Weekly Digest – January 27, 2023
This week you will probably start receiving your 2022 tax forms as January 31st is the filing deadline for w-2’s and 1099’s, so keep an eye out and start collecting those forms in a file and get ready to scan them into one pdf file for safekeeping and submission to your tax professional. This time of year it is most important to me to keep to my routine of getting out to the beach for morning sunrises. It’s cool to see how the clouds really help create a dramatic sunrise…
If I had waited a bit longer I would have missed this pre-sunrise “red sky at dawn”. It was truly spectacular, and the clouds and impending rain storm blocked the actual sun rise at 7:15.
I am glad to see we have a very moderate weather forecast for this weekend (48 degrees and partly cloudy), I hope you all have a great weekend.
NEW YEAR’S RESOLUTIONS
It seems that many people opt for a “self care”resolution like lose weight, get in shape, eat better, spend more quality time with family, etc. I believe that being mindful of our actions is critical if our efforts will be successful. Recently I read you eat healthier meals and drink less alcohol when you eat your evening meal with your family. Sounds like a plan to me! I then stumbled upon the U.S. Department of Agriculture “MyPlate” home page which gave several tips and this great punch line “The benefits of healthy eating add up over time, bite by bite”.
WEEKLY TAKE AWAY
Last week I admitted that I have not been bringing my business cards to recent events. This Monday I was offered “a seat at the IRS Tax Professionals Roundtable” which was an amazing event. Again I did not bring business cards and found that several other attendees did not carry cards as well. I am not sure if this is a trend or has it been so long since we focused on in person networking. Learning from past mistakes I sent a follow up thank you email as I headed home on the ferry. Sending a follow up email right after a meeting helps keep you top of mind and keeps the door open for future meetings and fosters a continued relationship.
TAX ISSUES/TAX PLANNING
Inflation Reduction Act (IRA) of 2022 and Credits for Clean Vehicles
I often mention that many tax laws and credits aim to influence behavior, and that is the case with the “other IRA”, the Inflation Reduction Act (IRA) of 2022 with business and individual tax credits for improving our environment through purchase of electronic vehicles, energy efficient home improvements, etc. In order to take advantage of the Credits for New Clean Vehicles Purchased in 2023 or After it is important to understand the very specific qualification rules, so please read through this list before you head for your auto dealership with visions of tax refunds for the purchase of your new EV:
The credit is available to individuals and their businesses.
To qualify, you must:
- Purchase the car for your own use, (not for resale)
- Use it primarily in the U.S.
- The credit is not available to you if you lease the car
In addition, your modified adjusted gross income (AGI) may not exceed:
- $300,000 for married couples filing jointly
- $225,000 for heads of households
- $150,000 for all other filers
To qualify, a vehicle must:
- Have a battery capacity of at least 7 kilowatt hours
- Have a gross vehicle weight rating of less than 14,000 pounds
- Be made by a qualified manufacturer index of qualified manufacturers and vehicles.
- FCVs do not need to be made by a qualified manufacturer to be eligible. See Rev. Proc. 2022-42 for more detailed guidance.
- Undergo final assembly in North America
The sale qualifies only if:
- You buy the vehicle new
- The seller reports your name and taxpayer identification number to the IRS at the time of sale
- You file IRS form 8936 with a timely filed tax return for the year in question with all required information, including the vehicle’s VIN
In addition, the vehicle’s manufacturer suggested retail price (MSRP) cannot exceed:
- $80,000 for vans, sport utility vehicles and pickup trucks
- $55,000 for other vehicles
IRS Tax Inflation Adjustments for 2023
The tax year 2023 adjustments described below generally apply to tax returns filed in 2024:
- The standard deduction for married couples filing jointly for tax year 2023 rises to $27,700 up $1,800 from the prior year. For single taxpayers and married individuals filing separately, the standard deduction rises to $13,850 for 2023, up $900, and for heads of households, the standard deduction will be $20,800 for tax year 2023, up $1,400 from the amount for tax year 2022.
