If I am self employed and don’t make that much money, do I have to file an income tax return?

Probably. You have to file an income tax return if your net earnings from self employment were $400 or more.

The IRS hired 5,000 new employees to handle phone calls for this year’s tax season. There should be a lot less calls also, since the Covid tax breaks have expired. This however may cause you to find that you tax bill is lower than last year. The IRS goal is to reduce the amount of time that you are on hold by 50% from last year.

One thing that is different this year is that companies that collect money for you, like PayPal, Square and Zelle are required to send you a 1099 if your collections exceed $600. That is a lower figure than last year. Many people who are involved in hobbies buying and selling things like collectibles and sports tickets to receive a 1099. Those people probably do not consider this business income. If you have a question about reporting this income, call our office.

If you have a 1099 and no matching income on your tax return, this could draw unwanted attention. Whether you sell items only online or not, the IRS and most states see any income you earn from these sales as taxable. Whether or not you will owe taxes for selling personal items, goods, or services online will depend on several factors, including whether you made a profit. If you sold an item you owned for personal use, such as a car, refrigerator, furniture, stereo, jewelry, or silverware, etc., at a gain, your gain is taxable as a capital gain.

Sold goods aren’t taxable as income if you are selling a used personal item for less than the original value. If you flip it or sell it for more than the original cost, you have to pay taxes on the surplus as capital gains.

How much can you sell for hobby before paying tax?

There is no set dollar limit, because some hobbies are more expensive than others. One of the reasons a hobby is not considered to be a business is that typically hobbies makes little or no profit.

It’s that time of year again, so hopefully you are putting your information in order. Perhaps you should call and make an appointment to have your taxes prepared to be sure that we are available.

PS Tax Solutions provides complete accounting services in Tampa or Lutz.  For more information, go to https://pstaxsolutions.com/ or call (813) 563-8724 for an appointment.

All corporations need to file an annual report. Consider doing it now so you don’t forget.

For profit Corporate Franchise Taxes and Annual Reports are due no later than March 1st of each year. Non-profit Corporations must file annual reports by March 1. Foreign Corporations are required to file an Annual Report on or before June 30th.

No, you don’t have until April 15^th, like your personal Federal income tax. If you are late, there is a $400 fine. And the State of Florida doesn’t have a sense of humor. If you say, “OK guys, I was only a few days late”. They don’t care. They will not waive the $400 fine.

Also, if you do not file the Annual Report in a timely manner, the Secretary of State can administratively dissolve your company. If your company is administratively dissolved, your company is no longer in good standing with the State, though it may still be sued.

However, this time of year you may receive an email that appears to be from the State reminding you to file your return, and it may appear to be from the State, and it is not. If you read it carefully, it says it will assist you in filing your return. Don’t waste your money. There is nothing to filling your return. You can do it in 5 minutes. Don’t waste your money.

The State’s website is Sunbiz.org. If it isn’t Sunbiz,org, don’t click on it.

Here is the link to file your Annual report: https://services.sunbiz.org/Filings/AnnualReport/FilingStart

PS Tax Solutions provides complete accounting services in Tampa or Lutz.  For more information, go to https://pstaxsolutions.com/ or call (813) 563-8724 for an appointment.

Rates

The same seven tax rates in effect for the 2022 tax year – 10%, 12%, 22%, 24%, 32%, 35% and 37% – still apply for 2023.

Brackets

What’s changing is the amount of income that gets taxed at each rate.

For example, in 2023, an unmarried filer with taxable income of $95,000 will have a top rate of 22%, down from 24% in 2022. That shakes out to tax savings of $429, assuming no changes in income between the two years.

Here’s how the math works: The first $11,000 of income will be taxed at 10%; the next $33,725 will be taxed at 12%; the last $50,275 will be taxed at 22%. That equals a tax bill of $16,207 for 2023, compared to $16,636 for 2022.

The top limit for each bracket will rise. That means in 2023 it will take higher income to become subject to each tax bracket.

The fact that you will remain in a lower bracket with higher income is generally good for taxpayers.

The IRS adjusts the brackets to account for inflation.

And during 2022 inflation rose higher than it had been in four decades.

