904-356-0349 info@nedjacksontax.com

Social Security Changes in 2023

Welcome back to Ned’s blog spot, where you can find all the answers to your tax questions. In today’s blog topic, we will be discussing social security and how it will be changing in the year 2023.

In the year 2023, there will be an increase in the cost-of-living-adjustment (COLA), payable to over 65 million social security beneficiaries. The increase will be 8.7%, equating to more than $140 per month starting in January 2023. Beneficiaries turning 66 years of age next year, will not lose any benefits if they earn $56,520 or less before reaching 66. Individuals who are 62-65 years of age by the end of next year, will make up to $21,240 before losing any benefits. Additionally, once a beneficiary turns 66, there will be no earnings cap.

With an increase in COLA, there will also be an increase in the maximum amount of earnings subject to social security tax. The new maximum amount will be $160,200, a $13,200 hike from years past. Employers and employees will continue to pay 1.45% Medicare tax on all compensation, with no cap. Employees also pay a 0.9% Medicare surtax on wages and self-employment income over $200,000 for singles and $250,000 for couples. The surtax does not apply to employers.

The Acting Social Security Commissioner, Kilola Kijakazi, has released the following statement regarding the above changes (there is a link below to watch the full press release)

“Medicare premiums are going down and Social Security benefits are going up in 2023, which will give seniors more peace of mind and breathing room. This year’s substantial Social Security cost-of-living adjustment is the first time in over a decade that Medicare premiums are not rising and shows that we can provide more support to older Americans who count on the benefits they have earned,”

LINKS

https://www.ssa.gov/cola/

https://www.ssa.gov/news/press/releases/2022/#10-2022-2

www.youtube.com/watch?v=Vgm5q4YT1AM.

We hope you find this information helpful as you begin to prepare for the upcoming tax season. And as always, the information for our main office downtown will be listed as well. Don’t forget to check back for more!

Ned Jackson Downtown Office
Address
255 N Liberty Street
Jacksonville, FL 32202

Phone
(904) 356-0349

Email
info@nedjacksontax.com

Hurricane Ian Disaster Relief

Welcome back to Ned’s blog spot, where you can find all the answers to your tax questions. We’ll be ending October with information regarding the effects Hurricane Ian has on taxpayers. We offer our deepest condolences to our clients impacted by the storm and have some great news regarding deadlines.

Hurricane Ian began its path of destruction September 23, 2022. Sweeping across Cuba, Florida, and the Carolinas, it destroyed many homes, took many lives, and left many without food, water, and power. Following the disaster declaration issued by the Federal Emergency Management Agency (FEMA), the IRS has announced that victims of Hurricane Ian will now have until February 15, 2023, to file individual and business taxes. The deadline also applies to estimated tax payments due January 17, 2023, plus payroll and excise tax returns. As with anything, here is the “fine print.” To be eligible for the new deadline, there must be a valid extension filed on or before April 18, 2022. The deadline also applies to the quarterly estimated tax payments, usually due January 17, 2023, and the quarterly payroll and excise taxes, usually due October 31, 2022 and January 31, 2022. Losses from Ian can be deducted on either your 2021 or 2022 tax return. If you’ve already filed your 2021, you may consider amending it to take the write-off.  All the limitations and rules for taking the losses will still apply.

The IRS will automatically be providing filing and penalty relief to any taxpayer with an IRS address located in the disaster area. However, if you are an affected taxpayer and receive a late filing or late payment penalty notice from the IRS, you are encouraged to call the IRS and have the penalty removed. Below you will find links to further information provided by FEMA and the IRS, relating to disaster relief as well as a map of the affected areas.

LINKS

https://www.irs.gov/newsroom/help-for-victims-of-hurricane-ian

https://www.irs.gov/newsroom/help-for-victims-of-hurricane-ian

We hope you find this information helpful as you begin to prepare for the upcoming tax season. And as always, the information for our main office downtown will be listed as well. Don’t forget to check back for more!

