Weekly Update – May 11th, 2023 – Happy Mother’s Day
We met our tax season 2023 deadlines by filing tax returns and extensions as needed; it’s time to focus on new tax laws, tax plans, and regular monthly and quarterly filing deadlines. As a tax nerd I love joining panels and speaking with small business owners highlighting rules, trends, and situations to beware of. Just this week I was thrilled to be included on a panel with Karen Tenenbaum, esq and Moshe Zupnick of Tenenbaum Law as we discussed business entity selection, tax audits, and best business practices with members of MAHI the Metropolitan Association of Home Inspectors. We had a great time and met some wonderful business owners.
I am happy to share my choice for sunrise photo of the week…
I hope you have great plans for this Mother’s Day weekend; let’s celebrate our mom’s and enjoy the weekend…
WEEKLY TAKE AWAY
During our weekly huddle Myriam related the story of the hit-and-run truck driver who side swiped her as she exited the highway on her way home the night before. Luckily she is fine, but her car is totaled. She also told us she was examined on site but did not go to the hospital in the ambulance. Monica had been in a similar accident several years ago, but in her case an off duty policeman had seen the driver hit another car and drive away before sideswiping Monica’s car. He helped Monica report her accident to the police and suggested she go to the hospital “just in case”. Myriam took Monica’s advice and had her daughter take her to the hospital for a check up (she was now feeling the after affects). Monica also explained that she was able to collect insurance money due to a “no threshold clause” on her policy. Safe travels!
TAX ISSUES/TAX PLANNING
The IRS is Aware of ERC Abuse
I have written about the rules, cautioned about unscrupulous companies advertising huge refunds, and received emails from business owners showing what look like an actual IRS notice urging businesses to contact the company to “claim their estimated tax credit”. With their recent funding, the IRS has hired 200 new auditors and are going after “low hanging fruit”, these amended payroll tax returns with huge refund claims. Many small businesses my be subject to criminal repercussions as well as penalties and interest on disallowed claims. Next week I am joining a panel “OMG My Client Owes Taxes, How Can I Help”, we will highlight various methods for assisting our clients when an unexpected tax bill shows up in the mail and other scenarios including large tax liabilities resulting from audits such as these. IRS issues renewed warning on Employee Retention Credit claims; false claims generate compliance risk for people and businesses claiming credit improperly | Internal Revenue Service
Inherited Individual Retirement Account Rules Updated by SECURE 2.0
Beginning in 2023, the SECURE 2.0 Act raised the required age that you must begin taking RMDs, to 73. If you reach age 72 in 2023, the required beginning date for your first RMD is April 1, 2025. If you reach age 73 in 2023, you were 72 in 2022 and therefore subject to the age 72 RMD rule in effect for 2022. If you reached age 72 in 2022, your first RMD was due April 1, 2023, and your second RMD is due by December 31, 2023. If the taxpayer opts to take their first two RMDs in the same calendar year, they need to be sure that this does not inadvertently put them into a higher tax bracket.
For Inherited IRAs, the SECURE Act requires the entire balance of the participant’s account be distributed within ten years. This 10-year rule has many exceptions—for a surviving spouse, a child who has not reached the age of majority, a disabled or chronically ill person, or a person not more than ten years younger than the account owner. This 10-year rule applies regardless of whether the participant dies before, on, or after, the required first RMD date.
We always suggest you contact your broker or banker and set up automatic annual payments so you follow the RMD requirements, not doing so could cause you to be liable for a penalty.
Deadline Relief for Florida Residents and Businesses IR-2023-94
With IR-2023-94, May 2, 2023, the IRS is offering relief to any area designated by the Federal Emergency Management Agency (FEMA) as a result of tornadoes, severe storms and flooding that occurred from April 12th to 14th. This is good news for those effected by the storms.
US Proposes Rules Requiring Airlines to Compensate Passengers for Flight Delays
I was headed home from California at the end of my “after-tax-season” vacation our plane was all set to take off on time, however… after we boarded twice our flight was cancelled and 150+ passengers scrambled to find our way home. My husband and I opted to take a flight the next day at the same time and were given hotel and meal vouchers at a local hotel; we had a great experience. The US Department of Transportation is proposing new rules that would require airlines to compensate passengers for various cancellations or disruptions caused by the airlines. Proposed rules would require airlines to offer cash compensation and accommodation vouchers in addition to refunds.
Warren Buffett Quoted Saturday
Warren Buffett has said that the period of excessive spending following the COVID-19 pandemic and stimulus is over and many businesses have too much inventory they’ll need to sell off. Managers, responding to increased demand, overestimated how much stock they would need and now sit with too much, the result of which could be an earnings decline.
The U.S. Debt Ceiling
The US government will have to find a solution to the $31.4 trillion US debt ceiling to avoid a default before the end of May. President Joe Biden has asked lawmakers to raise the federal government’s self-imposed borrowing limit without conditions, but the Republican House of Representatives Speaker Kevin McCarthy said they will not approve any deal that does not cut spending. The US debt ceiling denotes the law/rule that limits the amount of money the government can borrow to pay its bills. If the debt ceiling isn’t raised, the government may not be able to pay the salaries of federal and military employees, parks would be shut down, and weather services closed. This has occurred in the past, reeking havoc for families and the economy as a whole. Here’s more information on what the debt ceiling is and what it means for the economy.
The Writers Strike Could Last Through the End of the Summer
The Writers Guild of America is on strike after failing to reach a deal with the Alliance of Motion Picture and Television Producers. So far, no new talks have been scheduled, with the WGA saying the work stoppage could last for months. CBS news reported on how this will affect viewers this summer.
Disney Expands Lawsuit Against DeSantis After he Signed a Bill to Void Land Deals
Disney expanded its federal lawsuit against Florida Gov. Ron DeSantis, accusing the governor of waging a “retribution campaign” against the company by voiding Disney’s development deals. Disney alleges the retaliation began after the company publicly criticized a controversial Florida bill that limits discussion of sexual orientation and gender identity in classrooms.
- 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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