Estimated Taxes:

If you owe taxes to IRS, you must pay it in advance (Estimated Payments) to avoid late payment penalties or the “Non-Payment of Estimated Taxes” penalty. IRS/States are extremely strict now with prompt payment of Estimated Taxes. We have emailed you ES coupons for 2023 already.

If you have Affordable Care Act/Obamacare medical insurance, then you will receive a form 1095A and we’ll need that form to file your taxes.

Employers please file:

W2 forms and 1099’s (1099K, 1099 Misc, 1099 NEC, etc.) Deadline: January 31, 2024.

Business Owners:

Please email bank statements, canceled checks, credit card statements, and 1099’s ASAP but not later than January 25, 2024.

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 lowest rate is 10% for incomes of single individuals with incomes of $11,000 or less ($22,000 for married couples filing jointly).

The tax year 2023 maximum Earned Income Tax Credit amount is $7,430 for qualifying taxpayers who have three or more qualifying children, up from $6,935 for tax year 2022. For tax year 2023, participants who have self-only coverage in a Medical Savings Account, the plan must have an annual deductible that is not less than $2,650, up $200 from tax year 2022; but not more than $3,950, an increase of $250 from tax year 2022.

For self-only coverage, the maximum out-of-pocket expense amount is $5,300, up $350 from 2022. For tax year 2023, for family coverage, the annual deductible is not less than $5,300, up from $4,950 for 2022; however, the deductible cannot be more than $7,900, up $500 from the limit for tax year 2022. For family coverage, the out-of-pocket expense limit is $9,650 for tax year 2023, an increase of $600 from tax year 2022.

Capital gain refers to the profit made from the sale of capital assets, such as stocks, houses, cars, or other types of investments. Capital losses, on the other hand, are assets that have been sold for less than their original purchase price or cost basis. 

Capital gains tax?

A capital gains tax is a tax on the profit from the sale of an asset. How the capital gain is taxed depends on filing status, taxable income and how long the asset was owned before selling. 

Capital gains taxes apply to the sale of capital assets for profit. This can include investments such as stocks, bonds, cryptocurrency, real estate, cars, boats, and other tangible items.

Short-term Capital gains taxes

Short-term Capital gains taxes on assets held for a year or less correspond to ordinary income tax brackets: 10%, 12%, 22%, 24%, 32%, 35% or 37%.

Capital gains taxes apply to the sale of capital assets for profit. This can include investments such as stocks, bonds, cryptocurrency, real estate, cars, boats, and other tangible items.

2023 Long-Term Capital Gains Tax Rates and Brackets

The capital gains tax rate is 0%, 15% or 20% on most assets held for longer than a year. 

Some investors may owe an additional 3.8% of either your net investment income or the amount by which your modified adjusted gross income exceeds the amounts listed below — whichever is smaller. 
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The income thresholds that might make investors subject to the net investment income tax are:

• Single or head of household: $200,000.

• Married, filing jointly: $250,000.

• Married, filing separately: $125,000.Qualifying widow(er) with dependent child: $250,000.

Estates of decedents who die during 2023 have a basic exclusion amount of $12,920,000, up from a total of $12,060,000 for estates of decedents who died in 2022.

For active participants in any pension plan: Income Limits-Single or Head of Household income $73,000-$83000 Contribution-$6500Income limits-Married filing jointly income $116,000-$136000 Contribution-$6500

For those with IRA’s those who do not participate in another plan for single: $138,000-153000 and MFJ: $218,000-$228,000.

Catch-up limit if you are 50 or older is $1,000.00.

The HSA contribution limits for 2023 are $3,850 for self-only coverage and $7,750 for family coverage. Those 55 and older can contribute an additional $1,000 as a catch-up contribution.

The IRS announced the tax year 2023 Annual Inflation Adjustments (IRA) for more than 60 tax provisions including the tax rate schedules, some EV credits, House energy-efficient improvement credits, and other tax changes.

Residential Energy Credits

You can claim either the Energy Efficient Home Improvement Credit or the Residential Energy Clean Property Credit for the year when you make qualifying improvements.

Homeowners who improve their primary residence will find the most opportunities to claim a credit for qualifying expenses. Renters may also be able to claim credits, as well as owners of second homes used as residences.

The credits are never available for improvements made to homes that you don’t use as a residence.

Energy Efficient Home Improvement Credit

These expenses may qualify if they meet requirements detailed on energy.gov:

• Exterior doors, windows, skylights, and insulation materials
• Central air conditioners, water heaters, furnaces, boilers, and heat pumps
• Biomass stoves and boilers
• Home energy audits

The amount of the credit you can take is a percentage of the total improvement expenses in the year of installation:

• 2022: 30%, up to a lifetime maximum of $500
• 2023 through 2032: 30%, up to a maximum of $1,200 (heat pumps, biomass stoves and boilers have a separate annual credit limit of $2,000), no lifetime limit..

Residential Clean Energy Credit

These expenses may qualify if they meet requirements detailed on energy.gov:

• Solar, wind, and geothermal power generation
• Solar water heaters
• Fuel cells
• Battery storage (beginning in 2023)

The amount of the credit you can take is a percentage of the total improvement expenses in the year of installation:

• 2022 to 2032: 30%, no annual maximum or lifetime limit
• 2033: 26%, no annual maximum or lifetime limit
• 2034: 22%, no annual maximum or lifetime limit

You may qualify for a credit up to $7,500 under Internal Revenue Code Section 30D if you buy a new, qualified plug-in EV or fuel cell electric vehicle (FCV). The Inflation Reduction Act of 2022 changed the rules for this credit for vehicles purchased from 2023 to 2032.

The credit is available to individuals and their businesses.

