********YEAR END NEWSLETTER*******
Office of....
LINDA ROZET, CPA, PC.
9873 W Bell Rd
Sun City, AZ 85351
_________________________________________________________________
Phone 623-815-4749
Fax 623-486-0314
Email:acctgtaxes@lindarozetcpa.net
http:/lindarozetcpa.com
YEAR END NEWSLETTER
December 7, 2023
Dear valued client:
HAPPY HOLIDAYS!
I hope you have had a wonderful and blessed year! We hope you and your families are safe and healthy!
Reminder this is the second year we are operating from 9873 W Bell Rd, Sun City, AZ 85351.
This has been a good successful change for our team!
We would like to pass on the most common tax law changes that may educate you and help you with decision making and tax planning.
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WHAT’S NEW FOR THE 2023 TAX FILING YEAR?
INDIVIDUALS
AZ WITHHOLDING
For tax year 2023, there will be a new flat tax of 2.5% for everyone .
AZ TAX CREDITS
The maximum Qualifying Charitable Organizations credit donation amount for 2023:
$421 single, married filing separate or head of household; $841 married filing joint.
The maximum Qualifying Charitable Organizations credit donation amount for 2024:
$470 single, married filing separate or head of household; $938 married filing joint.
The maximum Qualifying Foster Care Organization credit donation amount for 2023:
$526 single, married filing separate or head of household; $1,051 married filing joint.
The maximum Qualifying Foster Care Organization credit donation amount for 2024:
$587 single, married filing separate or head of household; $1,173 married filing joint.
Private School donations
For the 2023 tax year, the maximums are:
$2,609 married filing jointly, and
$1,307 filing single.
Public Schools donations
$400 Married filing jointly, $200 Single
EDUCATOR DEDUCTION
Remains at $300 for educational professionals with qualifying expenses
NEW FORM 1099K REPORTING
For 2023 , payment apps and online marketplaces are only required to send out Forms 1099-K to taxpayers who receive over $20,000 and have over 200 transactions. For tax year 2024, the IRS plans for a threshold of $5,000 to phase in reporting requirements
STANDARD DEDUCTION
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
TAX 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).
EARNED INCOME CREDITS
The maximum amount of credit:
- No qualifying children: $600
- 1 qualifying child: $3,995
- 2 qualifying children: $6,604
- 3 or more qualifying children: $7,430
GIFT TAX
The annual exclusion for gifts increases to $17,000 for calendar year 2023, up from $16,000 for calendar year 2022
MILEAGE RATES
Medical .22 cents per mile and charity .14 cents per mile
RESIDENTIAL ENERGY CREDITS
The Inflation Reduction Act of 2022 increased the Residential Clean Energy Credit to 30% and extends it until the end of 2032. This is huge news for solar customers, as the tax credit was previously at 26% for 2022 installations and scheduled to step down to 22% in 2023 before going away entirely in 2034. Better yet, Americans that installed solar in 2022 expecting a 26% credit will now be eligible for 30%. That’s an extra $1,000 in tax credit for purchasing a $25,000 solar or battery system.
The Energy efficient credit now has a $1,200 annual limit instead of the old $500 lifetime limit.
The following can be qualifying main home improvements for the tax credit:
Exterior doors, ac units, windows, insulation, skylights, furnaces, water heaters, heat pumps
ELECTRIC VEHICLES
The Inflation Reduction Act extends the Clean Vehicle Credit until the end of 2032 and creates new credits for previously-owned clean vehicles and qualified commercial clean vehicles. Tax credits include up to:
- $7,500 for the purchase of new qualified commercial clean vehicles;
- $40,000 for vehicles over 14,000 pounds; and
- the lesser of 30 percent of the price of used electric vehicles or $4,000.
Limitations apply based on the manufacturer’s suggested retail price of the vehicle. There are also limitations for the new vehicle credit based on adjusted gross income (AGI) thresholds – for single or married filing separately taxpayers, the limit is $150,000; for taxpayers filing as head of household, the limit is $225,000; and for married filing jointly, or surviving spouse taxpayers, the limit is $300,000. Reduced AGI limitations apply to the used vehicle credit.
Starting in 2024, the Inflation Reduction Act establishes a mechanism that will allow car buyers to transfer the credit to dealers at the point of sale so that it can directly reduce the purchase price.
CHILD TAX CREDIT remains at $2,000
THE IRS SOLAR TAX CREDIT remains at 30%
IRA CONTRIBUTION LIMITS have increased to $6,500 WITH $1,000 EXTRA ALLOWED FOR OVER AGE 50. For 2024 this will be going up again to $7,500.
