2023 Residential Clean Energy Credit
The Inflation Reduction Act of 2022 extended and increased the Residential Energy Credit and renamed it the Residential Clean Energy Credit.
2023 IRS Security Summit
This year’s Security Summit tax professional summer campaign is emphasizing the following series of simple actions that they can take to better protect their clients and themselves from sensitive data theft.
34 Latest States with a Pass-Through Entity Tax
Pass-Through Entity Tax A total of 34 states have enacted legislation that creates a pass-through entity tax as a workaround to the $10,000 cap on the state and local taxes (SALT) itemized deduction. What is Pass-Through Entity Tax? The pass-through entity tax (PTE) allows partnerships and S Corporations to elect to be taxed at the entity level for state income tax purposes. If the entity makes this election the partner or shareholder is usually allowed to: (1) Claim a credit on their state individual income tax return for the amount of their distributive share of the pass-through entity tax paid by the partnership or S Corporation, and (2) Allows the partner or shareholder to not have to report their distributive share of income on their personal state income tax return. States with a Pass-Through Entity Tax A pass-through entity tax went into effect in the following states before 2022: States with Pass-Through Entity Tax Starting in 2022 A pass-through entity tax went into effect in 2022 in the following states: States with a Pass-Through Entity Tax that is Retroactive to 2022 A pass-through entity tax was signed into law in 2023 and is retroactive to 2022 for the following states: States with Pass-Through Entity Tax Starting in 2023 A pass-through entity tax goes into effect beginning in 2023 in the following states: Pass Through Entity Tax Rules by State Here are brief details as well as where to learn more about the pass-through entity tax rules for the following States that have enacted a pass-through entity tax: Alabama See the Alabama Electing Pass-Through Entity Tax Guidance page on the Alabama Department of Revenue website for more information. Arkansas For more information, see the Pass-Through Entity Tax: FAQs on the Arkansas Department of Finance and Administration’s website. Arizona For more information, see the Senate Fact Sheet for HB 2838 on the Arizona website. California For more information, see the Pass-through entity (PTE) elective tax page on the California Franchise Tax Board’s website. Colorado For more information, see Colorado House Bill 21-1327 on the Colorado website. Connecticut For more information, see the following on the Connecticut Department of Revenue Services website: Georgia For more information, see Rule 560-7-3-.03 Election to Pay Tax at the Pass-Through Entity Level on the Georgia Department of Revenue’s website. Idaho For more information, see the Pass-Through Entities page on the Idaho State Tax Commission’s website. Hawaii For more information, see Hawaii Tax Information Release No. 2023-01. Illinois For more information, see the following on the Illinois Department of Revenue’s website: Indiana For more information, see Pass Through Entity Tax page on the Indiana Department of Revenue’s website. Iowa For more details on how to make the election and other information see the Pass-Through Entity Tax (PTET) page on the Iowa Department of Revenue’s website. Kansas Kentucky For more information see Kentucky HB 360, Section 16 on the Kentucky Legislature website. Louisiana For more information, see Revenue Information Bulletin No. 19-019 – Guidance on Pass-Through Entity Election on the Louisiana Department of Revenue website. Maryland For more information, see the following on the Comptroller of Maryland’s website: Massachusetts For more information, see the Elective pass-through entity excise page on the Massachusetts Department of Revenue website. Michigan For more information, see the Flow-Through Entity Tax page on the Michigan Department of Revenue website. Minnesota For more information see the Pass-Through Entity (PTE) Tax page on the Minnesota Department of Revenue website. Mississippi For more information, see the Mississippi Department of Revenue Notice 80-22-001. Missouri For more information, see the Pass-Through Entity Tax FAQs on the Missouri Department of Revenue website. New Mexico For more information see the Pass-Through Entity page, in the Frequently Asked Questions About Direct Taxation of Pass-Through Entities section, on the New Mexico Taxation and Revenue Department’s website. New Jersey See the Pass Through Business Alternative Income Tax Act page on the New Jersey Division of Taxation website. New York For more information, see the following on the New York State Department Taxation and Finance’s website: North Carolina For more information see North Carolina S.B. 105 pages 594 – 599. Ohio See the Ohio’s PTE SALT Cap Workaround for “Electing Pass-Through Entities” beginning in Tax Year 2022 Tax Alert on the Ohio’s Department of Taxation website for more information. Oklahoma For more information, see page 7 of the 2021 Oklahoma Small Business Corporation Income and