Welcome to Baxter Tax Consulting – Assisting you with your financial and tax needs for 63 years!
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Estimated Tax Payment Deadlines:
- April 17, 2023
- June 15
- September 15
- January 15 of the following year
When Using Payment Vouchers:
- Each estimated tax payment should be paid by check or money order AND be accompanied by Form 1040-ES payment voucher.
- If you made an estimated tax payment last year you should receive a copy of the Form 1040-ES payment vouchers preprinted with your name, address, and social security number on it by mail from the Internal Revenue Service.
- Using the preprinted vouchers will speed up processing and reduce the chance of error.
- If you did not pay estimated taxes last year, but plan to do so this year, you will need to obtain a tax Form 1040-ES payment voucher from an accountant or via the Internet.
Please refer to www.IRS.gov for the proper address to mail your estimated tax payments.
Kindly make your check out to: UNITED STATES TREASURY
Write on the memo line of your check: 1040ES/1040 + the tax year for which you are paying.
Regarding Forms W-2 & 1099:
- Employers on or before January 31 of each year MUST mail these out.
- You will receive a separate W-2 Form from each employer for whom you have worked.
- If you have not received your W-2 Forms by February 15th, contact your employer or the Internal Revenue Service.
Regarding Form 1099:
You should receive your 1099 form(s) by February 1st of each year.
Underpayment Penalty – If you did not pay enough tax either through withholding or by making estimated tax payments, you will have an underpayment of estimated tax due AND you may have to pay a penalty fee.
Mandatory for this year – Coming in to have your taxes done? Due to new IRS and State regulations, the following information is needed for the completion of your tax return and for every person being claimed on your return.
Every person claimed on your return must provide copies of at least two of the following items:
- Driver’s License
- Social Security Card
- Birth Certificate
- Passport
- Earned Income Tax Credit (EITC) – If you are claiming the EITC credit from any of the categories below, you must provide two different documents for each qualifying individual:
- Residency
- School records or statement
- Landlord or property management statement
- Healthcare provider statement
- Medical records
- Childcare provider
- Social service records or statements
- Employer statement
- Place of worship statement
- Indian tribal official statement
- Disability of qualifying child
- Doctor Statement
- Other healthcare provider
- Social services agency statement
- Documents or other information
- Business license
- 1099 forms
- Bank statements
- Taxpayer summary of expenses
- Schedule C – If you are filling a schedule C you must bring the following:
- All bank statements
- 1099 K
- Proof of all deductions
- Mileage logbook
- Phone/Cell bills
- All receipts for meals and entertainment
- Proof of all schedule C deductions
What is New For Tax Season 2023?
Due Date of Your Tax Return: File Form 1040 or 1040-SR is due by May 16, 2023 as a result of the natural disasters that occurred nationwide during 2022.
***NOTE: All due dates for estimated tax are due on April 17, 2023.
Filing Status Name Changed to Qualifying Surviving Spouse:
The filing status qualifying widow(er) is now called “qualifying surviving spouse.” The rules for the filing status have NOT changed. The same rules that applied for qualifying widow(er) apply to qualifying surviving spouse.
Who Must File:
Generally, the amount of income you can receive before you must file a return has been increased. The Standard Deduction Amount for 2023 has been increased for ALL filers. The amounts are:
- Single or Married filing separately = $12,950.00
- Married filing jointly or Qualifying Surviving Spouse = $25,900.00
- Head of Household = $19,400.00
New lines 1a through 1z on Form 1040 and 1040-SR:
This year, line 1 is expanded and there are new lines 1a through 1 z. Some amounts that in prior years were reported on Form 1040, and some amounts were reported on Form 1040-SR are now reported on Schedule 1.
- Scholarships and fellowship grants are now reported on Schedule 1, line 8r.
- Pension or annuity from a nonqualified deferred compensation plan or a non-governmental section 457 plan are now reported on Schedule 1, line 8t.
- Wages earned while incarcerated are now reported on Schedule 1, line 8u.
