WASHINGTON — Today, the Internal Revenue Service announced an administrative transition period that extends until 2026 the new requirement that any catch-up contributions made by higher‑income participants in 401(k) and similar retirement plans must be designated as after-tax Roth contributions.

At the same time, the IRS also clarified that plan participants who are age 50 and over can continue to make catch‑up contributions after 2023, regardless of income.

Today’s announcements were included in Notice 2023-62PDF, now posted on IRS.gov. This notice provides initial guidance for section 603 of the SECURE 2.0 Act, enacted in December 2022. Under that provision, starting in 2024, the new Roth catch-up contribution rule applies to an employee who participates in a 401(k), 403(b) or governmental 457(b) plan and whose prior-year Social Security wages exceeded $145,000.

The administrative transition period will help taxpayers transition smoothly to the new Roth catch-up requirement and is designed to facilitate an orderly transition for compliance with that requirement. The notice also clarifies that the SECURE 2.0 Act does not prohibit plans from permitting catch-up contributions, so plan participants who are age 50 and over can still make catch-up contributions after 2023.

The Treasury Department and the IRS plan to issue future guidance to help taxpayers, and the notice describes several positions that are expected to be included. In addition, the notice invites public comment on the matters discussed in the notice and suggestions for the future. The notice provides details on how to submit comments.

Source: IRS-2023-155, Aug. 25, 2023

In today’s challenging, tech-driven environment, accounting firms are increasingly thinking outside of the box and looking to hire talent with additional skillsets. Are you ideally positioned to compete?

Upskilling can be a great way to unlock growth opportunities and land your dream job. Upskilling, which is essentially adding additional training or education to further develop your current skills, is obviously not a new concept but it has perhaps never been easier thanks to the rise of online resources that allow for on-demand learning and greater networking capabilities.

Both employers and job seekers are placing a greater focus on additional skillsets. Therefore, underestimating the importance of upskilling could place you at a disadvantage in your job search and hamper your ability to land the job, and pay, you desire.

Consider this: A Gallup survey, commissioned by Amazon, found that “upskilling is becoming a sought-after employee benefit and powerful attraction tool for employers amid the current labor shortage.”

According to the “American Upskilling Study,” upskilling is associated with an additional 8.6 percent boost in annual income (about $8,000 on average), higher job satisfaction overall, and an increased standard of living. In fact, 30 percent of workers surveyed said they were able to move into new, higher-paying jobs after gaining new skills.

And employers are recognizing that upskilling opportunities can help them better attract and retain talent. More than half (65 percent) of workers surveyed said the opportunity to participate in an upskilling program was an “extremely” or “very” important factor in deciding to take a new job.

The Impacts of Technology

Firms looking to drive greater efficiencies, expand bandwidth, and better serve clients are increasingly turning to technology and greater automation capabilities. As firms look to automate many manual tasks they will no doubt seek job candidates that possess the skillsets needed to provide more proactive, strategic advice.

According to “The Future of Jobs Report 2023” by the World Economic Forum, survey respondents predict that nearly half (42 percent) of business tasks will be automated by 2027. Task automation in 2027 is expected to vary from 35 percent of reasoning and decision-making, to 65 percent of information and data processing.

Survey respondents also predict that greater automation and the rise of digitalization will result in some job losses. In fact, surveyed organizations predict 26 million fewer jobs by 2027 in data entry, accounting, bookkeeping and payroll clerks; administrative and executive secretaries; and record-keeping and administrative roles, including cashiers and ticket clerks.

In-Demand Skillsets

So what are the skillsets that employers are looking for in a job candidate? Based on research from both LinkedIn and the World Economic Forum, the following 10 skillsets are among those that made that the list:

• Analytical thinking
• Creative thinking
• Technology literacy
• Leadership
• Communication
• Team work
• Problem solving
• Project management
• Talent management
• Customer service

“Skills that help a business not only run efficiently but also reach and retain customers are the ones companies need most right now. Learning and demonstrating the most up-to-date skills in customer service, sales, project management, research, or marketing can help you stand out as in demand talent and grow your career and help businesses thrive no matter the macro-environment,” stated the “LinkedIn 2023 Most In-Demand Skills” report.

