Warren A Frank, CPA

Effective January 1, 2024, there is now a filing requirement for all C Corps, S Corps and LLC's in existence to file Beneficial Ownership Information to FINCEN, the Financial Crimes Enforcement Network.

This information must be filed prior to January 1, 2025. Companies formed in 2024 will have 90 days to file and companies created in 2025 will have 30 days to file. Penalties for $500 a day up to $10,000 can occur for non filing.

Beneficial ownership is basically 25% or more, of the company.

Here is a helpful website for information: https://www.fincen.gov/boi-faqs

The Internal Revenue Service today announced Monday, Jan. 29, 2024, as the official start date of the nation’s 2024 tax season when the agency will begin accepting and processing 2023 tax returns.
The IRS expects more than 128.7 million individual tax returns to be filed by the April 15, 2024, tax deadline.
You can still prepare and file your return prior to that date. It just means that the IRS won't process them until January 29th.

IRS announces delay in Form 1099-K reporting threshold for third-party platform payments for 2023; plans for a threshold of $5,000 in 2024 to phase in implementation

WASHINGTON — Following feedback from taxpayers, tax professionals and payment processors and to reduce taxpayer confusion, the Internal Revenue Service today released Notice 2023-74 announcing a delay of the new $600 Form 1099-K reporting threshold for third-party settlement organizations for calendar year 2023.

As the IRS continues to work to implement the new law, the agency will treat 2023 as an additional transition year. This will reduce the potential confusion caused by the distribution of an estimated 44 million Forms 1099-K sent to many taxpayers who wouldn’t expect one and may not have a tax obligation. As a result, reporting will not be required unless the taxpayer receives over $20,000 and has more than 200 transactions in 2023.

Given the complexity of the new provision, the large number of individual taxpayers affected and the need for stakeholders to have certainty with enough lead time, the IRS is planning for a threshold of $5,000 for tax year 2024 as part of a phase-in to implement the $600 reporting threshold enacted under the American Rescue Plan (ARP).

Following feedback from the tax community, the IRS is also looking to make updates to the Form 1040 and related schedules for 2024 that would make the reporting process easier for taxpayers. Changes to the Form 1040 series – the core tax form for more than 150 million taxpayers – are complex and take time; delaying changes to tax year 2024 allows for additional feedback.
“We spent many months gathering feedback from third-party groups and others, and it became increasingly clear we need additional time to effectively implement the new reporting requirements,” said IRS Commissioner Danny Werfel. “Taking this phased-in approach is the right thing to do for the purposes of tax administration, and it prevents unnecessary confusion as we continue to look at changes to the Form 1040. It’s clear that an additional delay for tax year 2023 will avoid problems for taxpayers, tax professionals and others in this area.”

The ARP required third party settlement organizations (TPSOs), which include popular payment apps and online marketplaces, to report payments of more than $600 for the sale of goods and services on a Form 1099-K starting in 2022. These forms would go to the IRS and to taxpayers and would help taxpayers fill out their tax returns. Before the ARP, the reporting requirement applied only to the sale of goods and services involving more than 200 transactions per year totaling over $20,000.

The IRS temporarily delayed the new requirement last year.
Reporting requirements do not apply to personal transactions such as birthday or holiday gifts, sharing the cost of a car ride or meal, or paying a family member or another for a household bill. These payments are not taxable and should not be reported on Form 1099-K.

However, the casual sale of goods and services, including selling used personal items like clothing, furniture and other household items for a loss, could generate a Form 1099-K for many people, even if the seller has no tax liability from those sales.

IRS issues renewed warning on Employee Retention Credit claims; false claims generate compliance risk for people and businesses claiming credit improperly

WASHINGTON -- The Internal Revenue Service today issued a renewed warning urging people to carefully review the Employee Retention Credit (ERC) guidelines before trying to claim the credit as promoters continue pushing ineligible people to file.

The IRS and tax professionals continue to see third parties aggressively promoting these ERC schemes on radio and online. These promoters charge large upfront fees or a fee that is contingent on the amount of the refund. And the promoters may not inform taxpayers that wage deductions claimed on the business’ federal income tax return must be reduced by the amount of the credit.

“While this is a legitimate credit that has provided a financial lifeline to millions of businesses, there continue to be promoters who aggressively mislead people and businesses into thinking they can claim these credits,” said Acting IRS Commissioner Doug O’Donnell. “Anyone who is considering claiming this credit needs to carefully review the guidelines. If the tax professional they’re using raises questions about the accuracy of the Employee Retention Credit claim, people should listen to their advice. The IRS is actively auditing and conducting criminal investigations related to these false claims. People need to think twice before claiming this.”

