Mon, 20 Mar 2023 20:44:28 -0700WeeblyMon, 20 Mar 2023 18:29:32 GMThttp://foxaccountingandtax.com/news-letterblog/metro-and-multnomah-county-personal-income-tax-amnesty​Metro and the County have announced that they will be forgiving penalties that were previously assessed on returns for the Metro Supportive Housing and County Pre-School For All taxes that came on line for 2021. Officials indicated that because these are new taxes, many taxpayers were not aware of the new requirements and failed to file the forms. Also, some of the major tax software providers are still not supporting these forms.  As a result, for tax year 2021 (returns and payments that were due on April 18, 2022), all penalties and interest will be waived for all taxpayers regardless of their individual circumstances. Taxpayers who fail to pay the principal tax owed for tax year 2021 after being notified by the Revenue Division may have their penalties and interest reinstated if they continue to refuse to pay the tax.

For tax year 2022, taxpayers who were required to make quarterly estimated payments (those who owe more than $1,000 for tax year 2022) will have their quarterly underpayment interest waived. All taxpayers will also have any underpayment penalty (but not late filing penalty or late payment penalty) waived for tax year 2022 only.
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All other penalties and interest associated with tax year 2022 and beyond will remain in effect.
For taxpayers who have already paid these penalty and interest items, refunds will be automatically created and issued within 2-4 months.]]>Tue, 14 Feb 2023 23:34:43 GMThttp://foxaccountingandtax.com/news-letterblog/irs-issues-guidance-on-state-tax-paymentsDuring 2022, 21 states issued payments to taxpayers for either disaster relief or as a general welfare stimulus payments.  In July of 2022 Oregon issued checks of $600 to individuals and families who had qualified for the Earned Income Credit on their 2020 income tax return.  There has been some confusion about the treatment of these payments on your 2022 federal income tax returns.  The IRS initially requested that taxpayers who had received these payment hold off on filing until they could make a determination as to the taxability of the payments.
The good news is that late last week, the Internal Revenue Service determined that "in the interest of sound tax administration" and other factors, taxpayers in these states will not need to report these payments on their 2022 tax returns.   We are now cleared to file returns for these taxpayers.  


]]>Fri, 13 Jan 2023 17:54:58 GMThttp://foxaccountingandtax.com/news-letterblog/important-dates-for-2023-tax-year-2022SAVE THE DATE: There are several important dates to keep in mind for this year's filing season.

• January 13: IRS Free File opens.
• January 17: Due date for tax year 2022 fourth quarter estimated tax payment.
• January 23: IRS begins 2023 tax season and starts accepting and processing individual 2022 tax returns.
• January 27: Earned Income Tax Credit Awareness Day to raise awareness of valuable tax credits available to many people – including the option to use prior-year income to qualify.
• March 15: Most S Corporations and Partnership returns are due
• April 18: National due date to file an individual 2022 tax return or request an extension and pay tax owed due to the Emancipation Day holiday in Washington, D.C.
• May 15: Non Profit tax returns are due.  
• September 15: Due date to file for S corporations and Partnerships that have requested an extension to file.
• October 16: Due date to file for individuals requesting an extension on their 2022 tax returns.

]]>Mon, 22 Aug 2022 20:13:30 GMThttp://foxaccountingandtax.com/news-letterblog/irs-announces-interest-rate-increase-for-fourth-quarter-2022​The IRS issued the rates for interest on tax underpayments and overpayments for the quarter beginning October 1, 2022. The rates for interest determined under Code Sec. 6621 will be 6 percent for overpayments (up from 5 percent for the prior quarter), 5 percent in the case of a corporation (up from 4 percent), 6 percent  for underpayments (up from 5 percent), and 8 percent  for large corporate underpayments (up from 7 percent), and the rate of interest paid on the portion of a corporate overpayment exceeding $10,000 will be 3.5 percent (up from 2.5 percent).]]>Thu, 30 Jun 2022 16:54:56 GMThttp://foxaccountingandtax.com/news-letterblog/irs-increases-standard-mileage-rate-for-remainder-of-2022In recognition of recent gasoline price increases, the IRS made this special adjustment for the final 6 months of 2022. The standard mileage rate for business travel will be 62.5 cents per mile, up 4 cents from the rate effective at the start of the year. The new rate for deductible medical or moving expenses (available for active-duty members of the military) will be 22 cents for the remainder of 2022, up 4 cents from the rate effective at the start of 2022. These new rates become effective July 1, 2022. The IRS provided legal guidance on the new rates in Announcement 2022-13PDF, issued today.

