IRS NEWS 1/4/2023

Tax credits and deductions change the amount of a person’s tax bill or refund. People should understand which credits and deductions they can claim and the records they need to show their eligibility.

Tax credits
A tax credit reduces the income tax bill dollar-for-dollar that a taxpayer owes based on their tax return.  

Some tax credits, such as the Earned Income Tax Credit, are refundable. If a person’s tax bill is less than the amount of a refundable credit, they can get the difference back in their refund.

To claim a tax credit, people should:

Keep records to show their eligibility for the tax credits they claim.

Check now to see if they qualify to claim any credits next year on their tax return.

Deductions
Deductions can reduce the amount of a taxpayer’s income before they calculate the tax they owe.

Most people take the standard deduction. The standard deduction changes each year for inflation. The amount of the standard deduction depends on a taxpayer’s filing status, age and whether they’re blind and whether the taxpayer is claimed as a dependent by someone else. 

Some people must itemize their deductions, and some people may choose to do so because it reduces their taxable income more than the standard deduction. Generally, if a taxpayer’s itemized deductions are larger than their standard deduction, it makes sense for them to itemize.

Interactive Tax Assistant
Find help with tax questions based on specific circumstances with the Interactive Tax Assistant. It can help a person decide if they’re eligible for many popular tax credits and deductions.

 More information:

Tax credits for individuals: What they mean and how they can help refunds

Deductions for individuals: What they mean and the difference between standard and itemized deductions

Back to top

IRS NEWS 1/4/2023

0

Required Minimum Distributions

IRS News updated 12/28/2023

Required Minimum Distributions (RMDs) are minimum amounts you must withdraw from your IRA or retirement plan account when you reach age 72. Beginning in 2023, the SECURE 2.0 Act changed the age RMDs must begin to age 73 for taxpayers who are born after 1950.

Roth IRAs are not subject to RMDs until after the death of the original account owner. Designated Roth accounts in a 401(k) or 403(b) plan are subject to the RMD rules for 2023. However, for 2024 and later years, RMDs are no longer required from designated Roth accounts.   

RMDs from an IRA

You can meet your RMD requirement by withdrawing from one or more of your traditional IRAs, or SEP, SIMPLE, and SARSEP IRAs. It’s not necessary to take a withdrawal from each of your IRAs, but your total withdrawals must be at least equal to the total RMD due from all IRAs. 

Reach age 72 in 2022: The first RMD from your IRAs was due by April 1, 2023, based on the December 31, 2021, account balances. Your second RMD is due by December 31, 2023, based on the December 31, 2022, account balances.

Reach age 72 in 2023:  Your first RMD is for 2024, the year you reach age 73, and is due by April 1, 2025.

Reach age 73 in 2023: You were age 72 in 2022 and your first RMD for 2022 was due by April 1, 2023. Your second RMD is due by December 31, 2023, based on your December 31, 2022, account balances.

RMDs from a retirement plan

To satisfy the RMD requirements in a retirement plan, you must take RMDs separately from each of your retirement plans. If you reached age 72 in 2022, your first RMD for 2022 is due by April 1, 2023, based on your December 31, 2021, account balance. Your 2023 RMD is due by December 31, 2023, based on your December 31, 2022, account balance.

If you’re still employed by the plan sponsor, and not a 5% owner, your plan may allow you to delay taking RMDs from that workplace retirement plan until you retire. IRS rules always require you to take RMDs beginning at age 72 from traditional IRAs, SEP, SIMPLE and SARSEP IRA plans, even if you’re still employed.

For more information, see the recent IRS news release reminding those age 73 and older to make required withdrawals from IRAs and retirement plans by December 31, 2023.   

0

States raising the minimum wage in 2024

Here are the states increasing their minimum wage on Jan. 1 2024

  • Alaska: $11.73
  • Arizona: $14.35
  • California: $16
  • Colorado: $14.42
  • Connecticut: $15.69
  • Delaware: $13.25
  • Hawaii: $14
  • Illinois: $14
  • Maine: $14.15
  • Maryland: $15
  • Michigan: $10.33
  • Minnesota: $10.85
  • Missouri: $12.30
  • Montana: $10.30
  • Nebraska: $12
  • New Jersey: $15.13
  • New York: $16
  • Ohio: $10.45
  • Rhode Island: $14
  • South Dakota: $11.20
  • Vermont: $13.67
  • Washington: $16.28 
0

IRS updates frequently asked questions for the New, Previously Owned, and Qualified Commercial Clean Vehicle Credits

IR-2023-251, Dec. 26, 2023


WASHINGTON — The Internal Revenue Service today updated frequently asked questions in Fact Sheet 2023-29 to provide guidance related to the critical mineral and battery component requirements for the New, Previously Owned, and Qualified Commercial Clean Vehicle Credits.

These FAQs supersede earlier FAQs that were posted in Fact Sheet 2023-22 on Oct. 6, 2023.

The FAQs revisions are as follows:

  • Topic A: Eligibility Rules for the New Clean Vehicle Credit: Added Questions 13 and 14.

More information about reliance is available.

IRS-FAQ

Back to Top

0

Blog at WordPress.com.

Up ↑