Ned Jackson Downtown Office

Address

255 N Liberty Street

Jacksonville, FL 32202

 Phone

(904) 356-0349

 Email

info@nedjacksontax.com

Taxable Paycheck Protection Program Loans

Welcome back to Ned’s blog spot, where you can find all the answers to your tax questions. The IRS has advised that improperly forgiven Paycheck Protection Program (PPP) loans, are taxable. If you received PPP for your small business during the pandemic, please continue reading. The following information WILL affect your tax return for this upcoming tax year.

The Paycheck Protection Program (PPP) was established by the CARES Act to assist small businesses negatively affected by COVID-19. Many loan recipients who received forgiveness were qualified and used the loan to pay expenses. Since then, the IRS has discovered some recipients did not meet one or more of the eligible requirements. These specific recipients received forgiveness of their PPP loan via misrepresentation or exclusion and didn’t qualify for or misused the loan funds.

On September 21, 2022, the IRS issued an article of guidance confirming that, “when a taxpayer’s loan is forgiven based upon misrepresentations or omissions, the taxpayer is not eligible to exclude the forgiveness forgiven based upon said misrepresentation or omissions.” In layman’s terms, if you received a PPP loan and weren’t eligible, that loan will be taxable on this year’s tax return. Taxpayers who did not qualify or misused funds are being encouraged to file an amendment on returns that include forgiven loan amounts, as income. The following is a statement from IRS Commissioner, Chuck Rettig on the matter:

“This action underscores the Internal Revenue Service’s commitment to ensuring that all taxpayers are paying their fair share of taxes, we want to make sure that those who are abusing such programs are held accountable, and we will be considering all available treatment and penalty streams to address the abuses.”

HOW DO I KNOW IF THIS APPLIES TO ME?

Listed below you will find the three requirements to have complete loan forgiveness, as are stated on the IRS website. If all three requirements are met, the forgiven portion is excluded from income. If the conditions were not met, the forgiven amount must be included as income and will be taxable.

1. An eligible loan recipient:

a- Is a small business, independent contractor, eligible self-employed individual, sole proprietor, business, or a certain type of tax-exempt entity.
b- Was in business on OR before February 15, 2020
c- Had employees or independent contractors who were paid for their services, or was self-employed individual, sole proprietor, or independent contractor.

2. The loan proceeds had to be used to pay eligible expenses, such as payroll costs, rent, interest on the business’ mortgage, and utilities.

3. The loan recipient had to apply for loan forgiveness. The loan forgiveness application required a loan recipient to attest to eligibility, verify certain financial information, and meet other legal qualifications.

For more information, please visit the IRS website directly here:
https://www.irs.gov/newsroom/irs-advises-that-improperly-forgiven-paycheck-protection-program-loans-are-taxable

We hope you find this information helpful as you begin to prepare for the upcoming tax season. And as always, the information for our main office downtown will be listed as well. Don’t forget to check back for more!

Ned Jackson Downtown Office
Address
255 N Liberty Street
Jacksonville, FL 32202

Phone
(904) 356-0349

Email
info@nedjacksontax.com

Fourth Quarter Interest Rate Increases

Welcome back to Ned’s blog spot, where you can find all the answers to your tax questions. Short and sweet this time around, but not something you’ll want to miss.

Last month, the IRS announced that interest rates will increase for the fourth quarter of the year, beginning October 1, 2022. Below you’ll find a complete list of the new rates, as it appears on the IRS website:

– 6% for overpayments (5% for corporations). (Payments made in excess, of the amount owed)
– 3.5% for the portion of a corporate overpayment exceeding $10,000.
– 6% for underpayments. (Taxes owed but not fully paid)
– 8% for large corporate underpayments.

For more information, please visit the IRS website directly here:

https://www.irs.gov/newsroom/irs-announces-interest-rate-increases-for-the-fourth-quarter-of-2022-6-rate-applies-to-most-taxpayers-starting-oct-1

We hope you find this information helpful as you begin to prepare for the upcoming tax season. And as always, the information for our main office downtown will be listed as well. Don’t forget to check back for more!