]]>Tue, 28 Dec 2021 22:43:07 GMThttp://foxaccountingandtax.com/news-letterblog/oregon-pass-through-entity-owners-may-be-able-to-avoid-salt-limitions-in-whole-or-in-part-for-2022-2023Beginning with tax year 2018, the Congress limited the amount an individual may deduct for state and local income taxes to $10,000.  That limit had a big impact on the total tax paid for many of our clients. Last fall, the IRS announced, with respect to pass-through entities (LLCs or other entities taxed as partnerships or S corporations), that, if state law allows or requires the entity itself to pay state and local taxes (which normally pass through to the owners of the entity), the entity will not be subject to the $10,000 state and local taxes deductibility cap (the “SALT Cap”).

For tax years 2022 and 2023 only, Oregon has enacted SB 727 which gives pass-through entities an opportunity to elect to be liable and pay a “business alternative tax" to the state of Oregon.  This tax will be 9% on pass through income (for businesses with $250,000 or less in pass through income.  The rate increases to 9.9% for businesses with income above this amount).

The mechanics of this federal and state legislation appears to be as follows:

• The pass through entity pays the state tax on profits.
• The pass through entity deducts the full amount of this state tax on their return.
• The shareholder or partner repots the income net of that tax on their return
• The shareholder or partner reports a credit on their Oregon return for the taxes paid on their behalf.

The end result is that the state tax on this income is deducted in full.  The $10,000 Salt limit can then be used for property taxes and state income tax paid on other income.  Again, this legislation applies to only 2022 and 2023.  This is brand new legislation. There will be some complexities that we have not addressed here.

]]>Thu, 23 Dec 2021 01:26:49 GMThttp://foxaccountingandtax.com/news-letterblog/metro-multnomah-county-roll-out-new-taxes-in-2021Many of you will have some new tax forms to file this year as there are two new, local taxes taking effect.  There is a new 1% income tax that will impact metro area residents with taxable incomes of $125,000 for single filers or $200,000 for joint filers. This tax will also be applicable to Metro area businesses with gross receipts of $5,000,000 or more. 

Additionally, Multnomah County has a new 1.5% personal income tax for county residents.  This tax has the same thresholds of $125,000 in taxable income for single filers and $200,000 for married filers.  The rate increases by an additional 1.5% for higher income individuals, kicking in at $250,000 for single filers $400,000 for married joint tax returns.

If you are subject to these taxes, check with your employer to see if you can set up withholding.

Both of these tax programs were approved by voters in November of 2020 and were intended to support specific social programs. The Metro tax, or Supportive Housing Services tax, is earmarked for housing the homeless. The County tax, or the Preschool For All Tax, was enacted to support preschool services.  To learn more about these taxes or the programs that they fund, see the following links:


Metro's Supportive Housing Services website
Multnomah County’s Preschool for All website

]]>Mon, 20 Dec 2021 21:21:36 GMThttp://foxaccountingandtax.com/news-letterblog/important-numbers-for-2021-20222021 Standard Mileage Rates:

• 56 cents per mile for business purposes
• 16 cents per mile for medical or moving purposes
• 14 cents per mile for charitable purposes

2022 Standard Mileage Rates:

• 58.5 cents per mile for business purposes
• 18 cents per mile for medical or moving purposes
• 14 cents per mile for charitable purposes

2022 Meal Allowances:

The daily meal allowance for most us locations is $64 and $74 for high-cost localities. 50% of this will generally be deductible for business travel meals. You can look up the per diem rates for specific locations here  The rate for transportation workers (truckdrivers) is $69 with a deductible rate of 80%.

