As we approach the 2023 TAX DEADLINE by April 15, 2024, it’s essential to stay up-to-date with the latest tax changes and plan our financial strategies accordingly. If you need more time – a form extension till Oct 15, 2024 – our office will file that paperwork for a reduced fee.
In this comprehensive guide, we will delveinto the 2023 tax highlights, providing you with the necessary insights and strategies to navigate the upcoming tax season! Let’s go 🙂
Businesses — Corporations & Partnerships
Bonus Depreciation: Starting with the 2023 tax year, the 100 percent bonus depreciation amount is scheduled to be reduced every year. In 2023, the bonus depreciation phase out begins. Businesses can write off only 80% — instead of 100% — of an eligible property’s purchase price in 2023
Net Operating Loss (NOL): Now, the amount of NOL is limited to 80% of the excess of taxable income. If a company has losses in 2021 and 2022, but made taxable income in 2023, then it must pay taxes on a portion of 2023 income, even if the cumulative losses are substantial.
Sole Proprietors & Individuals
In 2023, the government introduced a series of updates to control inflation & adapt to the “Gig Economy.”
The Gig Economy came under scrutiny, with new regulations ensuring that freelancers fulfill tax obligations.
Specifically, new 1099-K reporting requirements for anyone earning income via third-party payment apps such as PayPal, Venmo, Cash App or Zelle – are in the pipeline.
Standard vs Itemized Deduction
After an inflation adjustment, the 2023 standard deduction increases to: MFJ: $27,700 — Single: $13,850
If you have enough tax-deductible expenses, you will benefit from itemizing vs taking the standard deduction. If you own a home, you will likely itemize because of all the mortgage interest on the first few years of your Amortization Table.
IRA and 401(k): Limits are slightly higher. The Traditional IRA and Roth contribution limits in 2023 increased slightly from 2022. Individuals can contribute up to $6,500 to an IRA.
Those over age 50 also qualify to make an additional $1,000 catch-up contribution.
In addition, the 2023 contribution limits for the tax-deferred 401(k) have increased to $22,500. If you’re age 50 or older, you qualify to make an additional $7,500 catch-up contribution for this tax year as well.
Actionable Strategies for 2023, due by April 15, 2024!
Understanding the tax changes is only the first step!
To maximize your tax benefits and minimize your tax liability, consider implementing the following strategies:
Explore Health Savings Accounts (HSAs): Take advantage of the tax advantages and flexibility offered by HSAs to save for medical expenses and retirement.
Utilize Child Tax Credit: Leverage the expanded Child Tax Credit to reduce your tax liability and increase your overall financial well being.
Monitor AMT Exposure: Stay vigilant about your Alternative Minimum Tax exposure and explore strategies to mitigate its impact on your tax liability.
Estate Planning: Develop an estate plan that aligns with the updated estate tax regulations and ensures the smooth transfer of assets to your beneficiaries.
We know tax planning and preparation can be overwhelming. That’s where Ascent Tax & Advisory comes in.
If you sold property, we offer a Free Consultation on your Closing Statement/1099-S tax form. By partnering with us, you can access expert guidance and leverage our specialized knowledge to navigate the intricacies of the tax system.
Prepare for the upcoming tax season with confidence and take control of your financial future. Let’s talk now!