To qualify, you must:

• Buy it for your own use, not for resale.
• Use it primarily in the U.S.

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

You can use your modified AGI from the year you take delivery of the vehicle or the year before, whichever is less. If your modified AGI is below the threshold in 1 of the two years, you can claim the credit.

The credit is nonrefundable, so you can’t get back more on the credit than you owe in taxes. You can’t apply any excess credit to future tax years.

The amount of the credit depends on when you placed the vehicle in service (took delivery), regardless of the purchase date.

For vehicles placed in service from January 1 to April 17, 2023:

• $2,500 base amount
• Plus $417 for a vehicle with at least 7 kilowatt hours of battery capacity
• Plus $417 for each kilowatt hour of battery capacity beyond 5 kilowatt hours
• Up to $7,500 total

In general, the minimum credit will be $3,751 ($2,500 + 3 times $417), the credit amount for a vehicle with the minimum 7-kilowatt hours of battery capacity.

For vehicles placed in service on April 18, 2023, and after:

Vehicles will have to meet all of the same criteria listed above, plus meet new critical mineral and battery component requirements for a credit up to:

• $3,750 if the vehicle meets the critical minerals requirement only.
• $3,750 if the vehicle meets the battery components requirement only.
• $7,500 if the vehicle meets both.

A vehicle that doesn’t meet either requirement will not be eligible for credit.

Qualified vehicles

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. 
  • 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
• Meet critical mineral and battery component requirements (as of April 18, 2023).

The sale qualifies only if:

• You buy the vehicle new.
• The seller reports required information to you and to the IRS at the time of sale.
  • Sellers are required to report your name and taxpayer identification number to the IRS for you to be eligible to claim the credit.

Federal Tax Credit Up To $7,500!

All-electric, plug-in hybrid, and fuel cell electric vehicles purchased new in 2023 or after may be eligible for a federal income tax credit of up to $7,500.

The availability of the credit will depend on several factors, including the vehicle’s MSRP, its final assembly location, battery component and/or critical minerals sourcing, and your modified adjusted gross income (AGI).

Learn more about requirements.

Qualified vehicles purchased before 2023 may be eligible for a similar tax credit of up to $7,500.
Pre-owned vehicles purchased in 2023 or after are eligible for a tax credit of up to $4,000.
State and/or local tax incentives may also apply.

Each year, an IRA owner age 70½ or over, when the distribution is made, can exclude from gross income up to $100,000 of these QCDs. For a married couple, if both spouses are age 70½ or over when the distributions are made and both have IRAs, each spouse can exclude up to $100,000 for a total of up to $200,000 per year.

• The QCD option is available regardless of whether an eligible IRA owner itemizes deductions on Schedule A. Transferred amounts are not taxable, and no deduction is available for the transfer.

What are Required Minimum Distributions? (updated March 14, 2023)

Required Minimum Distributions (RMDs) are minimum amounts that IRA and retirement plan account owners generally must withdraw annually starting with the year they reach age 72 (73 if you reach age 72 after Dec. 31, 2022). Retirement plan account owners can delay taking their RMDs until the year in which they retire unless they’re a 5% owner of the business sponsoring the plan. Owners of traditional IRA, SEP and SIMPLE IRA accounts must begin taking RMDs once the account holder is age 72 (73 if you reach age 72 after Dec. 31, 2022), even if they’re retired.

Retirement plan participants and IRA owners, including owners of SEP IRAs and SIMPLE IRAs, are responsible for taking the correct amount of RMDs on time, every year from their accounts, and they may face stiff penalties for failure to take RMDs.

For defined contribution plan participants, or IRA owners, who die after December 31, 2019, (with a delayed effective date for certain collectively bargained plans), the SECURE Act requires the entire balance of the participant’s account be distributed within ten years. This 10-year rule has an exception 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 employee or IRA account owner. The new 10-year rule applies regardless of whether the participant dies before, on, or after, the required beginning date. The required beginning date is the date an account owner must take their first RMD.

See Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs), and Retirement Topics – Beneficiary for more information on when beneficiaries must start receiving RMDs.

What types of retirement plans require minimum distributions? (updated March 14, 2023)

The RMD rules apply to all employer sponsored retirement plans, including profit-sharing plans, 401(k) plans, 403(b) plans, and 457(b) plans. The RMD rules also apply to traditional IRAs and IRA-based plans such as SEPs, SARSEPs, and SIMPLE IRAs.

The RMD rules do not apply to Roth IRAs while the owner is alive. However, RMD rules do apply to the beneficiaries of Roth 401(k) accounts.

When must I receive my required minimum distribution from my IRA? (updated March 14, 2023)

You must take your first required minimum distribution for the year in which you reach age 72 (73 if you reach age 72 after Dec. 31, 2022). However, you can delay taking the first RMD until April 1 of the following year. If you reach age 72 in 2022, you must take your first RMD by April 1, 2023, and the second RMD by Dec. 31, 2023.

If you reach age 72 in 2023, your first RMD for 2024 (the year you reach 73) is due by April 1, 2025.

A different deadline may apply to RMDs from pre-1987 contributions to a 403(b) plan (see FAQ 5 below).

How is the amount of the required minimum distribution calculated?

Generally, a RMD is calculated for each account by dividing the prior December 31 balance of that IRA or retirement plan account by a life expectancy factor that the IRS publishes in Tables in Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs). Choose the life expectancy table to use based on your situation.

How to calculate RMD distributions?

For simplicity’s sake, let’s assume a hypothetical investor has one IRA with an account balance of $100,000.00 as of December 31 of the prior year. To calculate the RMD the year they turn 73, they would use a life expectancy factor of 26.5. So, the RMD would be $100,000.00 divided by 26.5, or $3,773.58.