- Marginal Rates: For tax year 2023, the top tax rate remains 37% for individual single taxpayers with incomes greater than $578,125 ($693,750 for married couples filing jointly).
The other rates are:
- 35% for incomes over $231,250 ($462,500 for married couples filing jointly);
- 32% for incomes over $182,100 ($364,200 for married couples filing jointly);
- 24% for incomes over $95,375 ($190,750 for married couples filing jointly);
- 22% for incomes over $44,725 ($89,450 for married couples filing jointly);
- 12% for incomes over $11,000 ($22,000 for married couples filing jointly).
The lowest rate is 10% for incomes of single individuals with incomes of $11,000 or less ($22,000 for married couples filing jointly).
2023 IRS Standard Milage Rates
Beginning on January 1, 2023, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:
- 65.5 cents per mile driven for business use, up 3 cents from the midyear increase setting the rate for the second half of 2022.
- 22 cents per mile driven for medical or moving purposes for qualified active-duty members of the Armed Forces, consistent with the increased midyear rate set for the second half of 2022.
- 14 cents per mile driven in service of charitable organizations; the rate is set by statute and remains unchanged from 2022.
These rates apply to electric and hybrid-electric automobiles, as well as gasoline and diesel-powered vehicles. As always Document, Document, Document.
ECONOMY
The Government Hits its Debt Ceiling
The treasury secretary said the government would suspend debt issuance and investments into two government employee retirement funds until Congress acts.
Microsoft Throws its Weight Behind OpenAI
Microsoft is making a multibillion-dollar investment in the artificial intelligence startup OpenAI, which makes ChatGPT, DALL-E and other tools that can write readable text and create images.
Tech Companies Continue Layoffs
- Spotify Cutting 6% of its Workforce -the latest tech giant to announce a round of layoffs is Spotify, who said this week that 588 employees will lose their jobs.
- Fuchsia OS Group Saw ost layoffs at Google last week Google fired 12,000 people last Friday, and several projects were shut down or deprioritized. Fuchsia, Google’s future OS development group, saw an outsized 16% of its staff receive pink slips.
Bitcoin Continues to Gain Ground
Bitcoin has started 2023 on a positive note, with the price briefly rising above $23,000 earlier this week. Investors are hoping for a reversal in the monetary tightening that spooked market players last year.
GENERAL RESOURCES
- IRS resources for stimulus payments:
- Use the Get My Payment tool to check on EIP payment status
- Eligibility and general information about Economic Impact Payments
- A list of frequently asked questions for stimulus payments
- IRS information about the Advance Child Tax Credit Payments
- Portal to update information
- A list of frequently asked questions on the advance Child Tax Credit Payments
- The best source for up-to-date and accurate health information is the Center for Disease Control (CDC)
- Our Covid-19 Resource Center with relevant blog posts, videos and prior weekly newsletters
- Payroll, HR and benefits company Gusto has put together An Employer’s Guide to Navigating the Coronavirus
- Accounting Today has a special page for articles on COVID-19
- Intuit QuickBooks has a dedicated page to help small businesses
- Entrepreneur put together a listing of free tech resources for remote work
- The Consumer Financial Protection Bureau has warnings about COVID-related scams
- Fast Company has a listing of the best productivity apps for 2020
- The New York Times has an online newsletter on K-12 and higher education
- The Wall Street Journal has a collection of articles on education
- The Louvre has digitized 482,000 artworks from its collection
- PC Magazine explains how to carry your vaccination card on your phone
- How to create a strong password
We sincerely hope that you and your family are well and remain well. If you have any questions or concerns, don’t hesitate to reach out to us. We are here for you.
If you need help with your accounting, want to create a tax minimization plan, want to discuss your business growth plan or your finances, are concerned about retirement goals or need to be held accountable for your 90 day action plan, contact us for a complimentary discovery session or an appointment to just get started.
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