In this upcoming tax season, all Americans could be seeing changes on their tax returns.
General Tax Tips
Make sure your computer, phone and iPads are password protected in case they are lost or stolen. The earlier you file, the less likely you will be a victim of tax return fraud.
We want to bring some special items to your attention below:
Security and Identity Theft
Avoid sending sensitive information and documents via unsecure email, as this creates an opportunity for your information to be compromised.
Health Care Deductions
The amount of your medical expenses, in most cases, must be more than 7.5% of AGI before we can deduct anything, so weigh carefully whether to go to the trouble of summarizing these costs. If you are self-employed, we still need to know how much you paid for health insurance.
Several states allow a deduction for medical expenses. In NJ, you can deduct your medical expenses (prescriptions, dental, and vision are included) that are above 2% of your New Jersey gross income. Pennsylvania does not have a deduction for medical expenses. We can advise you about other states if requested.
ALL deductions of any amount must have a receipt. Any individual contribution over $250 must also have an acknowledgement letter from the charity, which should show the date and amount of the contribution, and should also state that no goods or services were received in return for the contribution. Remember if you charge a charitable contribution to a credit card by 12/31, you are able to deduct it in the current year.
Foreign Accounts or Assets
If you have an account, retirement account, business interest in a foreign country, a foreign business ownership (not through a mutual fund), or other assets, please let us know as some special rules will apply to you. There are substantial penalties for failure to disclose these items.
All mortgage interest statements (Form 1098) are needed to do your tax return. Be sure to obtain refinancing closing statements. Remember to get statements for all mortgages you had during the year. You may have more than one due to a change in mortgage companies or a refinance of your mortgage. Additionally, if you bought or sold a house, closing statements should be reviewed for possible deductions.
The amount you may give to one person in one year without any return filing requirements is $16,000 for 2022 and $17,000 for 2023.
If you have any income from 1099s through AirBNB, Turo, Etsy, EBay or similar consumer to consumer programs it may be reportable and taxable.
The simplest and most effective tax planning tool for all Americans of all income levels is full participation in retirement plans. Make sure you take advantage of any available match in your 401K, and maximize any IRA contributions.
Check your employee handbook and see what other fringe benefits are available at work and call us if you aren’t sure if it will benefit you. Some of the best fringe benefits provided by employers include cafeteria (or 125) plans, as well as child care plans and wellness programs.
The IRS recommends that all taxpayers file their returns as early as possible to avoid having to deal with the hassle of someone fraudulently filing a tax return under their identity.