How to Upskill

Participating in formal education and training is no doubt one way job seekers can upskill themselves but taking a step back and first outlining a strategy may prove beneficial. Below are some helpful tips to follow when looking to upskill yourself:

1. Start by thinking about what you are looking to achieve. What is your goal? What are you hoping to achieve in your professional career?
2. Identify the skillsets you may lack or need to improve upon. Looking at the job descriptions for your desired position can be a great way to identify skills you may need to develop.
3. Now it’s time to create a plan. Think about different ways you can obtain the necessary education or training and set your budget. Remember that there are a lot of free online resources that can be helpful.
4. Once you’ve started learning the skillsets begin putting them to use. If you’re working while searching for a new job, try testing out your new skills in your current job to hone your skills and increase your confidence as you look to advance your career and ultimately land your dream job.

In today’s business environment it is becoming increasingly vital to upskill yourself to remain competitive in your job search. Ramping up your skillsets and following the right job search tipscan help you land the job you desire. If you’re interested in learning more about career growth opportunities, visit the Larson Accounting Group.

Source: AMPLY

Taxpayers will have the option to go paperless for IRS correspondence by 2024 filing season, IRS to achieve paperless processing for all tax returns by filing season 2025

FS-2023-18, August 2023

IRS paperless processing initiative will eliminate up to 200 million pieces of paper annually, cut processing times in half, and expedite refunds by several weeks

Paper-based processes have long hampered the IRS and frustrated taxpayers. The challenges created by paper are two-fold: taxpayers are unable to digitally submit many forms and correspondence beyond their annual 1040 tax return, and the IRS is unable to digitally process paper tax returns it receives. For decades, taxpayers had to respond to notices for things like document verification through the mail, and IRS employees had to manually enter numbers from paper returns into computers one digit at a time, creating significant delays for taxpayers and challenges for IRS staff.

The IRS receives about 76 million paper tax returns and forms, and 125 million pieces of correspondence, notice responses, and non-tax forms each year, and its limited capability to accept these forms digitally or digitize paper it receives has prevented the IRS from delivering the world-class service taxpayers deserve. The IRS also has more than 1 billion historical documents, which costs $40 million per year to store.

Thanks to Inflation Reduction Act resources, taxpayers are now able to respond to more notices online, and the IRS has made significant progress adopting new technology that automates the scanning of millions of paper returns. As the next phase of its modernization, the IRS is accelerating paperless processing efforts. Using IRA resources, the IRS is launching an ambitious plan to ensure that by filing season 2024, taxpayers will be able to go paperless if they choose to do so, and by filing season 2025, the IRS will achieve paperless processing digitizing all paper-filed returns when received. In effect, this means all paper will be converted into digital form as soon as it arrives at the IRS.

Filing season 2024: Taxpayers will be able to go paperless

• Taxpayers will be able to digitally submit all correspondence, non-tax forms, and responses to notices; as a result, the IRS estimates more than 94% of individual taxpayers will no longer ever need to send mail to the IRS. Taxpayers use non-tax forms to request or submit information on a range of topics, including identity theft and proof that they are eligible for key credits and deductions to help low-income households. Achieving this milestone will enable up to 125 million paper documents to be submitted digitally per year. Taxpayers who want to submit paper returns and correspondence can continue to do so.
• Taxpayers will be able to e-file 20 additional tax forms. Achieving this milestone will enable up to 4 million additional tax documents to be filed digitally every year. This includes amendments to Forms 940, 941, 941-SS and 941 (PR), which are some of the most common forms taxpayers file when amending returns.
• At least 20 of the most used non-tax forms will be available in digital, mobile friendly formats that make them easy for taxpayers to complete and submit. These forms will include a Request for Taxpayer Advocate Service Assistance, making it easier for taxpayers to get the help they need.