Ned Jackson Downtown Office
Address
255 N Liberty Street
Jacksonville, FL 32202

Phone
(904) 356-0349

Email
info@nedjacksontax.com

Energy-Efficient Home Improvement Credits are BACK!

Welcome back to Ned’s blog spot, where you can find all the answers to your tax questions. We have good news this month on the blog. As you read in the title, the credit for adding energy-efficient improvements to your main residence is back and better than before.

According to the most recent tax letter by ‘The Kiplinger.’ “In the year 2022, the credit will apply to 10% of the cost of the following improvements: certain types of insulation, eternal windows, doors, and skylights. The credit will also include 100% of the cost of electric heat pumps and water heaters, some central air-conditioning systems, and similar energy-saving investments.” Don’t get too excited, it’s not a free for all. There will be a lifetime limitation of $500. Additionally, the credit will be capped for many items:

– No more than $150 for hot water boilers and furnaces
– $200 for a window
– $50 for a furnace circulating fan

Big changes are coming for tax years 2023-2032, the credit percentage increases to 30% of the cost, raising it 20% from tax year 2022. The lifetime credit limit of $500, will be replaced with a $1,200 annual limit. The annual limit increases to $2,000 for a biomass stove or hot water boiler, or an electric or natural gas heat pump. But we all know, what goes up, must come down; it’s science! In light of the increases in annual limits, there are some decreases as they relate to specific improvements and they are as follows: the annual limit will be lowered to $600 in relation to exterior windows and skylights, and $500 as it relates to exterior doors.

We hope you find this information helpful as you begin to prepare for the upcoming tax season. And as always, the information for our main office downtown will be listed as well. Don’t forget to check back for more!

Ned Jackson Downtown Office
Address
255 N Liberty Street
Jacksonville, FL 32202

Phone
(904) 356-0349

Email
info@nedjacksontax.com

Small Businesses and IRS Revenue

Welcome back to Neds Blog Spot! Do you own a small business? According to tax experts, you may be in for a battle with the IRS. In a recent article published with insight from the ‘Joint Committee on Taxation’, the Inflation Reduction Act will “target small business owners to pay for the legislation.” It’s estimated that between 78%-90% of the additional $200 billion the IRS will collect, will come from small businesses. Read more from the article using the link below.

https://nypost.com/2022/08/03/why-irs-80b-expansion-is-a-nightmare-for-small-business/#:~:text=Even%20if%20small%20business%20owners%20get%20everything%20right%2C,error%20on%20their%20taxes%20can%20put%20them%20underwater.

We hope you find this information helpful as you begin to prepare for the upcoming tax season. And as always, the information for our main office downtown will be listed as well. Don’t forget to check back for more!

Ned Jackson Downtown Office

Address

255 N Liberty Street

Jacksonville, FL 32202

 Phone

(904) 356-0349

 Email

info@nedjacksontax.com

CP14 Notices

Hello, and welcome back to Neds Blog Spot. Please utilize the link below to get familiar with why you may have received a CP14 Notice, from the IRS.

https://www.irs.gov/newsroom/irs-statement-on-balance-due-notices-cp-1

We hope you find this information helpful as you begin to prepare for the upcoming tax season. And as always, the information for our main office downtown will be listed as well. Don’t forget to check back for more

Ned Jackson Downtown Office

Address

255 N Liberty Street

Jacksonville, FL 32202

 Phone

(904) 356-0349

 Email

info@nedjacksontax.com

 

Midyear Mileage Changes

Gas prices aren’t the only thing rising this year. Do you claim mileage on your Schedule C? You’ll want to read this. The IRS has increased the mileage rate for the final 6 months of 2022. You will be able to use the “optional standard mileage rates to calculate the deductible costs of operating an automobile for business and certain other purposes.” Unprecedented times to be sure; the last time mileage rates changed mid-year was in 2011. What does that mean for you?

