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2022-2023 tax changes

The Required Minimum Distribution Age is raised in 2023 to age 73. This age will step up to age 75 by 2033.

The 2022 Child Tax Credits are reduced to where they were in 2020. The credit is back to $2,000 for children through the age of 16 and reduced to $500 until they reach age 19, or 24 if they are still in school.

The Educator Above the Line Deduction has been raised from $250 per year to $300 for 2022.

Residential Energy Efficient Home Improvement Credit replaces the old lifetime home energy credit of $500 per lifetime to a credit of $1,200 per year. There are still limitations on certain types of improvements, but most have increased. The Replacing Windows Credit increased  from $150 to $600 per year, and the Insulated Doors Credit goes to $250 for one door to a maximum of $500 for all doors replaced.

The Solar Credit increased from 26% in 2021 to 30% for tax years 2022 through 2032.

Electric Car Credit is revamped for 2023 to cars that have been assembled in the U.S. and the  manufacturer car limitation has been repealed.  Meaning for 2023, Tesla and GM cars that hit the 200,000 manufactured limit are now available for the $7,500 credit. There is a cost limit of $55,000 for cars and $80,000 for SUVs, so not all models may apply. The credit can also be applied at the point of purchase rather than having to wait until you file your income taxes. The credit will reduce the basis in purchase price for business vehicles.

Alternative Fuel Refueling Property Credit is a returning credit of up to $1,000 for putting an electric car charging device in your home. The cost of installing a bidirectional charger (so energy can run from the house to the car and from the car to the house) is now also covered with this credit.

Inherited IRAs - If the decedent was required to take distributions  under the Required Minimum Distribution rules, the recipient of the IRA must take the RMD using the decedent's life expectancy and clear out the IRA by year 10. The rule for ROTH IRAs is that no distribution is required until year 10.

Gifts - The 2022 annual gift exclusion is $16,000. For 2023 the annual gift exclusion is $17,000.

Estate Exemption - The 2022 estate exemption equivalent is $12,060,000.  For 2023 the estate exemption equivalent exclusion is $12,920,000.

Digital Assets - IRS is still checking on any activities in the acquisition and distribution of any digital currency or NFTs.

Foreign Bank Accounts - IRS is also interested if you hold any income in any account outside the U.S.  The penalties for not disclosing this are severe. If you have any signature authority over an account outside the U.S., this will apply to you. If the balance on this account was over $10,000 at any time during the year, you must file the FinCEN 114 (FBAR) form with the U.S. Treasury.

Student Loan Forgiveness is still being challenged in court. We don’t know yet if this will stand up, but you did need to apply for this forgiveness already. If upheld, the forgiveness will be $10,000 for federally held (non-private) debt and $20,000 for Pell Grant recipients. There is an income limit on this forgiveness, and it is currently unclear if the states will treat this debt forgiveness as being tax free.

 

 

 

 

Federal tax calendar

MONTHLY

15th - Payroll deposits due for monthly depositors

20th - Sales tax due

 

JANUARY

15th – Fourth estimated tax payment due

31st – Quarterly reports due for fourth quarter

 

MARCH

15th – Partnership and S-Corporation tax returns due

 

APRIL

15th – Individual & C-Corporation tax returns due

15th – First estimated tax payment due

30th – Quarterly reports due for first quarter

 

JUNE

15th – Second estimated tax payment due

 

July

31st – Quarterly reports due for second quarter

 

SEPTEMBER

15th – Third estimated tax payment due

 

October

31st – Quarterly reports due for third quarter

 

Watson CPAs, PC

2680 S Val Vista Dr Ste 192

Gilbert, AZ 85295

 

phone: 480-491-7994

fax: 480-491-8179