Tax season has historically brought rule changes for businesses and individual taxpayers. Keeping up with current and future tax changes helps companies maximize tax benefits and lower taxable income. Being proactive about tax planning is key in navigating the often complicated and changing tax laws.
Key changes to make note of:
A 100% temporary allowance deduction for restaurant business meals for 2022 reverts to 50% for 2023.
The 2023 rate for business miles driven is 65.5 cents, up 3 cents from the 2022 midyear increase setting the 62.5 cents rate for the second half of the tax year.
The maximum employee transportation fringe benefit monthly limitation for transportation in a commuter highway vehicle, as well as any transit pass, is $300, as well as $300 monthly limitation for qualified parking.
The 100% bonus depreciation will begin fading out this year. Changes are effective January 1, 2023. The first-year bonus depreciation deduction decreases as follows:
80% for property placed in service during 2023.
60% for property placed in service during 2024.
40% for property placed in service during 2025.
20% for property placed in service during 2026.
Most of the tax rules that were put into place during the COVID-19 pandemic have already expired or are near expiration.
After pushback from the public, small business owners and freelancers who receive more than $600 from third-party digital platforms, such as Amazon, Etsy, eBay, PayPal, and Venmo, were scheduled to receive Form 1099-K this year. This requirement has been postponed for one year, so if you are due a Form 1099-K, expect to receive it in 2024 for the 2023 tax year.
On December 29, 2022, President Biden signed The Consolidated Appropriations Act, 2021 (Section 113 of Division EE P.L. 116-260), into law. Included was a Work Opportunity Tax Credit (WOTC) extension. Employers who hire long-term unemployed individuals (unemployed for 27+ weeks) are eligible for a credit, which is equal to 40 percent of the first $6,000 of wages paid to a new hire, through December 31, 2025. The employer has 28 calendar days from the new employee’s start date to submit Form 8850 to a local agency located in the state in which the business is located and where the employee works.
The Inflation Reduction Act, signed into law in August 2022, included several tax credits and business deductions. The Energy-Efficient Commercial Buildings Deduction now allows business owners to claim larger deductions per square foot of qualified project renovations. Additionally, tax-exempt organizations such as charities and religious institutions are eligible to claim these deductions.
In 2023, businesses can claim a new, clean tax credit of up to $7,500 when they purchase electric or fuel cell electric vehicles. For vehicles larger than 14,000 pounds, the credit can go up to $40,000.
Important 2023 tax deadlines:
2022 tax returns and payments are due by midnight on April 18, 2023, for sole proprietorships, household employers and C corporations. For S corporations and partnerships, taxes are due March 15, 2023.
Quarterly tax deadlines for 2023 for estimated income tax are April 18 for Q1, June 15 for Q2, Sept. 15 for Q3 and Jan. 15, 2024, for Q4.
2023 tax returns and payments are due April 18, 2024. S corporations and partnerships must file by March 15, 2024.
During the busy calendar year-end financial and income tax reporting season, SPS/GZ professionals assist our clients navigate what are typically complicated and burdensome tasks in the areas of tax form reporting. We are a full-service tax reporting and stock plan administration firm that provides personalized service and exceptional support, utilizing state-of-the-art technology to business clients of all sizes. SPS/GZ team members create and e-file, various 1099s, including 1099-NEC, Forms 1042-S, 1098-T, Affordable Care Act tax forms, and Forms 3921 and 3922. Our complete and affordable solution allows administrators to simply upload their tax form data file to our secure portal in a few simple steps and we handle everything else to keep your organization compliant. Contact us today at email@example.com or call at (888)375-3049.