Filing season 2025: IRS achieves paperless processing for tax returns

• By filing season 2025, an additional 150 of the most used non-tax forms will be available in digital, mobile friendly formats. An estimated 15 percent of Americans rely solely on mobile phones for their Internet access—they do not have broadband at home—and making forms available in mobile-friendly formats is key to serving these taxpayers.
• IRS will digitally process all paper-filed tax and information returns. Achieving this milestone will enable up to 76 million paper documents to be processed digitally every year, improving service, cutting processing times in half, and expediting taxpayer refunds by several weeks.
• Half of paper-submitted correspondence, non-tax forms, and notice responses will be processed digitally. Achieving this milestone will enable up to 60 million paper documents to be processed digitally every year. All paper documents—correspondence, non-tax forms, and notice responses–will be processed digitally by filing season 2026.
• Up to 1 billion historical documents will be digitized, improving customer service, giving taxpayers access to their data, and ultimately saving IRS approximately $40 million in annual storage costs.

 Paperless processing is the key to unlocking service improvements

• Digitization has far-reaching implications for improving IRS service. Digitizing paper returns will eliminate errors that result from manually inputting data from paper returns, which will speed up processing, reduce storage costs, and allow IRS to focus more resources on customer service.
• Once paper returns are digitized, extracting the data will enable IRS customer service employees to more quickly and accurately answer taxpayer questions and resolve issues. Customer service employees do not currently have easy access to the information from paper returns and other correspondence submitted by mail. Digitization and data extraction will give them access to that information they need to better serve taxpayers.
• When combined with an improved data platform, digitization and data extraction will enable data scientists to implement advanced analytics and pattern recognition methods to pursue cases that can help address the tax, including wealthy individuals and large corporations using complex structures to evade taxes they owe.

More information:

• Remarks by IRS Commissioner Danny Werfel on the paperless processing initiative

Source: IRS, August 2023

The Internal Revenue Service reminds eligible contractors who build or substantially reconstruct qualified new energy efficient homes that they might qualify for a tax credit up to $5,000 per home.

The actual amount of the credit depends on eligibility requirements such as the type of home, the home’s energy efficiency and the date when someone buys or leases the home. This important credit was expanded as part of the Inflation Reduction Act of 2022.

Eligibility for builders and homes

To qualify, eligible contractors must construct or substantially reconstruct a qualified new energy efficient home. They also must own the home and have a basis in it during the construction, and they must sell or lease the home to a person for use as a residence.

The homes must also be specified categories of single-family (including manufactured) or multifamily homes under Energy Star programs, be located in the United States, and meet applicable energy saving requirements based on home type and acquisition date.

Requirements and credit amounts for 2023 and after

For homes acquired in 2023 through 2032, the credit amount ranges from $500 to $5,000, depending on the standards met, which include:

• Energy Star program requirements
• Zero energy ready home program requirements
• Prevailing wage requirements

Requirements and credit amounts before 2023

For homes acquired before 2023, the credit amount is $1,000 or $2,000, depending on the standards met, which include:

• Certifying that the home has an annual level of heating and cooling energy consumption that is at least 50% (or 30% for certain manufactured homes) less than that of a comparable home that meets certain energy standards, with building envelope component improvements accounting for at least 1/5 (or 1/3 for certain manufactured homes) of the reduction
• Meeting certain federal manufactured home rules
• Meeting certain Energy Star requirements

Properly claiming the credit

Eligible contractors must meet all requirements under Internal Revenue Code Section 45L prior to claiming the credit. Guidance interpreting Section 45L may be found in Notice 2008-35 (and Notice 2008-36, for manufactured homes).

Use Form 8908, Energy Efficient Home Credit, to claim the Section 45L credit.

The IRS encourages eligible contractors to practice good recordkeeping of all documents required to support a claim for the Section 45L credit.

Source: IRS-2023-142, Aug. 7, 2023