New line 6c on Form 1040 and 1040-SR:
A checkbox was added to line 6c. Taxpayers who elect to use the lump-sum election method for their benefits will check this box. See instructions for Form 1040.
Credits for Sick and Family Leave for certain self-employed individuals are NOT available:
The credit for sick and family leave for certain self-employed individuals were NOT extended and you can no longer claim these benefits.
Health Coverage Tax Credit is Not Available:
The health coverage tax credit was NOT extended. The credit is NOT available after 2021.
Credit for Child and Dependent Care Expenses:
The changes to the credit for child and dependent care expenses implemented by the American Rescue Plan Act of 2021 (ARP) were not extended. For 2022, the credit for the child and dependent care expenses is non-refundable. The dollar limit on qualifying expenses is $3,000.00 for one qualifying person and $6,000.00 for two or more qualifying persons. The maximum credit amount allowed is 35% of your employment-related expenses.
Child tax credit and additional child tax credit:
The many changes to the child tax credit (CTC) implemented by ARP were not extended.
- The credit amount of the CTC is $2,000.00 for each qualifying child.
- The amount of CTC that can be claimed as a refundable credit is limited as it was in 2020, except the maximum additional child tax credit amount (ACTC) has increased to $1,500.00 for each qualifying child.
- A child must be under age 17 at the end of 2022 to be a qualifying child.
- Bona fide residents of Puerto Rico are no longer required to have these or more qualifying children to be eligible to claim the ACTC. Bona fide residents of Puerto Rico may be eligible to claim the ACTC if they have one or more qualifying children.
Child Tax credit enhancements have expired.
Many changes to the CTC for 2021 implemented by the American Rescue Plan Act of 2021 have expired. For tax year 2022:
- The enhanced credit allowed for qualifying children under age 18 has expired. For 2022, the initial amount of the CTC is $2,000.00 for each qualifying child. The credit amount begins to phase out where modified adjusted gross income exceeds $200,000.00 ($400,000.00 in the case of a joint return). The amount of the CTC that can be claimed as a refundable credit is limited as it was in 2020 except that the maximum ACTC amount for each qualifying child increased to $1,500.00.
- The increased age allowance for a qualifying child has expired. A child must be under age 17 at the end of 2022 to be a qualifying child.
ACTC and bona fide residents of Puerto Rico.
Bona fide residents of Puerto Rico are no longer required to have three or more qualifying children to be eligible to claim the ACTC. Bona fide residents of Puerto Rico may be eligible to claim the ACTC if they have one or more qualifying children.
Advance child tax credit payments.
Advance child tax credit payments have not been issued for 2022.
Delayed refund for returns claiming ACTC.
The IRS cannot issue refunds before mid-February 2023 for returns that properly claim ACTC. This time frame applies to the entire refund, not just the portion associated with ACTC.
Changes to the earned income credit (EIC).
The enhancements for taxpayers without a qualifying child implemented by ARP don’t apply for 2022. This means, to claim the EIC without a qualifying child in 2022, you must be at least age 25 but under age 65 at the end of 2022. If you are married filing a joint return, either you or your spouse must be at lease age 25 but under age 65 at the end of 2022. It doesn’t matter which spouse meets the age requirement, as long as one of the spouses does.
Nontaxable Medicaid waiver payments on Schedule 1.
In 2021, the nontaxable amount of Medicaid waiver payments were reported on Schedule 1, line 8z. In 2022, these amounts will be reported on Schedule 1, line 8s.
Nontaxable combat pay election.
In 2021, the amount of your nontaxable combat pay was reported on Form 1040 or 1040-SR, line 27b. In 2022, these amounts will be reported on Firm 1040 or 1040-SR, line 1.
Standard mileage rate.