2021 Retirement contribution limits:

Individual Retirement Accounts. The limit on annual contributions to an Individual Retirement Account (pretax or Roth or a combination) remains at $6,000 for 2021. The catch-up contribution limit, which is not subject to inflation adjustments, remains at $1,000. 

Roth IRA Phase-Outs.  In 2021, the AGI phase-out range for taxpayers making contributions to a Roth IRA is $198,000 to $208,000 for married couples filing jointly, up from $196,000 to $206,000 in 2020. For singles and heads of household, the income phase-out range is $125,000 to $140,000, up from $124,000 to $139,000 in 2020.

The SIMPLE. The contribution limit for SIMPLE retirement accounts is unchanged at $13,500 for 2021. The SIMPLE catch-up limit is still $3,000.

Employee 401(k)s. The annual contribution limit for employees who participate in 401(k), 403(b), most 457 plans and the federal government’s Thrift Savings Plan is $19,500 for 2021—for the second year in a row. The catch-up contribution limit for employees age 50 or older in these plans also remains steady: it’s $6,500 for 2021. Even if you don’t turn 50 until December 31, 2021, you can make the additional $6,500 catch-up contribution for the year.  Please note that these are the maximum numbers.  Contributions are limited to 25% of compensation.  

SEP IRAs and Solo 401(k)s. For the self-employed and small business owners, the amount they can save in a SEP IRA or a solo 401(k) goes up from $57,000 in 2020 to $58,000 in 2021. That’s based on the amount they can contribute as an employer, as a percentage of their salary; the compensation limit used in the savings calculation also goes up from $285,000 in 2020 to $290,000 in 2021. 

2022 Retirement Contribution Limits:

IRA's. IRA contribution limits remain at $6000 with a $1000 age 50 catch up amount for 2022. Phase out ranges are $204000 to $21400 for married joint $129,000 to $144,000 for single filers.  Once your income reach these upper limits Roth IRA contributions will be limited to zero.  

Employee 401(k) contributions for 2022 will top off at $20,500—a $1,000 increase from the $19,500 cap for 2021 and 2020—the IRS announced on Nov. 4. Plan participants age 50 or older next year can contribute an additional $6,500.

SIMPLE contribution limits are up to $14000 over 2021's $13500.  The age 50 and older catch up contribution remains unchanged at $3000.

Employee 401(k)s.  The 401(k) contribution limit will increase to $20,500 in 2022.  The cath-up contribution for participants over age 50 remains the same at $6500.

SEP IRAs and Solo 401(k)s - The IRS increased 2022 contribution limits for self-employed persons who contribute to a SEP IRA or Solo 401(k) from $58,000 to $61,000. For those 50 or older, there is also a $6,500 catch-up contribution amount allowing total contributions in 2022 of $67,500.


2021 HSA Contribution Limits:

An individual with coverage under a qualifying high-deductible health plan (deductible not less than $1,400) can contribute up to $3,600 — up $50 from 2020 — for the year to their HSA. The maximum out-of-pocket has been capped at $7,000. An individual with family coverage under a qualifying high-deductible health plan (deductible not less than $2,800) can contribute up to $7,200 — up $100 from 2020 — for the year. The maximum out-of-pocket has been capped at $14,000.An additional catch-up contribution of $1,000 per year is available for individuals 55 and older. If your spouse is also 55 or older, he or she may establish a separate HSA and make a “catch-up” contribution to that account.

