new rule that allows certain employees to count their student loan repayment as a 401K contribution for the purposes of "employer matching." If you're paying back a student loan and your employer has a 401K matching policy, this option should be explored, as it could result in some "free money" being put into your 401K by your employer.
Cryptocurrency
The IRS is targeting people who have been making money with cryptocurrency but not reporting or paying taxes on it. The IRS has successfully sued several of the biggest cryptocurrency exchanges, forcing them to give the IRS data about certain of its users for the purposes of collecting tax. And the Treasury Department has announced that 1099's for cryptocurrency will start to be issued sometime soon.
These are just a handful of changes that may impact you this tax season. If you are ready to get started with your tax return or have questions about any of the chanages we are here now and year-round to help. Contact us today!