GET READY FOR 2023 TAX SEASON!
With every new year, we think about changes in our lives financially, physically, and spiritually. Then, you realized it is tax time again!
Planning for your taxes can help you file a complete, accurate tax return and avoid processing delays of your tax refunds. Here are some reminders for the upcoming tax filing season:
Gather and organize your tax records to include:
W2's from employers
Form 1099 from banks, brokerage account unemployment compensation, dividends, distributions from pensions, annuity, or retirement plan
Form 1099-K, 1099misc, other income from gig economy
records of virtual currency
1099-INT for interest received
Form 1095-A, Health Insurance Marketplace Statement, to reconcile advance Premium Tax Credits for Marketplace coverage.
Taxpayers can set up an Online Account in order to have access to:
View key data from your most recent tax return and access additional records and transcripts,
View details of your payment plan if you have one,
View 5 years of payment history and any pending or scheduled payments,
Make tax payments,
Tax notices
Life Changes
Did you get married or divorced?
Addition to your family (though birth or adoption)
Did you change jobs or have a second job? Consider adjusting your withholding if you owed taxes or received a large refund when you filed.
Did you purchase or sell your home?
Death of a spouse or dependent
Direct deposit information
Please let us know if your banking information has changed.
2024 Tax Law Changes
The contribution limit for employees who participate in 401(k), 403(b), and most 457 plans, as well as the federal government's Thrift Savings Plan is increased to $23,000, up from $22,500.
The limit on annual contributions to an IRA increased to $7,000, up from $6,500. The IRA catch‑up contribution limit for individuals aged 50 and over remains $1,000 for 2024.
The catch-up contribution limit for employees aged 50 and over who participate in 401(k), 403(b), and most 457 plans, as well as the federal government's Thrift Savings Plan remains $7,500 for 2024. Therefore, participants in the above plans who are 50 and older can contribute up to $30,500, starting in 2024. The catch-up contribution limit for employees 50 and over who participate in SIMPLE plans remains $3,500 for 2024.
Taxpayers can deduct contributions to a traditional IRA if they meet certain conditions. If during the year either the taxpayer or the taxpayer's spouse was covered by a retirement plan at work, the deduction may be reduced, or phased out, until it is eliminated, depending on filing status and income. (If neither the taxpayer nor the spouse is covered by a retirement plan at work, the phase-outs of the deduction do not apply.) Here are the phase‑out ranges for 2024:
For single taxpayers covered by a workplace retirement plan, the phase-out range is increased to between $77,000 and $87,000.
For married couples filing jointly, if the spouse making the IRA contribution is covered by a workplace retirement plan, the phase-out range is increased to between $123,000 and $143,000.
If you are not covered by a workplace retirement plan and are married to someone who is covered, the phase-out range is increased to between $230,000 and $240,000.
For a married individual filing a separate return who is covered by a workplace retirement plan, the phase-out range is not subject to an annual cost-of-living adjustment and remains between $0 and $10,000.
The income phase-out range for taxpayers making contributions to a Roth IRA is increased to between $146,000 and $161,000 for singles and heads of household. For married couples filing jointly, the income phase-out range is increased to between $230,000 and $240,000, up from between $218,000. The phase-out range for a married individual filing a separate return who makes contributions to a ROTH is the same as the traditional IRA above.
Taking distributions from your retirement plan or IRA before age 59 ½
Withdrawals or distribution from your retirement accounts are normally subject to ordinary income tax, and if taken prior to reaching age 59 ½ may be subject to an additional 10% tax unless you meet one of the exceptions below. New exceptions were added by the SECURE Act and SECURE 2.0 Act.
Exceptions to the 10% additional tax
Birth or adoption-you can distribute up to $5,000 per child for qualified birth or adoption expenses.
Corrective distributions (and associated earnings) of excess contributions.
Death- after death of the participant/IRA owner
Disability-total and permanent disability of the participant/IRA owner
Disaster recovery distribution up to $22,000 to individuals who sustain an economic loss by reason of a federally declared disaster where they live.
Domestic abuse victim distribution-to a victim of domestic abuse by a spouse or domestic partner, up to the lesser of $10,000 or 50% of account of account (distribution made after 12/31/2023)
Education- qualified higher education expenses only IRA, SEP, SIMPLE IRA and SARSEP
Emergency personal expense- one distribution per calendar year for personal or family emergency expenses, up to the lesser of $1,000 or vested account balance over $1,000 (made after 12/31/23)
Homebuyers-qualified first-time homebuyers, up to $10,000 from an IRA, SEP, SIMPLE IRA and SARSEP
Levy-because of an IRS Levy of the plan
Medical amount of unreimbursed medical expenses (>7.5% AGI). Also, health insurance premiums paid while unemployed only from IRA, SEP, SIMPLE IRA and SARSEP
Military-certain distributions to qualified military reservists called to active duty.
Returned IRA contributions-if withdrawn by extended due date of return, not including earnings on these returned contributions.
Rollovers-in-plan Roth rollovers or eligible distributions contributed to another retirement plan or IRA within 60 days.
Separation of service-the employee separates from service during or after the year the employee reaches age 55, (age 50 for public safety employees of a state in a governmental defined benefit plan.
Terminal illness-distribution made to a terminally ill employee, on or after the date the employee has been certified by a physician as having a terminal illness.
IRAs and IRA-based plans
Individuals can take distributions from their IRA, SEP-IRA or SIMPLE-IRA at any time. Taxpayers don’t need to show a hardship to take a distribution – they can just request a withdrawal from the financial institution that holds the account.
Distributions from a traditional IRA are subject to ordinary income tax. Withdrawals before age 59 ½ may be subject to the 10% early distribution tax unless an exception applies. Qualified distributions from a Roth IRA are not subject to income tax (generally, after you’ve had the Roth account for five years and reach 59 ½).
Loans Some plans may allow you to take loans if you meet certain plan limits on loan amounts and other requirements. You might be able to borrow up to the lesser of $50,000 or 50% of your account balance and must repay the loan over no more than 5 years. If the loan meets the plan rules and is repaid on time, these loans are not subject to tax.
Gift Tax Limit
The amount of the annual exclusion for gifts for 2024 is $18,000.
New Clean Vehicles purchased in 2023 and after
If you place in service a new plug-in electric vehicle (EV) or fuel cell vehicle (FCV) in 2023 or after, you may qualify for a clean vehicle tax credit.
At the time of sale, the seller must give you information about your vehicle's qualifications. Sellers must also register online and report the same information to the IRS. If they don't, your vehicle won't be eligible for the credit.
You may qualify for a credit up to $7,500 under Internal Revenue Code Section 30D if you buy a new, qualified plug-in EV or fuel cell electric vehicle (FCV). The Inflation Reduction Act of 2022 changed the rules for this credit for vehicles purchased from 2023 to 2032.
The credit is available to individuals and their businesses.
To qualify, you must:
Buy it for your own use, not for resale
Use it primarily in the U.S.
In addition, your modified adjusted gross income (AGI) may not exceed:
$300,000 for married couples filing jointly
$225,000 for heads of households
$150,000 for all other filers
The credit is nonrefundable, so you can't get back more on the credit than you owe in taxes. You can't apply any excess credit to future tax years. The amount of the credit depends on when you placed the vehicle in service (took delivery), regardless of purchase date.
Find information on credits for used clean vehicles, qualified commercial clean vehicles, and new plug-in EVs purchased before 2023.