BIG BLOCK Tax & Accounting Service, LLP

05/08/2023

IRS provides tax inflation adjustments for tax year 2023
https://www.irs.gov/newsroom/irs-provides-tax-inflation-adjustments-for-tax-year-2023 #:~:text=For%20single%20taxpayers%20and%20married,amount%20for%20tax%20year%202022.

IR-2022-182, October 18, 2022 — The Internal Revenue Service today announced the tax year 2023 annual inflation adjustments for more than 60 tax provisions, including the tax rate schedules and other tax changes. Revenue Procedure 2022-38 provides details about these annual adjustments.

05/08/2023

Credits for New Clean Vehicles Purchased in 2023 or After

You may qualify for a clean vehicle tax credit up to $7,500 if you buy a new, qualified plug-in electric vehicle or fuel cell electric vehicle.

05/08/2023

IRS Gives Big Boost to HSA, HDHP Limits in 2024
The annual contribution limit for health savings account , or HSAs, will soon get a sizable boost due to inflation, the IRS announced this week.
https://www.irs.gov/pub/irs-drop/rp-23-23.pdf

For 2024, the yearly limit for self-only HSA plans is rising to $4,150 from $3,850 in 2023, and the cap for family plans is jumping to $8,300 from $7,750. The catch-up contribution for savers age 55 and older remains at $1,000 each, bumping the total deposit limit for a couple of older individual savers to $10,300

It’s a “significant increase” when compared with historic HSA inflation adjustments.

11/10/2022

https://www.irs.gov/newsroom/news-releases-for-current-month

A listing of current news releases published by the IRS.

05/02/2022

Steps to Take Now to Get a Jump on Your Taxes
Tax planning is for everyone. Get ready today to file your 2021 federal income tax return. Planning ahead can help you file an accurate return and avoid processing delays that can slow your tax refund.
https://www.irs.gov/individuals/steps-to-take-now-to-get-a-jump-on-next-years-taxes

The IRS encourages taxpayers to get informed about topics related to filing their federal tax returns in 2022. These topics include special steps related to charitable contributions, economic impact payments and advance child tax credit payments.
https://www.irs.gov/newsroom/get-ready-for-taxes-heres-whats-new-and-what-to-consider-when-filing-in-2022

You may be eligible to claim a 2021 Recovery Rebate Credit on your 2021 federal tax return if you didn't qualify for a third Economic Impact Payment based on an earlier tax return, or if you got less than the full amount.

The third Economic Stimulus Payment amount was generaly received in March 2021:

$1,400 for an eligible individual with a valid Social Security number ($2,800 for married couples filing a joint return if both spouses have a valid Social Security number or if one spouse has a valid Social Security number and one spouse was an active member of the U.S. Armed Forces at any time during the taxable year)
$1,400 for each qualifying dependent with a valid Social Security number or Adoption Taxpayer Identification Number issued by the IRS

https://www.irs.gov/coronavirus/third-economic-impact-payment

In early 2022, the IRS sends Letter 6475 that contains the total amount of the third economic impact payment and any plus-up payments received. People should keep this and any other IRS letters about their stimulus payments with other tax records. Individuals can also create or log in to IRS.gov online account to securely access their economic impact payment amounts.

https://www.irs.gov/payments/your-online-account

Rescue Act Child Tax Credit (CTC) Expanded
oExpanded child tax credit (2021 only)
1.Up from $2,000 to $3,000 (for age 6 and over at end of 2021)
2.Up from $2,000 to $3,600 (for age 5 and under at end of 2021)
3.Up to and including age 17 (up from 16) qualifies Thus, parent w/ child reaching age 17 in 2021 gets bonus year of CTC

Thank you very much for your loyalty. We prepare in compliance with applicable laws, taking advantage of all legal benefits to minimize your tax bill and maximize the refund.

Best regards,

Get instructions on your online account. Review the amount you owe, balance for each tax year and payment history.

31/05/2021

Title: President Biden's Tax Proposals
Presenter: Keebler & Associates, LLP
Date Published: 4-30-2021
Description: The attached slides below - goes over the details of President Biden's Tax Proposals. Some important highlights of his tax proposal are:
• Restoration of the 39.6% top marginal tax rate no specific threshold identified
- Note: More details pointed out that this 39.6% marginal rate would apply to income over $400,000, but not clear if it applies to all filing statuses or some are at $400,000 and other statuses are at a different dollar amount.
• 39.6% long term capital gain rate for “households making over $1 million”
Note: this capital gains rate applies to those households with over $1 million in income (not clear if it is AGI, taxable income, etc.) -- on selling at capital gain(s) like stocks, bonds, etc.
• Eliminating the basis “step up” at death
Note: This definitely affects the sale of inherited property of deceased people being sold by their beneficiaries. This means - for example - let's say an inherited property is value at $100,000. Under the old rules, the step-up in basis is where if it is worth $2,000,000, then the basis would be $2,000,000 and if sold at $2,000,000, then no tax. However, under this proposal to remove the "step up" basis, then using this same example, an inherited property of basis $100,000 will remain at $100,000 and if sold at its current price at $2,000,000, then have a large gain of $1,900,000 ($2,000,000 current minus $100,000 basis).
• Extend the increased Child Tax Credit through 2025
• Permanently make the Child Tax Credit fully refundable
• And Other items (for more details - see the attached slides below)
Note: You don't have to read the slides now. You can read the slides much later -- since they're only proposals at this point. Not finalized tax rules and regulations.