Here are some changes for your 2022 tax filings. These changes are expected to reduce the amount of refunds people will see this tax season.

During 2021, taxpayers could take up to $600 in deductions for charitable donations even if they didn’t itemize. For 2022, there will be no above the line charitable deductions.

The child tax credit will revert back to $2,000 per child, if eligible, from the 2021 amount of $3,600.

The child and dependent care credit will return to a maximum of $2,100 in 2022 instead of $8,000 in 2021.

2022 Recap Of Some Important Items:
The standard deduction for single taxpayers is $12,950, and $25,900 for married filing jointly.
Income tax rates cap at 37% for individuals whose income exceeds $539,000, or $647,850 for married filing jointly.
Long Term capital gains rates are as follows: 0% for single filers with income under $41,675, 15% up to $459,750 and 20% if your income is over that amount. For married jointly the amounts are $83,350 and $517,200.
The annual exclusion for gifts for 2022 is $16,000. This goes up to $17,000 in 2023. The lifetime exemption is at $12,060,000.
Child credits for 2022 reverts to $2,000 per child.
Standard mileage rates for 2022 are $.585 per mile from Jan 1 to June 30 and $.625 per mile from July 1 to Dec 31. That means you have to have accurate records for your mileage for each period.
Required Minimum Distributions, or RMD’s must be started when you reach age 72. Prior to 2019, the age was 70 ½.

The Internal Revenue Service reminds taxpayers earning income from selling goods and/or providing services that they may receive Form 1099-K, Payment Card and Third-Party Network Transactions (Paypal, Venmo, Etc), for payment card transactions and third-party payment network transactions of more than $600 for the year.
There is no change to the taxability of income; the only change is to the reporting rules for Form 1099-K. As before, income, including from part-time work, side jobs or the sale of goods, is still taxable. Taxpayers must report all income on their tax return unless it is excluded by law, whether they receive a Form 1099-NEC, Nonemployee Compensation; Form 1099-K; or any other information return.
The IRS emphasizes that money received through third-party payment applications from friends and relatives as personal gifts or reimbursements for personal expenses is not taxable.

Gifting
The annual gift tax exclusion provides a simple, effective way of cutting estate taxes and shifting income to heirs. For example, in 2022, you can make annual gifts of up to $16,000 ($32,000 for a married couple) to as many donees as you desire. The $16,000 is excluded from the federal gift tax so that you will not incur gift tax liability.

Direct Payments
Direct payments for medical or educational purposes indirectly shift income to heirs; however, it only works if the payments are made directly to the qualifying educational institution or medical provider. This strategy allows you to give more than the annual gifting limit of $16,000 per donee. For example, if you're a grandparent, you can pay tuition directly to your grandchild's boarding school, college, or university. Room and board, books, supplies, or other nontuition expenses are not covered. Similarly, they can make direct payments to a hospital or medical provider. Medical expenses reimbursed by insurance are not covered, however.

Understanding how the IRS contacts taxpayers:
The IRS does not send text messages including shortened links, asking the taxpayer to verify some bit of personal information. These fraudulent messages often contain bogus links claiming to be IRS websites or other online tools.
The IRS does not initiate contact with taxpayers by email to request personal or financial information. The IRS initiates most contacts through regular mail.
Taxpayers will generally first receive several letters from the IRS in the mail before receiving a phone call. However, there are circumstances when the IRS will call, including when a taxpayer has an overdue tax bill, a delinquent or unfiled tax return or has not made an employment tax deposit.
The IRS does not leave pre-recorded, urgent or threatening voice messages, including demanding payment immediately, threaten to call local police or ask for credit or debit card information over the phone.
If you do receive a fraudulent email or text message you can forward it to [email protected].

If you're self-employed and use your car for business, you can deduct certain business-related car expenses. The first thing small business owners need to know is that there are two options for claiming deductions:

Actual Expenses. To use the actual expense method, you need to figure out the actual costs of operating the car for business use. You are allowed to deduct the business-related portion of costs related to gas, oil, repairs, tires, insurance, registration fees, licenses, and depreciation (or lease payments).

Standard Mileage Rate. To use the standard mileage deduction, multiply the standard mileage rate set by the IRS each year by the number of business miles traveled during the year. Normally, there is one set rate for the entire calendar year; however, in 2022, there are two rates: 58.5 cents per mile for the first six months (January through June) and 62 cents per mile for the last six months (July through December)