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Archives for January 2023

IRS National Tax Security Awareness Week 2022 Highlights

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The Internal Revenue Service (IRS) held its 2022 National Tax Security Awareness Week Security Summit from November 28 through December 2, 2022. This week was devoted to informing taxpayers of the latest tax security measures and ways to protect themselves from fraud. The Summit included daily webinars, workshops, and other activities designed to educate taxpayers on the most recent data security trends. In addition, IRS representatives provided guidance and advice on how to recognize potential scams and safeguard personal information. Here are some of the highlights from National Tax Security Awareness Week 2022. New Threats and Focus Areas National Tax Security Awareness Week 2022 had a wealth of great topics, and the IRS shared several insightful tips and tricks that we wanted to highlight here. The first one we wanted to talk about is the recent increase in IRS-related texting scams. These scams (also known as “smishing”) target mobile users and the text messages are made to look like official communication from the IRS. In 2022 alone, the IRS reported thousands of fraudulent domains included in these messages, all aimed at stealing personal and financial information. Protecting personal and financial information online was a theme throughout the week, and it’s important to remember that mobile devices (both professional and personal) are an often-overlooked online asset. Your smartphone is just a pocket-sized computer, and we often store more personal and financial information here than we do on our home or work computers. The IRS in their sessions continued to emphasize the importance of MFA (multi-factor authentication, strong passwords, and the installation of antivirus software on all devices that connect to the internet. Fake Charities Were a Big Topic on Day 2 of National Tax Security Awareness Week Because Day 2 of National Tax Security Awareness Week fell on Giving Tuesday, it was the perfect time to talk about the prevalence of fake …

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Get Ready Early for the 2023 Tax Season

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The 2023 tax season is already upon us. With the help of this article, we’ll talk you through some best practices to get ready for your 2022 federal tax return.  The 2023 Tax Season is Upon Us The time has come to start preparing for your 2022 federal tax return. Filing taxes can be a daunting task, but with the right knowledge and preparation, it doesn't have to be an overwhelming experience. It is important to understand the process and all the necessary steps involved so you can feel in control of your finances and avoid any potential problems or delays, especially as we approach the upcoming tax filing season. Preparing for the 2022 federal tax return is an important part of managing your finances. It's important to understand the process and be aware of any changes to the tax code that might affect you. Let’s discuss helpful tips on organizing your documents, understanding deductions and credits, filing deadlines, and more. Check Your Bookkeeping Just like packing for an extended vacation, you can’t successfully prepare for tax season in one day. You’ll forget things or leave out important assets, and it’s much more annoying to make changes to your taxes when they’re being prepared and processed. The best practice for your 2022 federal tax return (and every tax return in the future) is to make sure you are tracking and recording your transactions and important paperwork as it is created, not after the year is over. You also want to ensure that your bookkeeping is consistent – monthly expenses for a renovation or new product or service venture should be consistent in their classification. For example, if you have a web developer creating and updating an app for your business, you can’t record those expenses as “investments” one month and “marketing expenses” the next. Consistency is key. Reconcile Your Bank Accounts for the 2023 Tax Season Reconciling your bank accounts just means making sure your books (whether you do them by hand or use a …

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Preparing for 2023 Tax Brackets with Inflation Adjustments

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As of late 2022, annual inflation was over 8%, and consumer prices are up more than 9%. Let’s break down how inflation adjustments will affect our 2023 tax brackets. Inflation on the Rise – IRS Response We previously talked about the effects of inflation on business and tax trends earlier this year. And now the IRS is addressing these issues in an adjustment plan that affects more than 60 tax provisions. They recently shared a 28-page document outlining all of the provisions and changes, but we wanted to share some of the highlights with you here as well. The procedures in this provision went into effect on October 18, 2022, and will likely affect many taxpayers’ filings in the 2023 tax season. If you or your employees have salaries that did not keep up with the crazy inflation hikes this year, tax savings could be in your future for the 2022 tax year when it comes time to file your returns. The inflation adjustments are coming from the fact that prices haven’t increased this drastically for more than 40 years! With the price of everything – gas, groceries, homes, and everything in between – going up so quickly, the IRS has made inflation adjustments to the 2023 tax brackets. But what does that mean for you, the taxpayer? Let’s talk about it. 2023 Tax Brackets with New Inflation Adjustments The IRS makes inflation adjustments every year, but this year the adjustments were much more substantial. Some increases range from $400 to $1,000 depending on how the taxpayer files (married jointly, head of household, etc.). And tax year 2023 withholding rates have also been adjusted, which means employees will see slightly larger paychecks even without having received a raise for the year. For the tax year 2023, the standard deduction for those who file as married, filing jointly will increase to $27,700. This is a $1,800 increase from the previous year. For those filing single or married filing separately, the standard deduction will be $13,850 (a $900 …

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Taxpayers Can Now Amend Taxes Electronically

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The Internal Revenue Service (IRS) recently announced a change in the process for amending forms and corrections filing. Here’s the latest on this change and the changes related to it. You Can Now Amend Taxes Electronically Recently, the IRS announced that you can amend taxes electronically for Forms 1040 and 1040-SR for the tax years 2019, 2020, and 2021, as well as Forms 1040-NR and 1040-PR for the tax year 2021. The IRS also shared information that a new checkbox was added to the forms listed above in order for taxpayers to indicate that a superseding return is being filed electronically. Form 1040-X is the one that allows you to amend taxes should you have a need, and you are still able to file a paper copy if you’d like. The IRS just expanded the ability to amend taxes to include electronically, too. When You Should Amend Taxes There are several instances where you should amend taxes. The following situations are all worthy of an effort to amend taxes: You noticed you’ve missed an opportunity to claim a tax deduction or credit – whether the amended refund you get will be substantially or even slightly larger is of no consequence. If the deduction or tax credit is worth it to you, you should do it – and it’s even easier now because you can amend taxes electronically. You chose the wrong tax filing status by mistake. You don’t have to keep the same status year after year, and it’s easy to get into a routine and forget to double-check this information. You have added or removed dependents in your living situation but haven’t reported that change on your tax return. You forgot to claim taxable income on your tax return. It’s easy to forget and lots of people have side hustles. Make sure yours are included, even if they aren’t a huge or majority percentage of your overall yearly earned or passive income. You mistakenly claimed an expense, deduction, or credit that you aren’t actually eligible for at this time. Math or clerical …

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