2023 Year End Newsletter
Dear Clients & Friends,
We hope you are enjoying the cooler weather of fall and are looking forward to the holidays ahead. Tax law is always evolving, which means that the tax year 2023 has its own set of changes.
Some of these changes are highlighted in the enclosed year-end edition of our newsletter. In the newsletter, you will find important information to consider before the end of 2023.
For the tax year 2023, income brackets subject to tax are increasing by approximately seven percent due to inflation. There are also new tax credits available for new clean vehicles, used clean vehicles, and energy efficient home improvements. If you buy a new clean (i.e., electric and fuel cell) vehicle, it may be eligible for a tax credit of up to $7,500, so long as your modified adjusted gross income meets the parameters listed on our newsletter. Similarly, a used clean vehicle may be eligible for a tax credit of up to $4,000 and energy efficient home improvements may be eligible for a tax credit of up to $1,200.
Required distributions for tax-deferred IRAs and 401(k)s can now be delayed to the age of 73. If you turn 72 in 2023 or later, then this new law gives your IRA another 12 months to grow. In this vein, the penalty for those who do not take a required distribution has decreased from 50% to 25%, and if a correction is made within two years, the penalty is further reduced to 10%.
You may receive a new form for this coming tax year called a “1099-K.” This form is designed to catch business activity conducted on the internet that is currently unreported. This form will report the gross amount of payments you received of more than $600 from transactions on services like PayPal and Venmo. If you receive one, save it and make a list of related expenses. This revenue needs to be reported, even if you lost money.
Tax planning is always important. The newsletter includes several tax reduction ideas in response to the higher standard deduction amounts. You may want to consider maximizing HSA contributions, leveraging retirement accounts to their fullest, donating appreciated assets, deducting student loan interest, and leveraging your itemized deductions.
Please stop by our office to be introduced to our new Office Manager, Caila Miles. Caila is a recent college graduate and came on board in October; she is excited to help us serve our clients and friends! Jenn has moved to the accounting staff and is going to pursue a degree in accounting starting this January.
The months of November and December are a great time to evaluate your tax situation and review the options you have. If you have any concerns or questions, please don’t hesitate to call our office regarding the information contained in this letter or any questions you would like to address before the end of the year.
As always, we appreciate your continued patronage.
2023 Year End Newsletter – Starkey & Company
Happy Holidays,
Starkey & Company, PA