Franchise Tax Forms and Instructions (Form 512-S) on the Oklahoma Tax Commissions website. Oregon For more information, see the Pass-Through Entity – Elective Tax FAQs on the Oregon Department of Revenue’s website. Rhode Island For more information, see the following on the Rhode Island Division of Taxation’s website: South Carolina For more information, see SC Revenue Ruling #21-15 on the South Carolina Department of Revenue’s website. Utah For more information see the SALT Report & Tax Facts on the Utah State Tax Commission’s website. Virginia See the Pass-Thru Entities page and Virginia Tax Bulletin 22-6 on the Virginia Department of Taxation’s website for more information. West Virginia For more information see West Virginia Senate Bill 151. Wisconsin For more information, see the following on the Wisconsin Department of Revenue’s website: CrossLink Professional Tax Software CrossLink is the industry’s best professional tax software solution for high-volume tax businesses. Built based on the needs of busy tax offices that specialize in providing their taxpayer clients with fast and accurate tax returns, CrossLink has been a trusted software solution since 1989. CrossLink’s in-depth tax calculations, advanced technological features, and paperless solutions allow you to prepare the most complicated tax returns with confidence and ease while providing your customers an unparalleled experience.
Clean Vehicle Tax Credit: Qualifications and Rules for Electric Vehicle Purchases
Clean Vehicle Tax Credits for 2023 and Beyond This article provides details on the three credits for electric vehicles and fuel cell vehicles that are included in the Inflation Reduction Act that became law in August of 2022 and go into effect in 2023. New Clean Vehicle Tax Credit Tax Credit for Used Clean Vehicles Commercial Clean Vehicle Tax Credit New Clean Vehicle Tax Credit A taxpayer that purchases a new electric fuel cell vehicle in tax years 2023 – 2032 may be eligible for up to a $7,500 nonrefundable credit for New Clean Vehicles. Taxpayers may claim this credit by completing Form 8936 and Form 8936, Schedule A and including it with their federal income tax return. To see what these two forms look like see the following on the IRS website: New Clean Vehicle Tax Credit Requirements The full $7,500 credit is available for fuel cell vehicles that meet the requirements under IRC 30B(b)(3). The basic requirement is that the vehicle must be propelled by power derived from 1 or more cells which convert chemical energy directly into electricity by combining oxygen with hydrogen fuel which is stored on board the vehicle in any form. What are the Critical Minerals Requirements for EVs? Vehicle’s battery must contain a threshold percentage of critical minerals that were extracted or processed in a country with which the US has a free trade agreement or recycled in North America as follows: What are the Battery Components Requirements for EVs? To meet this requirement the vehicle’s battery components must meet a percentage threshold for manufacturing or assembly in North America as follows: For more details see the following on the IRS website: Tax Credit for Used Clean Vehicles A taxpayer who purchases an eligible used clean vehicle in tax years 2023 – 2032 may be eligible for the new nonrefundable Credit for Previously Owned Clean Vehicles. The credit is 30% of the vehicle’s purchase price or $4,000 whichever is less. Taxpayers may claim this credit by completing Form 8936 and Form 8936, Schedule A and including it with their federal income tax return. To see what these two forms look like see the following on the IRS website: Used EV Tax Credit Requirements For more details see the following pages on the IRS website: Commercial Clean Vehicle Tax Credit A taxpayer who purchases a qualified commercial clean vehicle on tax years 2023 – 2032 may be able to claim the new nonrefundable Commercial Clean Vehicle Credit. Taxpayers may claim this credit by completing Form 8936 and Form 8936, Schedule A and including it with their federal income tax return. To see what these two forms look like see the following on the IRS website: What is the Commercial Clean Vehicle Tax Credit? Businesses and tax-exempt organizations qualify for the commercial clean vehicle tax credit, also known as the commercial electric vehicle tax credit. This credit is calculated as the lesser of: The maximum credit that may be taken on a qualifying vehicle is: Or Commercial Electric Vehicle Tax Credit Requirements For more details see the following pages on the IRS website: CrossLink Professional Tax Software CrossLink is the industry’s best professional tax software solution for high-volume tax businesses. Built based on the needs of busy tax offices and mobile tax preparers that specialize in providing their taxpayer clients with fast and accurate tax returns, CrossLink has been a trusted software solution since 1989. CrossLink’s in-depth tax calculations, advanced technological features, and paperless solutions allow you to prepare the most complicated tax returns with confidence and ease while providing your customers an unparalleled experience.
