Tax Year 2023 POTPOURRI
For Everyone
Estimated tax payments for Q4 of 2023 are due January 16.
The IRS opens up for business January 29 this year, and unlike last year for many California residents, there are no automatic extensions to file or to pay. Well, so far!
Regular fiiling deadlines without extension to be aware of (Ed.: Could it be we will see a “normal” filing year? At this point, “normal” is the exception!):
March 15 for Partnerships and S-Corps with calendar year filing schedule
April 15 for Individual returns, C-Corps on a calendar year, Estate, Trusts, and 990-T filers
May 15 for most non-profits
For Individuals
Itemizers who have qualified medical expenses can use 22 cents/mile for travel to and from appointments and charitable mileage is rated at 14 cents per mile.
New in 2023, for those of you who have educational 529 plans you can rollover $35,000 in a lifetime to a Roth IRA regardless of income if the 529 account has existed for 15 years.
California Proposition 19 which concerns the untaxed transfer of a primary residence from parents to children (or grandchildren in some cases) requires the transferee be 55 years or older and only the first $1 million is transferrable tax-free, after which normal re-assessment applies.
SECURE 2.0 changed the distribution time requirements for inherited IRAs and pension plans from the convenient 10-year stretch to, well, something else, depending on when the deceased began (or never began) taking distributions. Call me if this is something you inherited.
Those aged 60, 61, 62, 63 with a qualified retirement plan will now enjoy a “super” catch-up provision allowing them to contribute the greater of $10,000 or 150% of the regular age-50 limit, indexed for inflation.
The IRS has issued new guidance about how to report virtual currency transactions, essentially tying them to existing taxation scenarios (airdrops = stock splits, hard forks = dividends, staking can be taxable interest, et al.). Be aware the IRS plans to gradually draw the 1099 reporting threshold in a few years down to $600.
IRA contributions to charity remain one of the best ways to reduce your income, but you must be 70½ to take advantage.
Student loan repayment requirement began June of 2023, but to mitigate this, 2024 loan payments can be treated as retirement contributions where there is an employer match program. If you obtain student loan forgiveness any time through 2025, it is exempted from taxation, FYI.
The so-called SALT work-around (also known as a Pass-Through Entity Tax) blessed by Congress and used in California has gained traction, but to take advantage you must have ownership of a pass-through entity (excluding Single-Member LLCs) to be able to use this. The tax may be found on line 1 of your K-1.
SECURE 2.0 primarily addressed benefits and retirement, including increased catch-up contributions.
o Required Minimum Distributions (RMDs) for 2023 begin at 73 and in 2033 the RMD age is 75, but will that change in 10 years?
o Worth repeating: RMD penalties are now reduced from 50% of what should have been withdrawn to 25%, and even to 10% if the mistake is corrected within two years.
For Small Business Owners
SECURE 2.0 business issues are not limited to the following!:
o SEP and SIMPLE employer and employee contributions can now be Roth contributions.
o Solo 401(k) account owners can contribute employee deferrals retroactively in the first year they set up the plan up to the filing date of the return, not including extensions.
o Small businesses who start new retirement plans can enjoy a credit up to 50% of setup costs up to $5,000 per year and runs for three years.
o In addition, small business can qualify for a 100% credit up to $1,000 per employee for employers who contribute to employee accounts retirement.
The 2023 standard business mileage rate was 65.5 cents per mile and 67 cents per mile for 2024. The tax courts side with taxpayers who keep a contemporaneous log.
If you received Employee Retention Tax Credit money in 2023, expect a 1099-INT for reportable interest.
If you ever incur a Net Operating Loss, keep all your original spreadsheets that establish your claim.