31/05/2021

Title: "Biden's Major Tax Changes Will Wait Until October"
Date Published: March 18, 2021
Written by: Julio Gonzales - Accounting Today
Description: from the author, "I predict that no substantive tax laws will be changed until the budget reconciliation is allowed to be used again in October, so the administration can quickly advance high-priority fiscal legislation focused on COVID without facing the filibuster."
Also, "But for those earning over $1 million, Biden wants to increase the long-term capital gains tax rate to 39.6 percent. This would make it no longer desirable to hold investments for longer than a year, since the richest would pay 39.6 percent for short-term gains as well."
The following is a Proposed list of items that may be included in the Biden's New Tax Law -- in October 2021:
"1. Wealth tax. Congress is promoting a wealth tax that would hit about 180,000 households; Sen. Bernie Sanders says the new levy would increase federal revenue by about 10 percent, raising $4.35 trillion over a decade. Individuals with a net worth of $16 million and up ($32 million and up for married couples) would face an annual tax, starting at 1 percent and topping out at 8 percent for married couples worth $10 billion-plus. Sen. Elizabeth Warren has a similar, slightly less ambitious, wealth tax plan.
2. A higher marginal tax rate for the wealthy. Because President Biden wants the country's wealthiest to pay higher taxes, he aims to raise the top marginal income tax
rate from 37 percent to 39.6 percent, returning it to the margin tax rate for the wealthiest before the Tax Cuts and Jobs Act of 2018.
3. More Social Security taxes for higher earners. Right now, for those who earn more than $142,800, the excess isn’t subject to a 12.4 percent Social Security tax. But Biden wants to tax wages over $400,000. Under the new law, if a taxpayer made over $400,000, they wouldn't pay Social Security taxes on earnings between $142,800 and $400,000, but they would on earnings over $400,000.
4. A higher corporate tax rate. Although the Tax Cuts and Jobs Act lowered the top corporate tax rate from 35 percent to 21 percent, the Biden administration wants to raise that top rate to 28 percent. While this change wouldn't affect individual taxpayers directly, it would probably trickle down to consumers indirectly via higher-cost goods and services.
5. No more tax breaks on long-term capital gains for the wealthy. If a taxpayer holds stocks for at least a year and a day before selling them at a profit, they’re taxed at a more favorable rate than for stocks held for a year or less. For America’s highest earners, their long-term capital gains tax rateshave a maximum threshold of 20 percent; most taxpayers pay 0 percent to 15 percent for long-term gains.
6. Eliminate the 1031 exchanges. The Biden administration is interested in eliminating the 1031 Exchange Program for real estate investors with incomes above $400,000. The program allows investors to defer capital gains taxes due upon the sale of an investment property by reinvesting the proceeds into another property. But if this program is eliminated, high-income investors might hold on to properties for longer than in the past, which may decrease supply and demand.
7. Tax unrealized gains. The Biden administration is proposing a so-called “mark-to-market” regime for taxing unrealized capital gains. Currently, individuals pay tax only on “realized” capital gains — when the asset is sold, and they collect a profit. But under the new law, if they’re over a certain income level or with qualifying assets exceeding a threshold, they would be expected to pay taxes on increases in the on-paper value of assets, even if the capital gain was unrealized."

05/01/2021

If you mean the New $600.00 stimulus checks, yes - they should be direct deposited today to taxpayers' bank accounts. As for other people, they should be getting in the mail by the end of January.
I also got this HRB Email.

"A second round of stimulus payments is coming, and most Americans will benefit."

If you have questions about eligibility and payments, you’re not alone. Answers to some of the most frequently asked questions follow, and more information is available at hrblock.com/coronavirus.

Q: Who is eligible?
A: Eligibility is based on your Adjusted Gross Income from your 2019 tax return. You can view the income thresholds here.

Q: How much money will I receive?
A: Currently, the starting amount is $600 per person and $600 for qualifying children under age 17. Payments vary based on your 2019 household income, the number of children under age 17 you claimed, and your filing status. Our stimulus check calculator can help you estimate how much you may receive.

Q: What if my information has changed since the first stimulus payment or since my 2019 taxes?
A: You can indicate changes to income, filing status, or dependent information when you file your 2020 tax return and potentially receive additional money.