You don’t need to worry about any of this. PS Tax Solutions will take care of everything. PS Tax Solutions provides complete accounting services in Tampa or Lutz.  For more information, go to https://pstaxsolutions.com/ or call (813) 563-8724 for an appointment.

You only have 6 weeks before the end of the year. Now is the time to make decisions that will help you reduce your tax bill for this year.

Gift Tax

Have kids? Are you trying to transfer money to the kids now instead of waiting until you pass on? That’s great. But if you give them money, the recipient uses the money to make a profit, like interest on savings, or investments, technically that money is taxable to the recipient. The gift tax exemption for 2022 is $16,000. Keep that amount in mind and make sure allocate the amounts each year to avoid complications. The annual exclusion is per recipient; it isn’t the sum total of all your gifts. That means, for example, that you can give $16,000 to your child, another $16,000 to a friend, another $16,000 to a neighbor, and so on all in 2022 without having to file a gift tax return.

If you’re married, you and your spouse may give away up to $16,000 each without needing to file a gift tax return in 2022.

Donations

If you are making donations, make sure you get the checks in the mail before the end of December to make sure that you get the full deduction.

Pay an Extra Mortgage payment

Maybe you could pay January’s mortgage payment before the end of the month in December in order to get the deduction on this year’s taxes.

Sell Stocks

Stocks are down right now. The Nasdaq 100 has dropped nearly 33 percent so far in 2022, the Dow Jones Industrial Average lost more than 20 percent while the world’s best-known cryptocurrency, Bitcoin, lost nearly 60 percent of its value.

Did you lose money? If so, you could sell the stock before the end of the year to take advantage the tax write-off on this year’s taxes. Be careful not to turn around and buy the same stock again within 30 days. That would cause the “wash-sale” rule which would make your write off invalid.

Retirement Fund

Make sure that you try to put the maximum amount in your retirement account for tax savings. Individuals can contribute up to $20,500 to a 401(k), plus $6,500 more if age 50 or up. The 2022 pay in cap for IRAs is $6,000, plus an extra $1,000 if age 50 and older.

If you are a client of PS Tax Solutions, we will keep you on your toes and help you meet your deadlines. PS Tax Solutions provides complete accounting services in Tampa or Lutz.  For more information, go to https://pstaxsolutions.com/ or call (813) 563-8724 for an appointment.

The Internal Revenue Service today reminds taxpayers who requested an extension to file their 2021 tax return to do so by Monday, October 17.

We Keep you on your toes

While October 17 is the last day for most people to file a Form 1040 to avoid the late filing penalty, those who still need to file should do so as soon as possible. If they have their information ready, there’s no need to wait.

However, some taxpayers may have additional time. They include:

• Members of the military and others serving in a combat zone. They typically have 180 days after they leave the combat zone to file returns and pay any taxes due.

• The IRS calls special attention to people hit by recent national disasters, including Hurricane Ian. Taxpayers with an IRS address of record in areas covered by Federal Emergency Management Agency disaster declarations in Missouri, Kentucky, the island of St. Croix in the U.S. Virgin Islands and members of the Tribal Nation of the Salt River Pima Maricopa Indian Community have until November 15, 2022, to file various individual and business tax returns. Taxpayers in Florida, Puerto Rico, North Carolina, South Carolina, parts of Alaska and Hinds County, Mississippi, have until February 15, 2023. This list continues to be updated regularly; potentially affected taxpayers by recent storms should visit the disaster relief page on IRS.gov for the latest information.

(Courtesy of the IRS website)

IRS announces tax relief for victims of Hurricane Ian in Florida.

Victims of Hurricane Ian that began September 23 in Florida now have until February 15, 2023, to file various individual and business tax returns and make tax payments, the Internal Revenue Service announced today.

Following the recent disaster declaration issued by the Federal Emergency Management Agency, the IRS announced today that affected taxpayers in certain areas will receive tax relief.

Individuals and households affected by Hurricane Ian that reside or have a business anywhere in the state of Florida qualify for tax relief. The declaration permits the IRS to postpone certain tax-filing and tax-payment deadlines for taxpayers who reside or have a business in the disaster area. For instance, certain deadlines falling on or after September 23, 2022, and before February 15, 2023, are postponed through February 15, 2023.

