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by Larson Accounting
28 de August de 2023
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Tax 2023

Interest rates increase for the fourth quarter 2023

The Internal Revenue Service today announced that interest rates will increase for the calendar quarter beginning Oct.1, 2023.

For individuals, the rate for overpayments and underpayments will be 8% per year, compounded daily. Here is a complete list of the new rates:

  • 8% for overpayments (payments made in excess of the amount owed), 7% for corporations.
  • 5.5% for the portion of a corporate overpayment exceeding $10,000.
  • 8% for underpayments (taxes owed but not fully paid).
  • 10% for large corporate underpayments.

Under the Internal Revenue Code, the rate of interest is determined on a quarterly basis. For taxpayers other than corporations, the overpayment and underpayment rate is the federal short-term rate plus 3 percentage points.

Generally, in the case of a corporation, the underpayment rate is the federal short-term rate plus 3 percentage points and the overpayment rate is the federal short-term rate plus 2 percentage points. The rate for large corporate underpayments is the federal short-term rate plus 5 percentage points. The rate on the portion of a corporate overpayment of tax exceeding $10,000 for a taxable period is the federal short-term rate plus one-half (0.5) of a percentage point.

The interest rates announced today are computed from the federal short-term rate determined during July 2023. See the revenue ruling for details.

Revenue Ruling 2023-17PDF announcing the rates of interest,will appear in Internal Revenue Bulletin 2023-37, dated Sep. 11, 2023.

Source: IRS-2023-154, Aug. 25, 2023

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by Larson Accounting
28 de August de 2023
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IRS announces administrative transition period for new Roth catch up requirement; catch-up contributions still permitted after 2023

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

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by Larson Accounting
28 de August de 2023
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Treasury and IRS issue proposed regulations on reporting by brokers for sales or exchanges of digital assets; new steps designed to end confusion, help taxpayers, aid high-income compliance work

The Department of the Treasury and the Internal Revenue Service today issued proposed regulations that would require brokers to report sales and exchanges of digital assets by customers.

The proposed regulations cover a range of digital asset issues where there have been questions, including defining brokers and requiring proceeds to be reported to the IRS on new Form 1099-DA.

“These proposed regulations are designed to help end confusion involving digital assets and provide clear information and reporting certainty for taxpayers, tax professionals and others,” said IRS Commissioner Danny Werfel. “A key part of this effort fits in with the larger IRS compliance focus on wealthy taxpayers. We need to make sure digital assets are not used to hide taxable income, and the proposed regulations are designed to provide a clearer line of sight into activities by high-income people as well as others using them. We want to make sure everyone pays what they owe under the tax laws, and our research and experience demonstrate that third-party reporting improves compliance. We welcome comments on these proposed regulations as we work to finalize the rules in this complex and evolving area.”

For sales or exchanges of digital assets that take place on or after Jan. 1, 2025, the proposed regulations would require brokers, including digital asset trading platforms, digital asset payment processors and certain digital asset hosted wallet providers, to report gross proceeds on a newly developed Form 1099-DA and to provide payee statements to customers. Brokers, in certain circumstances, would also be required to include gain or loss and basis information for sales that take place on or after Jan. 1, 2026, on these information returns and statements, so that customers have the information they need to prepare their tax returns.

The proposed regulations would also require real estate reporting persons, such as title companies, closing attorneys, mortgage lenders and real estate brokers, who are treated as brokers for dispositions of digital assets, to report the disposition of digital assets paid as consideration by real estate purchasers to acquire real estate in real estate transactions that close on or after Jan. 1, 2025. These real estate reporting persons would also be required to include on Form 1099-S the fair market value of digital assets paid to sellers of real estate in real estate transactions that close on or after Jan. 1, 2025.

Finally, the proposed regulations set forth gain (or loss) computation rules, basis determination rules and backup withholding rules applicable to digital asset sale and exchange transactions and propose many useful definitions.

Written comments regarding the proposed regulations must be submitted by Oct. 30, 2023. A public hearing has been scheduled for Nov. 7, 2023, with a second public hearing date for Nov. 8, 2023, if the number of requests to speak at the hearing exceed the number that can be accommodated in one day.

Source: IRS-2023-153, Aug. 25, 2023

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by Larson Accounting
21 de August de 2023
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ALERT

IRS encourages truckers to e-file by August 31 tax payment deadline

The Internal Revenue Service today encouraged all those who have registered, or are required to register, large trucks and buses with a taxable gross weight of 55,000 pounds or more to e-file Form 2290, Heavy Highway Vehicle Use Tax ReturnPDF, by the Aug. 31, 2023, payment deadline for vehicles first used in July 2023.

The heavy highway vehicle use tax is an annual federal excise tax on heavy highway motor vehicles operating on public highways.

