Happy New Year! Wishing you and yours a healthy, happy, and prosperous 2024. We have a lot of information to convey regarding the upcoming tax year.
- Filing season officially begins on Monday, January 29th. This is the first day that the IRS will accept electronically filed returns. We can prepare taxes before then but cannot send them until that date. Filing season will close on Monday, April 15th. Payments or returns after that date are subject to interest and penalties unless an extension is filed.
- The big news for 2023 involves home energy credits. The old credit was a $500 lifetime credit for installing new doors or windows or replacing your heating and cooling systems with energy efficient ones. The new credit that took affect last year allows up to $1,200 per year for home energy upgrades. Plus, there are separate credits for heat pumps, solar energy, and wind turbines. Renters may be eligible for some credits, as are owners of second homes where work is done. We will be asking everybody about these, so go to www.Energystar.gov for more details.
- Two important retirement-related changes are in effect now. Anybody needing emergency money from their retirement accounts can now take up to $1.000 out per year penalty-free (still taxable) and have the option to pay it back later if they want to. Also, the required minimum distribution rules for retirees have changed again. Only those who reached age 73 or above in 2023 are required to take money out of their retirement funds (it used to be 72), and that number will rise to 75 eventually.
- People who make money on the side through Ebay, Uber, Etsy, AirBNB, or any of dozens of other gig sites make up close to 40% of workers. The reporting threshold for gig workers has been at $20,000 for years and was supposed to go down to $600 last year. The IRS has postponed that requirement for one more year, and for 2023 the threshold remains the same, dropping to $5,000 in 2024 and then $600 in 2025 unless congress acts. The reporting form for these workers is form 1099-K, and it’s expected that millions of those forms will go out once the threshold changes! These activities must be accounted for on the tax return, and some of them could be subject to 15% self-employment taxes. If you plan on working with one of these companies in 2024, keep that in mind.
- The following only applies to LLC and Corporate filers who are registered with the state. Beginning in 2024 the Corporate Transparency Act requires all companies to file with the Department of Treasury by the end of the year or face fines. This is an attempt to crack down on money launderers from around the world, who are using the US to hide their money. People who own at least 25% of the company will have to register as well. New companies formed during 2024 have only 90 days to register. And any changes in ownership will have to be reported in a timely manner. Don’t miss this important new requirement. For more information go to www.fincen.gov.
- Starting in 2023, new credits are available for the purchase of electric or hybrid automobiles. From 2024 onward, those credits can be taken at the dealership and reconciled on the income tax return. The credit is up to $7,500 on qualifying new vehicles and $4,000 on used vehicles, but it has a lot of strings attached that relate to models, purchase price, assembly location, and AGI of the buyer. For more details and to see which cars qualify (the list is still evolving) go to www.fueleconomy.gov.
We look forward to helping you this tax season at Buenger Accounting with all of your tax-related questions. If you need an organizer for your business, rental, or other situation, please let us know and we can get one to you.