UPCOMING DEADLINES
Fourth Quarter 2022 Estimated Tax Payments are due by Tuesday, January 17, 2023. (see below)
INCOME TAX RETURNS
Partnership and S-Corporation tax returns are due Wednesday, March 15, 2023. Individual and C-Corporation tax returns are due Tuesday, April 18, 2023.
PAYROLL REPORTING
Forms 1099-NEC, W-2, and W-3 are due Tuesday, January 31, 2023. Forms 1099-MISC are due Tuesday, February 28, 2023 (paper-filed) or Friday, March 31, 2023 (e-filed).
Getting ready for tax filing season
“EXTENDED” FILING DEADLINE: With the weekend and federal holiday, the filing deadline for individual income tax returns this year is pushed back to April 18th. As always, the earlier you get your documents to us the better, so please send us your W-2s, 1099s, K-1s, etc. no later than February 15th. Most should be delivered to you in late January or early February.
TAXCADDY: We will continue to use TaxCaddy as our document delivery system. For clients that are new to the Dental Accounting Group, you will receive a separate email with instructions on how to setup your account. It is a secure portal that allows us to request specific documents, and you can even upload them by taking pictures with your phone. Once your return is complete, it is also the place where you will receive your digital copy of the return. If you have not received your invitation by early February, please let us know.
ID THEFT PIN: If you have been the victim of identity theft in recent years, the IRS will likely mail you a PIN number which must be included with your filed tax return. Do not forget to include that letter with your tax documents.
2023 LIMITS AND UPDATES
With recent inflation, several IRS amounts received significant increases for 2023.
|
Amount |
2022 |
2023 |
|
401(k) deferral max |
20,500 |
22,500 |
|
401(k) catch-up if 50+ |
6,500 |
7,500 |
|
SIMPLE deferral max |
14,000 |
15,500 |
|
SIMPLE catch-up if 50+ |
3,000 |
3,500 |
|
FICA wage base |
147,000 |
160,200 |
|
Business mileage rate |
62.5 cents/mile |
65.5 cents/mile |
|
Standard deduction (single) |
12,950 |
13,850 |
|
Standard deduction (married joint) |
25,900 |
27,700 |
While the individual tax rates remain the same ranging from 10% to 37%, the brackets within which each rate begins have been adjusted upward as well.
FORM 1099-K REPORTING
Form 1099-K has been around for several years and is used by payment processing companies (credit cards, PayPal, Venmo, etc.) to report certain transactions. In prior years, they were only required if a recipient received more than $20,000 and 200 transactions in a year. That was set to change to $600 and no transaction minimum for tax year 2022. This would result in millions more 1099-Ks being issued to individuals who had never received one before.
After many complaints, the IRS acquiesced at the last minute to delaying the change for another year, so the lower threshold will go into effect this tax year, with the first such 1099-Ks issued in January 2024.
It is important to note that the actual taxation of such transactions has not changed. If you receive payment for services through Venmo or sell something on eBay, you are required to report the income (if the sale results in a gain; a loss is likely a non-deductible personal loss and is not reported). The only change surrounds who is issued a 1099-K.
The backlash related to scenarios such as splitting the bill at a restaurant and reimbursing a friend through PayPal. That remains a non-taxable event. But the payment processing company likely does not know what the payment was for and will issue a 1099-K if your annual total exceeds $600. While still a little unclear, the likely result in that scenario is to show the “income” on your individual income tax return, then back it out as non-taxable. Failing to report the income at all could result in a notice from the IRS that you underreported income.
NEW WASHINGTON CAPITAL GAINS TAX
As a reminder, Washington State enacted a 7% tax on capital gains for Washington residents with gains above $250,000 (with exceptions for assets such as real estate, property used in a trade or business, etc.). It went into effect January 1, 2022, which, as things stand, means taxes on 2022 gains will be due by April 18, 2023. According to the WA DOR, if the Court eventually finds the statute to be unconstitutional, any tax payments received will be promptly refunded with interest.
We have explored this topic multiple times, but we still do not have a final decision on if it will stand. A recent court case reversed a prior decision that barred the State from collecting the tax. While it technically allows the State to collect the tax, it essentially just ensures that the State Supreme Court will have to ultimately decide on the tax’s legality.
Fourth Quarter 2022 Estimated Tax Payments
***THIS IS ONLY FOR THOSE THAT PAY BY QUARTERLY INSTALLMENTS***
We highly encourage that estimated payments be made online at EFTPS.gov – this very convenient site allows you to enter multiple payments and dates in advance. Call us if you need help!
However, if you still prefer to mail in a paper check:
If we have prepared your 2022 return, you will find pre-printed estimated tax payment vouchers in your TaxCaddy account or in your folder if we mailed your tax return to you. Otherwise, detach or photocopy the voucher below.
- Complete the name, address and social security number sections.
- Fill in amount (call us at 425.216.1612 if you have questions regarding the amount).
- Address your envelope to:
Internal Revenue Service
PO Box 802502
Cincinnati, OH 45280-2502
*** NOTE THE NEW ADDRESS – DO NOT SEND TO SAN FRANCISCO ANYMORE ***
- Make your check payable to the United States Treasury.
- Note your social security number and “2022 1040-ES” on the memo line of your check.
- Enclose the voucher and check in your envelope addressed to the Internal Revenue Service (see above).
- Mail on or before Tuesday, January 17, 2023.