Considering recent fuel cost increases, the IRS has made a special adjustment for the remainder of 2022. Effective July 1, 2022, the standard mileage rate for business travel will be 62.5 cents, up 4 cents from the start of year rate. Rates related to moving and medical expenses will be 22 cents, also up 4 cents from the effective rates at the start of the year. There is a legal guidance PDF, provided by the IRS available on their website, that will be linked below. In a recent interview withthe IRS Commissioner Chuck Rettig, he states “We are aware a number of unusual factors have come into play involving fuel costs, and we are taking the special step to help taxpayers, businesses and others who use this rate.” Well, thank you Chuck, we appreciate that!

We hope you find this information helpful as you begin to prepare for the upcoming tax season. Listed below, you will find some links with commonly asked questions about the changes to mileage rates. And as always, the information for our main office downtown will be listed as well. Don’t forget to check back for more!

LINKS
https://www.irs.gov/newsroom/irs-increases-mileage-rate-for-remainder-of-2022

https://www.irs.gov/pub/irs-drop/a-22-13.pdf

Ned Jackson Downtown Office
Address
255 N Liberty Street
Jacksonville, FL 32202

Phone
(904) 356-0349

Email
info@nedjacksontax.com

The New W-4

2020 was a year that yielded many changes; among those, were your W-4 forms. You may or may not have known about this, as it wasn’t required you fill out a new form. However, there are some changes to be aware of that could affect your upcoming tax return.

Out with the Old, In with the New

We’ve all heard it before, the age old saying, “If it ain’t broke, don’t fix it.” So why did they? As the W-4 was created to help you break even, they’ve attempted to make things simpler and more accurate. And while the new form may be simpler in number of steps, it can feel a bit more complicated in comparison to the old form, we knew and loved. Let’s go through the form step by step to ensure you’re filling this out accurately.

Step 1

Much like the old form W-4, step 1 is basic demographic information. One of the major differences is the filing status. If you notice, the filing status options are as follows:

• Single or Married filing Separately
• Married filing jointly (or qualifying widow(er))
• Head of Household

Of course, you’ll want to select accordingly. It’s important to mention here, if you are married filing jointly and don’t include all other income, it will put you in a lower tax bracket, resulting in a lesser amount being withheld. Next, you will observe they emphasize to complete steps 2-4 ONLY if they apply to you. Don’t worry; Ned already knows your next question; Does it apply to me? Visit ‘Step 2-4’ to find out.

Step 2-4

 

You’ll want to complete step 2 if you hold more than one job or are married filing jointly and your spouse also works. The correct amount of withholding will be dependent upon income from all your jobs (and your spouses’ jobs) combined. If you have only two jobs, you’ll be able to select the box under 2c, but it may also be a good idea to complete the ‘Multiple Jobs Worksheet’ on page 3, to get an accurate idea of how you will come out when filing your taxes.

Now, for those who have children you will use step 3 to claim your dependents; those under the age of 17, and all other dependents. You’ll add the amounts listed in a and b, and you’ll list the total amount in c.

We will look at step 4 in three parts (a, b and c).

4a) If you’re a taxpayer that normally carries interest, dividends and retirement that won’t have withholding, you may want to consider reporting it early.

4b) If you’re a taxpayer who knows you’re able to itemize and won’t be taking the standard deduction, you can report your average deduction amount here, so less withholding will be taken out.

4c) If you’d like any additional withholding taken each pay period, as ‘insurance’, you’ll place that amount here.

Finishing up, you’ll need to complete step 5, which is just your signature and the date. Once this form is completed and submitted to your employer, you’ll want to check and make sure the correct amount of withholding is being taken out. You can do this, by checking your paper or electronic paycheck stubs/statements.

We hope you find this information helpful as you begin to prepare for the upcoming tax season. Listed below, you will find some links with commonly asked questions about the new form W-4. And as always, the information for our main office downtown will be listed as well. Don’t forget to check back for more!

LINKS

http://www.irs.gov/newsroom/faqs-on-the-2020-form-w-4

Ned Jackson Downtown Office
Address
255 N Liberty Street
Jacksonville, FL 32202

Phone
(904) 356-0349

Email
info@nedjacksontax.com

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