THE IRS PIN PROGRAM IS BEING OFFERED TO ANYONE WHO WOULD LIKE TO APPLY FOR A NUMBER. THIS IS USED TO VERIFY THE IDENTITY OF THE PERSON ACTUALLY FILING THE TAX RETURN. AVAILABLE MID JANUARY
RMD (Required Minimum Distribution) update
The SECURE Act changed the RMD age to 72 for participants born on or after July 1, 1949. SECURE 2.0 further changed the age to 73 for participants born in 1951 (age 72 in 2023). Starting in 2033, the relevant age is scheduled to be age 75.
For tax years 2023 onward, you may be subject to a 25% penalty for any amount not withdrawn. That said, if you correct the issue by taking the RMD, that penalty may be reduced to 10%.
Taxpayers who skipped RMDs from inherited retirement accounts won’t owe a penalty for 2021 or 2022, IRS has waived penalties for certain heirs for 2023 due to ongoing confusion.
If you already paid the penalty for 2021, you can request a refund of that excise tax.
BUSINESSES
EMPLOYER RETENTION CREDITS
THERE IS STILL TIME TO APPLY FOR THE EMPLOYER RETENTION TAX CREDITS. YOU CAN QUALIFY EVEN IF YOU RECEIVED PPP ASSISTANCE. THIS CAN BE A GREAT BENEFIT AND COMMONLY OVERLOOKED FOR EMPLOYERS.
BUSINESS MEALS go back down to 50% deductibility and ENTERTAINMENT expenses are not deductible.
IRS MILEAGE RATE
- 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.
The IRS is continuing to concentrate their efforts in community outreach in the areas of rental property owners and small business clients. If this applies to you, please remember to keep good records of all income and business expenses as this paperwork is required to support any potential deductions claimed on your return.
It is very important to keep an accurate mileage log to support your business use of a vehicle. Just as important is proper documentation of any business meals/entertainment and per diem or travel allowances. Please be prepared to submit this documentation during tax preparation. I am always available to offer advice in any of these technical areas.
I am very disappointed to announce that QuickBooks Desktop will be phasing out in the near future. There is limited support available for this software now and a decision has not been made yet as to what direction our team will be going in on this as an alternative to this long standing software.
WEBSITE FUNCTIONALITY
I’d also like to encourage you to explore the various resources that are available on our office website. Our website continues to have increased use in our quest to accommodate more clients virtually.
Pages will continue to be updated as the tax season approaches.
” FINANCIAL CALCULATORS” are available on the website (tools for savings calculations, retirement contributions, payroll deductions, budgeting tools, credit score analysis and Earned Income Credit calculations).
Credit/Debit card payments are continued to be accepted through a payment option on the Home Page, in addition to, of course, in-office, Zelle and phone payments.
Tax Organizers for new clients as well as some commonly requested forms are available.
You may find some very useful information on the FAQ page and you may enjoy reading client comments on the TESTIMONIAL page.
If you have had a good experience with us, we would very much appreciate receiving a GOOGLE REVIEW or a CLIENT TESTIMONIAL for the website.
Another feature offered on the website is a file sharing program called “MY FIRM FILES”. This is available for anyone needing to submit sensitive data that is too large for regular email or for anyone that prefers the extra security of the encryption process. Please contact us to be issued a password.
OFFICE NEWS
We continue and encourage Zelle as a payment method for services rendered. Help us by saving on processing fees. To add some fun….those paying by Zelle get to choose a prize from our prize box if you are in the office.
PLEASE REFRAIN FROM VISITING THE OFFICE IF YOU HAVE ANY RESPIRATORY SYMPTOMS . OUR OFFICE TEAM IS PRACTICING THE SAME PROTOCOL. YOUR APPOINTMENT CAN ALWAYS BE RESCHEDULED OR CAN BE HANDLED VIRTUALLY TO REDUCE SPREAD OF ILLNESS.
We continue to offer evening, as well as Saturday tax appointments. A lot of clients have been very receptive to this extra availability.
Again, we’d like to emphasize that we offer tax appointments through ZOOM, OR PHONE for anyone who is interested. This may be a great option for those of you who have relocated, who aren’t feeling well or would like to refrain from coming into the office in person. We also continue to offer face/face appointments.
We continue to track projects and job status through a Project Management System, which our team all has access to, in the hopes of increasing efficiency.
Our office CONTINUES to offer business texting, especially for things such as appointment reminders and admin issues. However, please continue to submit tax documentation or technical tax questions through email.