The filing deadline is not tied to the vehicle registration date. Taxpayers must file Form 2290 by the last day of the month following the month in which the taxpayer first used the vehicle on a public highway during the taxable period, regardless of the vehicle’s registration renewal date.

Taxpayers that have 25 or more taxed vehicles registered in their name must e-file Form 2290 and pay the tax. However, on vehicles they expect to use for 5,000 miles or less (7,500 for farm vehicles), they’re required to file a return, but pay no tax. If the vehicle exceeds the mileage use limit during the tax period, the tax becomes due.

Vehicles first used on a public highway during the month of July 2023 must file Form 2290 and pay the appropriate tax between July 1, 2023, and August 31, 2023. For additional taxable vehicles placed on the road during any month other than July, the tax should be prorated for the months during which it was in service. IRS.gov has a table to help determine the filing deadline.

File and pay the easy way

Get the facts

Gather the required information

  • Vehicle Identification Number(s).
  • Employer Identification Number (EIN) – not a Social Security number. It can take about four weeks to establish a new EIN. See How to Apply for an EIN.
  • Taxable gross weight of each vehicle.

Filing options

  • All Form 2290 filers are encouraged to e-file, a list of IRS-approved e-file providers is on IRS.gov.
  • E-file is required when reporting 25 or more vehicles on Form 2290.
  • A watermarked Schedule 1 is sent within minutes after acceptance of an e-filed return.
  • If filing by mail, ensure that the correct mailing address is used.
  • Mail filers will receive their stamped Schedule 1 within 6 weeks after the IRS receives the form.

Payment options

More information:

Source: IRS-2023-149, Aug. 17, 2023

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by Larson Accounting
21 de August de 2023
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ALERTALERT

New school year reminder to educators; maximum educator expense deduction is $300 in 2023

WASHINGTON – As the new school year begins, the Internal Revenue Service reminds teachers and other educators that they’ll be able to deduct up to $300 of out-of-pocket classroom expenses for 2023 when they file their federal income tax return next year.

This is the same limit that applied in 2022, the first year this provision became subject to inflation adjustment. Before that, the limit was $250. The limit will rise in $50 increments in future years based on inflation adjustments.

This means that an eligible educator can deduct up to $300 of qualifying expenses paid during the year. If they’re married and file a joint return with another eligible educator, the limit rises to $600. But in this situation, not more than $300 for each spouse.

Who qualifies?

Educators can claim this deduction, even if they take the standard deduction. Eligible educators include anyone who is a kindergarten through grade 12 teacher, instructor, counselor, principal or aide who worked in a school for at least 900 hours during the school year. Both public and private school educators qualify.

What’s deductible?

Educators can deduct the unreimbursed cost of:

  • Books, supplies and other materials used in the classroom.
  • Equipment, including computer equipment, software and services.
  • COVID-19 protective items to stop the spread of the disease in the classroom. This includes face masks, disinfectant for use against COVID-19, hand soap, hand sanitizer, disposable gloves, tape, paint or chalk to guide social distancing, physical barriers, such as clear plexiglass, air purifiers and other items recommended by the Centers for Disease Control and Prevention.
  • Professional development courses related to the curriculum they teach or the students they teach. But the IRS cautions that, for these expenses, it may be more beneficial to claim another educational tax benefit, especially the lifetime learning credit. For details, see Publication 970, Tax Benefits for Education, particularly Chapter 3.

Qualified expenses don’t include the cost of home schooling or for nonathletic supplies for courses in health or physical education. As with all deductions and credits, the IRS reminds educators to keep good records, including receipts, cancelled checks and other documentation.

For 2022 tax returns being filed now: Don’t forget to claim educator expenses

For those who received a tax filing extension, qualify for a disaster extension, or for any other reason are still working on their 2022 return, the IRS reminds educators that the rules for claiming the deduction are the same as they are for 2023. For those who obtained an extension, the filing deadline is Oct. 16, 2023. But taxpayers can avoid processing delays by filing before that date.

File electronically when ready. Tax-filing software uses a question-and-answer format that makes doing taxes easier. Whether a return is self-prepared or prepared with the assistance of a tax professional or trained community volunteer, the IRS urges everyone to file electronically and choose direct deposit for refunds. For details, visit IRS.gov/efile.

In addition, the IRS urges anyone who owes taxes to choose the speed and convenience of paying electronically, such as with IRS Direct Pay, a free service available only on IRS.gov. For information about this and other payment options, visit IRS.gov/payments.

Source: IRS-2023-150, Aug. 17, 2023

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by Larson Accounting
14 de August de 2023
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News

Looking for a new job in accounting? Why upskilling is a must

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

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by Larson Accounting
8 de August de 2023
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NewsNewsNewsNewsNewsNewsNews

IRS launches paperless processing initiative

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:

Source: IRS, August 2023

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by Larson Accounting
8 de August de 2023
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IRS: Builders of qualified new energy efficient homes might qualify for an expanded tax credit under Section 45L

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

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