Pay Attention to These Tax Regulation Changes:
As a busy year comes to a close, we look forward to 2024. This also means considering many of the tax law changes and updates that occurred in 2023, which may affect you next year while completing your 2023 tax return. That said, let’s take a look at what’s been passed so far and what we need to consider for this tax season.
1) Energy Efficient Home Improvement Credits
A new bill has been passed for 2023 that allows you to receive a $1200 credit for certain qualified expenses every year (compared to the previous $500 given over a taxpayer’s lifetime).
2) Electric Vehicle Tax Credits
For new EVs in service after December 31, 2022, Biden’s Inflation Reduction Act allows for up to $7500 in tax credit under certain qualifications. You can also get up to a $2500 tax credit for the purchase of a used EV.
3) Student Loan Interest Adjustment
As of October 2023, the COVID-19 student loan forbearance ended and student loan payments restarted. If you are paying down college debt, you might be eligible to deduct $2,500 of student loan interest paid each year. This can be claimed on a Schedule 1 of Form 1040.
4) RMD Age Changing
The age for taking required minimum distributions (RMDs) is now 73 (vs. the previous 72) for owners of many retirement plans such as traditional IRAs and 401(k)s. If you turn 73 this year, you will need to take your first RMD by April 1, 2024. Those who work past the age of 73 may be able to delay taking RMDs from an employer’s retirement account until they retire.
5) New Reporting Requirements for 1099-K
Anyone who sells more than $600 in merchandise with any number of transactions, even a single one, will be receiving the newly revised Form 1099-K.
6) IRS increases mileage rate for 2023
The mileage reimbursement rate for 2022 was 62.5 cents per mile. Starting in 2023, the mileage rate was increased to 65.5 cents per mile.
Eliminations and Reductions
Some of the changes for 2023 also included eliminating deductions and reducing credits given during the pandemic.
7) Child Tax Credits
For 2022, the child tax credit was reduced to $2000 per child ages 0-16 if your adjusted gross income was $400,000 or below (for those married filing jointly) or $200,000 or below (for other filers). This is still in effect in 2023. Click here to learn more.
8) Bonus Depreciation
Previously, businesses were able to deduct 100% of the purchase price of qualified fixed assets. This year, that percentage has been reduced to 80%. Click here to learn more.
9) Meal Deductions
For the past two years, businesses could deduct 100% of business-related food and beverages. For 2023, this percentage had been changed to the previous 50%. Click here to learn more.
It’s important to stay informed on tax regulation changes, as Congress uses the tax code to drive spending and saving habits, causing changes to occur more rapidly. Remember to keep checking in with our blog to stay up-to-date on these.