I’m happy to announce you will be seeing several of the same faces and voices this year. We currently have the strongest team we’ve ever had, and we continue to grow and help as many as we can at a very reasonable price.
I’d like to reintroduce our team along with their specialties:
Linda Rozet, CPA-Corporate Taxes, Complex Individual taxes, Consults, Tax Planning, Office Management
Carole Owens-Personal Taxes, IRS issues, General Office Admin
Ida Torres-Admin Support, Scheduling & Phone Support, AZ Dept of Revenue Reporting, Special Projects
Ellen Eklund-Small Business support-Bookkeeping, Payroll, Personal Taxes
SENSITIVE STAFF NEWS
I do need to reemphasis TURNAROUND TIMES as this continues to be one of the main issues of concern that is a challenge.
The tax season is a very demanding time and there continues to be increasing new regulation that entails a tremendous amount of important work to be handled within a very short time. Therefore, if you can keep this in mind and please be patient in waiting for responses it would be of utmost appreciation. We understand the tendency is to be anxious while waiting upon tax results. We simply just ask for you to please be patient as we do the best professional job we can. Keep in mind, sometimes this can entail additional time and judgment.
We will gladly give you an ESTIMATED turnaround time at the time of your tax appointment, but this is estimated and subject to change daily.
We are generally engaged in preparing the most accurate tax returns we can, achieving the best tax results while following all applicable laws. Keep in mind we are NOT engaged to have your tax return rushed as that may very well jeopardize one of the other principles, we are required to follow…. integrity, objectivity, competency, accuracy, ethics.
It is our professional policy to generally not prepare tax returns while clients wait and not to release tax results until your pickup appointment or until your package arrives in the mail. I realize there will be some limited circumstances when this information is needed in advance, such as the decision to apply refunds to the following tax year. That can be considered an exception to the policy.
If we can all work together on these requests and policies, it will make for a much smoother tax season. Many thanks on this in advance!
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RECURRING NEWS
IRS has not announced their opening date as of yet. Stay tuned for further information.
Deadline to file the 2022 Tax Returns is scheduled for April 15th this year.
IRS allows E-filing for the most three recent tax years.
Amended tax returns are now eligible to be E-filed
We hope to hear from you soon in regards to the preparation of your tax returns. As always, your continued business is greatly appreciated! We have opened the calendar for tax appointments at this point so you can schedule whenever you are ready. Feel free to email or call with a request for a specific day and/or time for your appointment and we will try our best to accommodate that. As a reminder, evening and weekend appointments are offered. Once again, this year we will be using income tax organizers and would appreciate them being filled out as best as you can to help recap the accuracy of your return details, (especially anyone with a small business.) Even though it may not seem needed from your perspective, they are a very helpful tool as I may only talk to many of you once a year.
As another reminder, once again this year, I am requesting that we place any large special projects and prior year tax returns on hold during the Jan-April time frame unless it is extremely urgent. If you are behind in your bookkeeping or income tax filings, please contact me and make special arrangements to handle your needs. Due to the demands of the tax season, I regret that as a general rule, we do not have the resources to work on special projects or prior year tax returns during this time frame. I feel this is only fair as a courtesy to all clients trying to meet the regular income tax filing deadlines.
The options for tax preparation again this year are your own personal choice. While some feel that certain tax issues are best handled and discussed in person, others prefer submitting data electronically if your tax situation is similar to last year and if there isn’t much that warrants a new discussion.
Income tax paperwork can always be mailed, emailed, faxed, dropped off in office or drop box or delivered to us by a carrier. Returning clients are welcome to drop off unless you have rentals or self-employment. Drop off submission slips are available in office or our website.
YEAR END AND YEAR-ROUND REMINDERS
The following list is a summary of what I feel are important tasks to review before year end. A lot of these I feel are worth repeating, as many of these are frequently overlooked by many businesses and individuals each year.