Understanding Form 1099-K
Form 1099-K is an IRS information return used to report payment card and third-party network transactions on a federal tax return for businesses, sole proprietors, individuals, and gig economy workers.
2023 Tax Filing Deadline
The federal 2023 tax filing deadline for Tax Year 2022 individual tax returns, also known as Tax Day, is Tuesday, April 18, 2023. This day is also the filing deadline for calendar year C Corporations (1120) and Estate/Trust (1041) returns.
Complete List of 32 States with a Taxpayer Access Point or Online Account
The following States offer some version of a taxpayer online account.
How To eFile Taxes Like a Professional
Learn how to efile taxes as well as what e-filing is, how it works, and the advantages of e-filing your taxes in this detailed article.
Detailed Breakdown to the Question “How Do Taxes Work?”
How Do Taxes Work? The U.S. tax system is extremely complex, leading many often ask the question, “How do taxes work?” This article is meant to help you understand what taxes are, how taxes work, the different tax forms that exist, and how to file your taxes. What are Taxes? Income taxes are a type of tax that the federal and most state governments impose on an individual’s or business’ income. All individuals and businesses must file an income tax return annually. The U.S. tax system imposes a progressive tax in which the tax rates increase with income. It is also a voluntary system in the sense that taxpayers report all of their earnings by filing an annual income tax return and compute their tax themselves. However, paying and filing their income tax is required by law. For individuals, there is a personal income tax that is imposed on their wages, salaries, and other types of income. Business’ such as corporations, S corporations, partnerships, and self-employed individuals are taxed on their taxable business income. For S corporations and partnerships, the net business income is passed thru to the shareholders and partners who then report it on their personal income tax return. Self-employed individuals report their business income and expenses on their personal income tax on Schedule C. Direct Taxes Direct tax is a tax paid directly to the government agency or authority that is imposing the tax. Examples of a direct tax are: Indirect Taxes Indirect taxes are imposed only when a taxable transaction occurs. Examples of indirect taxes are sales tax, excise taxes, consumption taxes, or value added taxes. An indirect tax is collected by an intermediary when the taxable transaction takes place, such as purchasing an item at a retail store. The retail store will then forward the tax on to the applicable government agency when they file a return during the year. Income Types For tax purposes, the types of taxable income for individuals are: Employment Taxes Employment taxes (usually referred to as payroll taxes) are taxes that employees and employers pay based on the wages and salaries paid by employers and tips earned by the employee. The employee pays their portion of these taxes through a deduction from their wages, and the employer pays their portion directly to the IRS when they file their payroll tax returns during the year. Examples of payroll taxes are: Capital Gain A capital gain is the profit that an individual has from the sale of property or an investment. For tax purposes, the sale of property or stock is reported on Schedule D and if the taxpayer realizes a gain on the sale, it is either short-term (property held less than one year) or long-term (property held for longer than one year). A short-term capital gain is taxed as ordinary income and a long-term gain is taxed at the capital gains rate of 0%, 15%, or 20% depending on the taxpayer’s taxable income. Dividend A dividend is a distribution of cash, stock, or other property to a publicly listed company to its eligible shareholders. These distributions are made out of a company’s profits as a reward to investors for purchasing stock in the company. Dividends are taxable to the individual in the year they receive it. Interest Interest is the cost an entity, such as a bank, charges for loaning money to individuals and businesses. It also is the amount that an entity, such as a bank, will pay to individuals or businesses that deposit their money at the entity. Interest income is the earnings generated from interest-yielding investments such as savings accounts, Certificate of Deposits (CDs), and other investments that pay some form of interest. Interest income is taxable to the individual in the year they receive it. How to File Taxes For federal purposes, every individual who has total taxable income over a certain threshold (more than $12,550 or $25,100 if filing Married Filing Joint for 2021) must file a federal income tax return each year. Tax Forms To file a federal income tax return, individuals need to file, at a minimum, the following tax forms: 1040 (U.S. Individual Income Tax Return) Form 1040 is the main form that an individual uses to file their annual federal