Q: When will I get my payment?
A: The IRS announced it will begin issuing direct deposits and mailing checks this week. If you are receiving a direct deposit, you should see it in your account by January 4. All payments will be sent out by the end of January.

Q: How will I get paid?
A: In most cases, the IRS will use the information from your first stimulus payment or your most recent tax return. If you received the first round of stimulus payments on your Emerald Card and haven’t updated anything, it’s likely you will receive your second stimulus on your Emerald Card. Check hrblock.com/coronavirus for updates."

05/01/2021

Cryptocurrency: "IRS IS POSITIONING ITSELF FOR A SMOOTH TRANSITION FROM EDUCATION TO ENFORCEMENT IN 2021"

By: Blockchain Council - Toshendra Kumar Sharma
Summary: "According to the latest announcement by Don Fort, the former chief of the Internal Revenue Service (IRS) is shifting from education to enforcement. Over the past several years, the IRS has frequently warned that taxpayers who violate the law while using virtual currency will be entering a new phase this year as the..."

To read more, go here: https://www.blockchain-council.org/blockchain/irs-is-positioning-itself-for-a-smooth-transition-from-education-to-enforcement-in-2021/

Other Notes: Taxation on Cryptocurrency is quite unique. Generally, anyone that invests in cryptocurrency where they just buy and sell cryptocurrency (like how one buys and sells stocks), the gains and losses are reported on Schedule D and Form 8949.
For other people who received Cryptocurrency money like wages shown on w-2 is reported as W-2 income on Form 1040 page 1. Or, if the people received cryptocurrency as self-employed, it gets reported on Schedule C.

Now, there's the Important Detail: When Cryptocurrency owner uses the crypto money to buy something, then have to report how much the crypto money is spent on the tax return.
The tax rules / regulations state that Cryptocurrency is treated as property not actual "foreign currency". That means when the cryptocurrency is sold like an investment it's reported on Schedule D and Form 8949 on individual income tax return.

When the Cryptocurrency person just uses it like Digital Cash to buy something, they have to report on Schedule D and Form 8949, how much the cryptocurrency was used to buy a product (it's like a sale of the cryptocurrency to become cash to be used to buy a product) and how much that same cryptocurrency was bought a long time ago.

So, there can be a situation where a self-employed worker or W-2 worker gets Cryptomoney and reports that as ordinary money income and then when used to buy like a watch, then have to report that how much of that cryptocurrency was used to buy that watch on Schedule D and Form 8949.

Please see attached document on the online news article about the IRS enforcement of cryptocurrency reporting on income tax returns.

According to the latest announcement by Don Fort, the former chief of the Internal Revenue Service (IRS) is shifting from education to enforcement.

05/01/2021

American Institute for Professional Bookkeepers (AIPB) Article: Inconsistent records lose auto deductions

Source: https://aipb.org/bookkeeping-tips/

Summary: "Our goal as your profession’s association is to raise bookkeepers’ professional status. We do this by offering you bookkeeping, accounting and payroll self-study courses (ebooks or hard copy)—and by keeping you current in our member newsletter, The General Ledger.

Here’s just one example from a recent issue of our member newsletter, The General Ledger:
The case: C was a sole proprietor whose consulting business primarily involved traveling within 30 miles of her home to train clients in software. She kept a contemporaneous mileage log, generally recording the date or range of dates for a trip, the city, a brief description of the purpose of the trip, the number of miles driven, and the person or people she consulted with. To compute her vehicle expense deduction, she multiplied the standard mileage rate by the number of miles driven for business and added some actual operating expenses. The IRS denied all the vehicle expense deductions.

Held: For the IRS. A taxpayer cannot deduct both the standard mileage rate and actual operating expenses— it’s one or the other.
The court denied both treatments because the taxpayer did not maintain adequate records as required by §274, Disallowance of certain entertainment, etc., expenses, and the accompanying regs, which require that records establish:
(1) the amount of the expense;
(2) the time and place the expense was incurred; and
(3) the business purpose of the expense.

Also, because vehicles are “listed property”—assets that lend themselves to both personal and business use, such as cars, PCs and phones—the taxpayer must establish both total use and the proportion of business use. The travel log lacked crucial details. Many entries included multiple days of travel together. Other entries excluded required facts such as the time and place of the travel. Because the records did not comply with §274(d) requirements, all the travel deductions were denied.
[Cooney v. Commissioner, T.C. Summ. Op. 2019-10]

AIPB tip: Even if the IRS auditor believes your company or client used a vehicle for business and can determine the number of miles driven, the deduction will be denied if the records do not include all the details required by §274 for each trip."
https://quickbooks-training.net/bookkeeping-tips-from-aipbs-website/

Bookkeeping Tips from AIPB’s Website These Bookkeeping tips were published by AIPB.org in: http://www.aipb.org/newsletter/bookkeeping_tips/index.php Who Is Today’s “Professional Bookkeeper”? Part accountant, part tax practitioner, part financial analyst. Today’s professional bookkeeper is ...