This means individuals who had a valid extension to file their 2021 return due to run out on October 17, 2022, will now have until February 15, 2023, to file. The IRS noted, however, that because tax payments related to these 2021 returns were due on April 18, 2022, those payments are not eligible for this relief.

The February 15, 2023, deadline applies to the quarterly estimated tax payments, normally due on January 17, 2023 and to the quarterly payroll and excise tax returns normally due on October 31, 2022, and January 31, 2023. Businesses with an original or extended due date also have the additional time, including calendar-year corporations whose 2021 extensions run out on October 17, 2022.

If you are a client of PS Tax Solutions, we will keep you on your toes and help you meet your deadlines. PS Tax Solutions provides complete accounting services in Tampa or Lutz.  For more information, go to https://pstaxsolutions.com/ or call (813) 563-8724 for an appointment.

You’ve read that they passed the “inflation Reduction Act”. You should consider the tax credits that are available next year in your tax planning strategy. It might affect whether you decide to purchase a new air conditioner, a new water heater, a new or used electric vehicle and how you purchase health insurance.

Health Care extensions.

Are you aware of the American Rescue Plan Act that has been extended. It allows taxpayers with incomes above 400 percent of the Federal Poverty Level to qualify for the Premium Tax Credit. There are two ways to get the credit. If you qualify for advance payments of the premium tax credit (APTC), you can choose to have amounts paid directly to the insurance provider to help cover your monthly premiums. You can also choose to get all of the benefit when you claim the PTC on your tax return. If you haven’t discussed this with us before, make sure you do.

The Affordable Care Act has been extended. The Affordable Care Act (ACA) is designed to make guaranteed issue health insurance plans available to everyone. These plans cover preexisting conditions along with a list of essential health benefits that don’t change from plan to plan.

Home Improvement credit for Energy Efficiency.

The Nonbusiness Energy Property Credit was extended through 2032. Inflation Reduction Act brings it back to life, improves it substantially, and even gives it a new name – the Energy Efficient Home Improvement Credit.

The old, expired credit was worth 10% of the costs of installing certain energy-efficient insulation, windows, doors, roofing, and similar energy-saving improvements in your home. You could also claim the credit for 100% of the costs associated with installing certain energy-efficient water heaters, heat pumps, central air conditioning systems, furnaces, hot water boilers, and air circulating fans.

The annual limits for specific types of qualifying improvements will also be modified – and for the better. Beginning in 2023, they will be:

• $150 for home energy audits:
• $250 for an exterior door ($500 total for all exterior doors);
• $600 for exterior windows and skylights; central air conditioners; electric panels and certain related equipment; natural gas, propane, or oil water heaters; natural gas, propane, or oil furnaces or hot water boilers; and
• $2,000 for electric or natural gas heat pump water heaters, electric or natural gas heat pumps, and biomass stoves and boilers (for this one category, the $1,200 annual limit may be exceeded).

For eligible home improvements after 2024, no credit will be allowed unless the manufacturer of any purchased item creates a product identification number for the item, and the person claiming the credit includes the number on his or her tax return.

Electric Vehicles:

The Inflation Reduction Act extends the Clean Vehicle Credit until the end of 2032 and creates new credits for previously-owned clean vehicles and qualified commercial clean vehicles.

Tax credits include up to:

• $7,500 for the purchase of new qualified commercial clean vehicles;
• $40,000 for vehicles over 14,000 pounds; and
• the lesser of 30 percent of the price of used electric vehicles or $4,000.

Limitations apply based on the manufacturer’s suggested retail price of the vehicle. There are also limitations for the new vehicle credit based on adjusted gross income (AGI) thresholds – for single or married filing separately taxpayers, the limit is $150,000; for taxpayers filing as head of household, the limit is $225,000; and for married filing jointly, or surviving spouse taxpayers, the limit is $300,000. Reduced AGI limitations apply to the used vehicle credit.

PS Tax Solutions provides complete accounting services in Tampa or Lutz.  For more information, go to https://pstaxsolutions.com/ or call (813) 563-8724 for an appointment.