The 2022 rate for business use of a vehicle is 58.5 cents a mile from January 1, 2022 to June 30, 2022, and 62.5 cents a mile from July 1, 2022 to December 31, 2022. The 2022 rate for use of your vehicle to do volunteer work for certain charitable organizations is 14 cents a mile from January 1, 2022 to December 31, 2022. The 2022 rate for operating expenses for a car when you use it for medical reasons are 18 cents from January 1, 2022 to June 30, 2022, and 22 cents a mile from July 1, 2022 to December 31, 2022.
Modified AGI limit for traditional IRA contributions.
For 2022, if you are covered by a retirement plan at work, your deduction for contributions to a traditional IRA is reduced (phased out) if your modified AGI is:
- More than $109,000.00 but less than $129,000.00 for a married couple filing a joint return or a qualifying surviving spouse.
- More than $68,000.00 but less than $78,000.00 for a single individual or head of household, or
- Less than $10,000.00 for a married individual filing a separate return.
If you either live with your spouse or file a joint return, and your spouse is covered by a retirement plan at work but you aren’t, your deduction is phased out if your modified AGI is more than $204,000.00 but less than $214,000.00 if your modified AGI is $214,000.00 or more, you can’t take a deduction for contributions to a traditional IRA.
Modified AGI limit for Roth IRA contributions.
For 2022, your Roth IRA contribution limit is reduced (phased out) in the following situations:
- Your filing status is married filing jointly or qualifying surviving spouse and your modified AGI is at least $204,000.00. You can’t make a Roth IRA contribution if your modified AGI is $214,000.00 or more.
- Your filing status is single, head or household, or married filing separately and you didn’t live with your spouse at any time in 2022 and your modified AGI is at least $129,000.00. You can’t make a Roth IRA contribution if your modified AGI is $114,000.00 or more.
- Your filing status is married filing separately, you live with your spouse at any time during the year, and your modified AGI is more than zero. You can’t make a Roth IRA contribution if your modified AGI is $10,000.00 or more.
2023 modified AGI limits.
You can find information about the 2023 contribution and AGI limits.
Tax law changes for 2023.
When you figure how much income tax you want withheld from your pay and when you figure your estimated tax, consider tax law changes effective in 2023.
Alternative minimum tax (AMT) exemption amount increased.
The AMT exemption amount is increased to $75,900.00 ($118,100.00 if married filing jointly or qualifying surviving spouse; $59,050.00 if married filing separately). The income levels at which the AMT exemption begins to phase out have increased to $539,900.00 ($1,079,800.00 if married filing jointly or qualifying surviving spouse).
Adoption credit.
The adoption credit and the exclusion for employer-provided adoption benefits have both increased to $15,950.00 per child in 2022. The amount begins to phase out if you have modified AGI in excess of $239,230.00 and is completely phased out if your modified AGI is $279,230.00 or more.
Reporting requirements for Form 1099-K.
Form 1099-K is issued by third party settlement organizations and credit card companies to report payment transactions made to you for goods and services.
You must report all income on your tax return unless excluded by law, whether you received the income electronically or not, and whether you received a Form 1099-K or not. The box 1a and other amounts reported on Form 1099-K are additional pieces of information to help determine the correct amounts to report on your return.
If you received a Form 1099-K that shows payments you didn’t receive or is otherwise incorrect, contact the Form 1099-K issued. Don’t contact the IRS; the IRS can’t correct an incorrect Form 1099-K. If you can’t get it corrected, or you sold a personal item at a loss, see the instructions for Schedule 1, lines 8z and 24z, later, for more reporting information.
Refunds For Returns That Were Filed LATE:
If you were due a refund but neglected to file a return, you must file a return within 3 years from the date the return was due (including extensions) to obtain a refund.
Frivolous Tax Returns:
- The IRS has published a list of positions that are identified as frivolous
- The penalty for filing a frivolous tax return is $5,000.00
- Remember to bring, fax, or scan via e-mail your relevant documents
Contact Information:
Virtual Office Phones: (626) 599–8999, (626) 599-8998, (562) 588-3873, and/or (562) 357-4253
FAX: (626) 599-8073
Email: sandi@baxtertax.com