Weekly Digest – March 17, 2023, Happy St. Patrick’s Day
We in the Northeast were hit with some stormy weather this week, we got rain, but those north of us were hit with multiple snow stoms. The snow looks so beautiful as long as it’s not your job to shovel…
Over 2 feet of snow this week in New Hampshire, look at those snow banks!
We here in southern Queens received many inches of rain, while friends an hour’s drive north of New York City reported 2 days with a total of 16″, it does look beautiful; grab a mug of hot chocolate and enjoy the view out the window…
Just this week we tax professionals survived our multi-deadline day March 15th and today we get to celebrate St. Patrick’s day.
Happy St Patrick’s day, these really cute dogs are dressed and ready to celebrate…
Enjoy your Friday and weekend no matter where and what you are celebrating, remember there’s some “good tax stuff” below, scroll down to the technical info, it’s a short read.
WEEKLY TAKE AWAY
Creating and following our 90 day action plan(s), weekly huddles and team work helped our firm successfully navigate one or our hardest tax deadlines this Wednesday. It was a lot of work, we learned a lot as we navigated through new laws and state decoupling from the IRS, but team work, respect and commitment to the tools we have in place made it all possible and helped keep our stress level down.
TAX ISSUES/TAX PLANNING
How do Independent Contractors File their Tax Returns
An appeals court in California has overturned a previous ruling that deemed Proposition 22 unconstitutional, which would allow ride-sharing apps like Uber and Lyft to continue classifying their drivers as independent contractors. Now what does that mean to them in “tax speak”:
- Quarterly estimated tax payments to the IRS and your state. Independent contractors get paid in full and must calculate their tax retuirement and make quarterly estimated tax payments.
- Independent contractors must accumulate their regular and ordinary business expenses and net them against their earnings in order to determine the proper net profit to use for calculating taxes. Remember document, document, document!
- Independent contractors can benefit by choosing the right tax entity for thier situation.
- Proactive planning with the right professional advisory team can reduce costs in the long run.
- Create and follow a 90 day action plan, this will help you keep on track
Homeownership in Within Reach Again; Related Expenses May Not Reduce your Annual Tax Bite
According to Matthew Graham, COO of Mortgage News Daily, a shift in consumer behavior due to the current banking crisis could positively impact rates, which are currently driven by inflation. On Monday The 30-year fixed mortgage rate decreased to 6.57% – potentially encouraging buyers to return to the market. While this is the “American Dream” the related deductions may not impact your taxes at all. Currently the standard deductions (for the 2022 tax year) are:
- Married filing jointly $25,900
- Single and married filing seperately $12,950
- Head of household $19,400
These rise for 2023:
- Married filing jointly $27,700
- Single and married filing seperately $13,850
- Head of household $20,800
Qualifing itemized deductions include:
- Unreimbursed medical expenses in excess of 7.5% of your adjusted gross income (AGI)
- Charitable contribuitions – a combination of cash, checks credit card payments documented by receipts as well as the fair market value (FMV) of non cash items such as food, toy and clothing drive donations.
- State and Local taxes, these include real estate taxes as well as state income taxes (like those on your W-2). No matter how much these total they are capped at $10,000, this is known as the SALT limit. Depending upon other taxes or the amount of real estate taxes
- Mortgage Inerest – with some limitations. The mortgage interest you pay depends on your interest rate, date you purchased your home and the principle balance on yur loan.
When you add these all up, they may not exeed the current standard deduction; my best advise is always never do something just for the tax advantage, it has to make sense for you.
Danny Werfel Sworn in as the 50th Commissioner of the IRS
Werfel previously served as Acting Commissioner in 2013 and has over 15 years of federal government experience. He expressed gratitude for the opportunity to lead dedicated public servants at a critical moment in IRS history.
President Biden Assures Americans that the Banking System is Safe amid Silicon Valley Bank Collapse
President Biden reassured Americans that their deposits in the banking system are safe and that his administration will take action to contain Silicon Valley Bank’s collapse. He explained how his administration will protect small businesses and workers affected by the bank’s shutdown.
Yesterday’s front page of the New York Times had some great articles about the ripple effect of the Silicon Valley Bank collapse read the full article… “Bank Fears Go Global as Markets Convulse Over Lurking Hazards“.
Crypto Surges Despite the Closure of Signature Bank and Regulatory Pressure on the Industry
Cryptocurrencies experienced a surge in value on Monday despite the announcement of the closure of Signature Bank, the last major crypto bank in the US. This move has sparked concerns among crypto investors and entrepreneurs that regulators are putting pressure on banks to shut down their businesses.
Investors Anticipate Slight Cooling in February Inflation Report, with 6% Annual Gain Projected.
Investors will be closely monitoring the February inflation report, which is expected to show consumer prices cooled slightly last month. Headline inflation is forecast to rise 6% over the prior year, a slowdown from January’s 6.4% annual gain is expected.
- IRS resources for stimulus payments:
- IRS information about 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 prior blog posts, videos and prior weekly newsletters
- Entrepreneur put together a listing of free tech resources for remote work
- The Consumer Financial Protection Bureau has warnings about COVID-related scams
- 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
- 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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