income tax return. The individual enters their taxable income, claims deductions and credits, enters their tax withheld from their wages, and any other payments they have made during the year, and with this information determines whether they will receive a refund or owe additional tax. Form 1040 generally must be filed by April 15 each year, however if an individual needs more time to gather their information, the IRS grants taxpayers an automatic six-month extension until October 15 to file their federal income tax return. If the individual believes they will owe additional tax, they must pay that tax by April 15 or they will owe penalty and interest for not paying their tax on time. The Form 1040 includes the most common income deductions and credits. If the individual needs to report additional income items or claim additional deductions or credits, they may need to use the following: This schedule is used to report all taxable income that is required on Form 1040 such as business income, rental income, alimony received, etc. It is also used to report adjustments to income such as IRA deduction, educator deduction, self-employed health insurance deduction, student loan interest deduction, and other deductions that may be reported as adjustments to income on Form 1040. This schedule is used to report taxes such as alternative minimum tax, self-employment tax, etc. that if applicable, is reported on Form 1040. This schedule is used to report non-refundable credits such as education credits, retirement savings account credit, adoption credit, etc. that, if applicable is reported on Form 1040. Schedule 3 is also used to report refundable credits and other payments that, if applicable, are reported on Form 1040. Individuals may also need other forms and schedules to report
Advantages of Creating an IRS Online Account
Creating an IRS Online Account For your average taxpayer, filing their yearly tax return can be confusing and frustrating. There are many tools and resources out there that can help the individual taxpayer, and one of them is an IRS Online Account. From accessing the adjusted gross income (AGI) from their prior year’s tax return, which is needed to file their current year tax return electronically, to tracking the status of their refund, creating an IRS online account is worth the effort. Why Should an Individual Set up Their IRS Online Account? By gaining access to their IRS Online Account an individual, at a minimum, will have access to the information on their most recently filed federal tax return as well as the three prior year returns. They will also have the ability make payments, see their payment history, have access to any notices that were sent to them, and other information related to their account with the IRS. What Information is Included in an IRS Online Account? An individual can view the following while in their IRS online account: An individual can also use their IRS online account to: How to Set Up an IRS Online Account To set up their IRS Online Account, an individual will go to Your Online Account on the IRS website and select “Sign into your Online Account”. What Information is Needed to Create an Online IRS Account? To access their account information, an individual will need the following to verify their identity: Once they have these items, they will select “Create an account with ID.me” on the IRS Online Account Sign in page and will do the following: Once they have completed the verification process when setting up their IRS Online Account, the taxpayer will also have access to other IRS online tools such as: For more information see the following: Is There an Online IRS Account for Businesses? The IRS has enabled a business online account. For now, the business online account is only for sole proprietors who have employees and/or must file highway use tax Form 2290. Here is what a sole proprietor may do inside their business online account related to their employment tax or highway use tax: For partnerships and S-Corporations, a partner or shareholder who has an SSN and was issued a K-1 may view the following: The IRS will be adding more functionality to the business online account in the future. See the following on the IRS website for more information: IRS News Release IR-2023-194 (IRS launches new initiatives using Inflation Reduction Act funding to ensure large corporation pay taxes owed; continues to improve and modernize technology with launch of business tax account) CrossLink Professional Tax Software CrossLink is the industry’s best professional tax software solution for high-volume tax businesses. Built based on the needs of busy tax offices and mobile tax preparers that specialize in providing their taxpayer clients with fast and accurate tax returns, CrossLink has been a trusted software solution since 1989. CrossLink’s in-depth tax calculations, advanced technological features, and paperless solutions allow you to prepare the most complicated tax returns with confidence and ease while providing your customers an unparalleled experience.