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 |  Bizink  |  2023 IRS Standard Milage Rates,  business cards,  Credits for Clean Vehicles,  Inflation Reduction Act (IRA) of 2022,  IRS Tax Inflation Adjustments for 2023,  NYC Ferry,  Sunrise,  tax planning,  tax season 2023,  Weekly Take-Away

Weekly Update – January 27th 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…

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Dramatic sun rise through the clouds this week

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.

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Red Sky at dawn pre-sunrise on Rockaway Beach

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.

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NYC Ferry between Rockaway & Pier 11

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

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

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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