INDIVIDUALS
- Mail your January mortgage payment early enough to be posted this year if you are needing deductions or HOLD your January mortgage payment to defer deductions if your itemized deductions are LIMITED this year
· Make donations this year of any unused household items
· Take advantage of the AZ School Tax Credits http://www.azdor.gov/TaxCredits.aspx
- Take advantage of the AZ Charities that provide assistance for the Working Poor Tax Credit http://www.azdor.gov/TaxCredits/QualifyingCharitableOrganizations.aspx
- Request a personal tax projection from us if you have had an issue with under-withheld taxes in the past. (The tax planning charge would be quite justified if it helps you in managing your financial affairs and eliminates year end surprises)
· Make HSA, Educational and Individual IRA contributions
· Keep better track of charity, medical and business mileage for the self-employed
- Sign up for employer flexible spending accounts (Section 125 plans) and retirement benefits (dependent care, medical, 401K)
· Make sure to use all the funds left in your flexible spending accounts
- Make 4th quarter estimated income tax payments (AZ deduction counts this year if mailed during December)
- Consider selling losing securities to benefit from the allowable capital loss deduction and to net losses against gains in the same year
· Install qualified energy efficient home improvements or solar equipment
· Submit all charity deductions, even if you are NOT itemizing your deductions
- Consider requesting employer reimbursement now for employee expenses as they are no longer deductible on your personal income taxes
· Remember that travel expenses are now deductible as eligible gambling losses
· Consider shifting income to others that may be in a lower tax bracket
· Consider a ROTH conversion to utilize the wider new income tax brackets
- Consider taking advantage of the ZERO Capital Gains rate by utilizing in full the lowest tax bracket
- Take your RMD
BUSINESSES
- Upgrade your QuickBooks Desktop
- File your corporate and partnership income taxes on time! There are now steep penalties assessed for non-filing of your income taxes.
- AZTAXES.GOV continues to be the only method accepted for filing withholding or TPT reports.
- Corporations: Generate your annual meeting minutes and any bylaw changes. IMPORTANT: All Corporations are required to have stock registers/certificates, minutes and bylaws! If you do not have these on file, contact me for a referral source.
- Corporations: File your Arizona Corporation Commission reports on a timely basis. You can sign up for e-mail reminders through their website.
· Accelerate any foreseen equipment, auto and supply purchases into this year
· Consider taking advantage of the Section 179 deduction for vehicle purchases
· Make SEP contributions
· Log in cash expenses for the year
· Document business miles traveled on your mileage logs (see me for a sample)
· Keep better track of expenses for home utilities for businesses operating from home
- Claim up to a maximum of $25 for any valid business gifts given to individuals or businesses
· Delay billing customers in December to defer revenue into January, if possible
· For cash basis businesses, pay all outstanding bills if cash flow allows
· Remember that credit card purchases are deductible in the year the items are purchased
- Make sure you are in compliance with the State Fund mandatory coverage requirements for contractors that do work for you.
- REMINDER: Workers Compensation Insurance is mandatory for all employees with owner/officers being the exception to the rule.
- File payroll and sales tax reports timely and become knowledgeable as to your filing deadlines
- Turn otherwise hobby expenses into legitimate business deductions by converting into and setting up a sole proprietorship
- Review the possibility of claiming a home office deduction under the fairly new SIMPLIFIED METHOD
EMPLOYERS
- REMINDER: Arizona requires all businesses to provide paid sick time for all employees. The minimum is 1 hour of sick time per 30 hours worked.
· Calculate any payroll bonuses or shareholder loan payments
· Sole proprietors-pay children for services rendered to shift income to a lower tax bracket
- Order a current tax table if you are a QuickBooks payroll user (not required if I enter your payroll for you)
- Report new employees to the New Hire Reporting Division (mandatory through the year) THIS HAS BEEN OVERLOOKED BY MANY BUSINESSES.
- Obtain current addresses and taxpayer identification numbers for any 1099 subcontractors, employees and previous employees (for 2023) and enter these into QuickBooks
· Reimburse employee business mileage at .655 cents per mile
· Check your files to make sure that valid I-9, W4 and A4 forms exist for every employee
- Make sure you are aware of your required tax deposit and quarterly report deadlines. I have seen excessive penalties again this year relating to late reports that could have been easily avoided. Contact me for a payroll chart if it would be helpful. It definitely helps to make sure you understand the specific payroll filing requirements for your business. I’d love to see these reduced or completely eliminated for next year.
· Consider setting up a small business profit/sharing or retirement plan.
· Consider setting up an HSA (Health Savings Account) for employees.
· Re-evaluate the best business structure for your company under the new Tax Reform Act
· Continued 20% QBI deduction for small businesses
- Review the criteria for the Work Opportunity Hiring Tax Credits-targeted groups that qualify are: certain veterans, SSI recipients, summer youth, former inmates
- Consider showing earned income for children to enable them to receive IRA contributions on the earned income.
Hopefully, I have suggested some items that can be of assistance to you or your business and can possibly help save some money. If you have any questions or comments, don’t hesitate to call.
Lastly, you will periodically be hearing from me throughout tax season as I receive any important tax updates!
Thank you all for your continued support and ongoing trust and business!
Hope to see or hear from you soon ……….
Warmest Regards and Happy Holidays,
Linda, Carole, Ida & Ellen
LINDA ROZET, CPA, PC