2022 HSA Contribution Limits:

The annual inflation-adjusted limit on HSA contributions will be $3,650 for self-only and $7,300 for family coverage. That's about a 1.4 percent increase from 2021.  The catch up amount for individuals 55 or over remains unchanged at $1000.
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       ]]>Mon, 17 Dec 2018 17:44:36 GMThttp://foxaccountingandtax.com/news-letterblog/2019-mileage-rates-announcedThe Internal Revenue Service has issued the 2019 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.  Beginning on Jan. 1, 2019, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

• 58 cents per mile driven for business use, up 3.5 cents from the rate for 2018,
  
• 20 cents per mile driven for medical or moving purposes, up 2 cents from the rate for 2018, and
• 14 cents per mile driven in service of charitable organizations.

The business mileage rate increased 3.5 cents for business travel driven and 2 cents for medical and certain moving expense from the rates for 2018. The charitable rate is set by statute and remains unchanged.
It is important to note that under the Tax Cuts and Jobs Act, taxpayers cannot claim a miscellaneous itemized deduction for unreimbursed employee travel expenses. Taxpayers also cannot claim a deduction for moving expenses, except members of the Armed Forces on active duty moving under orders to a permanent change of station. For more details see Notice-2019-02.
The standard mileage rate for business use is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs.


Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.
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A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be used for more than four vehicles used simultaneously.
]]>Mon, 22 Oct 2018 20:10:10 GMThttp://foxaccountingandtax.com/news-letterblog/depreciation-changes-for-2019The Tax Cuts and Jobs Act was signed into law on Dec. 22, 2017, and it provides many incentives for small business owners, including three ramped up depreciation benefits you should know about:

1. Bonus Depreciation
Congress has increased bonus depreciation from 50 percent to 100 percent for property placed in service after Sept. 27, 2017. Generally, bonus depreciation applies to personal property, such as furniture and equipment, and now, used property also qualifies for the deduction.
Your clients can only elect out of bonus depreciation on an asset class basis and must attach an election statement to do so. Bonus depreciation will not begin phasing down until 2023 under the following schedule:

• 100 percent for property placed in service after Sept. 27, 2017, and before Jan. 1, 2023
• 80 percent for property placed in service during calendar year 2023
• 60 percent for property placed in service during calendar year 2024
• 40 percent for property placed in service during calendar year 2025
• 20 percent for property placed in service during calendar year 2026

2. Section 179 Expensing
Congress has doubled the Section 179 limit from $500,000 in prior years to $1 million in 2018 and beyond for qualified property. The annual phase-down threshold based on investment has increased from $2 million to $2.5 million.

The Section 179 deduction allows for more flexibility than bonus depreciation because taxpayers are able to pick and choose the assets and amounts versus an all-or-nothing approach required of bonus depreciation (per asset class). But remember, the 179 deduction is limited to business income and is recaptured if the business use percentage drops below 50 percent.

Under the current law, qualified real property eligible for Section 179 has been expanded to include personal property used predominantly to furnish lodging, so has been expanded to include rentals. Examples include beds, furniture, refrigerators, ranges, roofs, HVAC property, fire protection, alarm systems and security systems. To qualify, these items must be placed in service after the date nonresidential real property was placed in service.

It’s important for the small business owner to consider purchasing assets and taking advantage of the first-year deductibility, which thereby reduces their taxable income.

3. Luxury Auto Limits
Another big gift in the area of deprecation is the automobile depreciation limits, which have almost been tripled under the new law. As a reminder, the word “luxury” applies to almost all four-wheeled vehicles that drive on public roads and weigh less than 6,000 lbs.
Below are the auto limits beginning in 2018 under the new law. Remember to add $8,000 to the first-year amounts when bonus depreciation is taken.
Any depreciation that is not allowed because of these annual limitations is allowed once the vehicle reaches the end of the depreciation schedule but is still subject to certain limits:

• $10,000 year one (was $3,160 under prior law)
• $16,000 year two (was $5,100 under prior law)
• $9,600 year three (was $3,050 under prior law)
• $5760 years four through six (was $1,875 under prior law)

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