2022 Winter Letter
Dear Clients & Friends,
We hope you enjoyed the Holidays with family and friends and were able to continue your family traditions or even start new ones. It’s important now more than ever to enjoy these times with family and friends but also important to stay safe. Please remember if you have been exposed and/or tested positive for Covid, Flu or any other contagious illness to please contact the office prior to any appointments either here at the office or at your place of business to reschedule.
As we begin a new year, it’s important to think about tax planning for 2023 and the various tax rules, tax breaks and deductions that could affect you. At your earliest convenance, please provide us all necessary information so we can help plan and allow you to pay the lowest taxes possible.
Enclosed, is our winter newsletter. In it, you’ll find a review of some key changes to the tax code for 2022 and 2023.
Due to inflation, the income tax brackets and standard deductions are subject to increase by approximately 3 to 3.8 percent. In 2022 the Child Tax Credit was reduced to $2,000 per child and the Dependent Care Credit has also been reduced to the 2020 levels. For 2022, the maximum qualified childcare expenses are $3,000 for one child and $6,000 for two or more. Business owners’ meal expenses were still 100% deductible for 2022 but returns to 50% deductible in 2023. For our clients who are teachers, the deduction for out-of-pocket classroom expenses have increased to $300 for single and $600 for married.
There is increased tracking and reporting of virtual currency transactions required in 2023. Brokers and dealers will be required to provide more in-depth reporting of cryptocurrency to the IRS starting this year. Many firms started implementing the change in 2022.
This editions newsletter was printed before the IRS decided to delay the new 1099-K filing for 2022. The one-year delay is due to Congress failing to make changes to the new law which was part of the 2021 American Rescue Plan Act. In previous newsletters it was reported that if you received more than $600 in digital payments in 2022 and the activity was for business, you would receive a 1099-K in January from PayPal, Venmo, CashApp, etc. The reporting delay does not change the overall obligation of those doing business through these sites to report any taxable income.
Changes in Charitable Giving Deductions for 2022. The deduction of $300 for single and $600 for joint against income expired on December 31, 2021. In order to receive the charitable deduction, taxpayers will need to itemize deductions on their return.
Tax preparation organizers will be sent out over the next couple of weeks and we are starting to schedule appointments for clients to bring in their tax information. We ask that you have all your information when you drop off your tax information or request an appointment. We generally use the first in first out method when preparing returns, so getting in early gets you closer to the top of the list. Call us if you currently do not receive an organizer and would like one to assist you in gathering your information.
Please contact our office if you have questions concerning any information in this newsletter. We’re always here to help our clients. New Year means New Tax Season. Starting January 3rd, we’ll be open 6 days a week. Monday – Friday 8:30 a.m. – 5:00 p.m. and Saturday 9:00 a.m. – 2:00 p.m. Stop in as soon as you have all your tax information together or just to say Hi.
Thank you for your continued patronage and we’re looking forward to a great 2023!
Sincerely,
Starkey & Company, PA