Current Tax Issues
Current Tax Issues
EDUCATOR EXPENSE DEDUCTION
Eligible educators can deduct up to $300 worth of qualified expenses from their income for 2022, up from $250 in 2021. Qualified expenses include purchases such as: books, classroom supplies, technology and computer software used in the classroom during the process of teaching students.
BUSINESS MEALS DEDUCTION
Beginning January 1, 2023, the deduction for business meals including office parties, etc reverts back to 50% (from 100% in 2021 and 2022). Click here for frequently asked questions about meals and entertainment rules.
REQUIRED MINIMUM DISTRIBUTIONS (RMD) FROM TAX DEFERRED ACCOUNTS
The law changed on January 1, 2023 to defer the requirement to take an RMD until you turn age 73. Clickhere for more information.
INFLATION-ADJUSTED INCOME TAX RATES, LIMITS AND MORE
Review this comprehensive document that provides income tax rates, standard deduction limits, mileage allowances, luxury depreciation limits, employee benefit plan limits, IRA limits, HSA limits, education credit limits, high income individual thresholds and more.
ENERGY-CONSCIOUS PURCHASES CREDIT
For 2022, qualifying property can be found here. The credit is 10% of the costs for principal residence only, up to a $500 lifetime credit. If you did not previously deduct this full $500 on any year's Form 5695, provide a copy of the bills you incurred for these purchases.
For 2023, even if you took the $500 lifetime credit through 12/31/22, a $1,200 annual credit is allowed for 30% of the qualified energy efficient improvements installed during the year but for both your principal residence and any other residences (not investment properties though). An additional credit amount of $150 is available for a home energy audit. After 2024, identification numbers will be required with respect to specified property items place in service.
For electric vehicles, for 2022, provide us with a copy of the invoice for the purchase of any new vehicle to determine the proper credit for your federal, or possibly state too, tax return. A maximum nonrefundable credit of $7,500 is available to buyers of certain new electric vehicles. Vehicles sold after 8/16/22 only qualify for the credit if their final assembly occurs in North America, with a transition rule for contracts before 8/16 and possession afterwards. Click here to enter the VIN number and model year to see if it qualifies.
After 2022, qualifying vehicles must have a minimum battery capacity of seven kilowatt hours (up from a four-hour minimum). This credit will then apply to previously owned vehicles as well as new vehicles. The credit will no longer be allowed:
- For vehicles with (MSRP) over $55,000 ($80,000 for vans, sport utility vehicles, and pickups); and
- If the taxpayer’s Modified Adjusted Gross Income (MAGI) (or, if lower, the MAGI for the preceding year) exceeds $300,000 for taxpayers filing jointly, $225,000 for head of household, or $150,000 for other taxpayers.
For previously owned vehicles, the credit is 30% of the sales price up to $4,000 and only for taxpayers with MAGI under $150,000 if filing jointly, $112,500 for head of household, and $75,000 for single. To qualify, a used clean vehicle's model year must be at least two years earlier than the calendar year in which the taxpayer acquires it and purchased from a dealer for less than $25,000.
Contact us if you would like to discuss how these laws might impact you.