As 2024 begins, we at Wouch Maloney are continually grateful for the opportunity to serve you. We hope that you enjoyed the holiday season and had a chance to spend time with family and friends. As always, as your trusted business advisors, we are here to assist you with navigating the ever-changing tax laws.
Items of Note
There are a few items specific to 2023 that could impact your tax filing including:
Retirement Plans: 401(k)s, IRAs and More
The beginning age for taking required minimum distributions (RMDs) rises to 73 from 72 for owners of traditional IRAs, 401(k)s and other workplace retirement plans. If you turned 73 in 2023, you must take your first RMD by April 1, 2024. People who work past 73 can generally delay taking RMDs from their current employer’s 401(k) until they retire.
There is a penalty for people who fail to take their RMD, but that penalty is lower than in past years. Starting in 2023, the excise tax for such failures is 25% of the missing RMD amount, which is down from 50%. Additionally, the penalty goes down to 10% for failures that are corrected in a timely manner.
Energy-efficient home improvement credit
The credit was overhauled for 2023 through 2032. First, the credit percentage increases to 30% of the cost of certain types of insulation, boilers, air-conditioning systems, windows, doors, etc. added to your residence. Second, the $500 lifetime limit is replaced with a $1,200 annual limit. This $1,200 annual limit is lowered to $500 in the aggregate for exterior doors and $600 for exterior windows and skylights and other items. The annual limit increases to $2,000 for a biomass stove or hot water boiler, or an electric or natural gas heat pump put in the home. Third, a credit of up to $150 for the cost of a home energy audit is now available.
Tax Filing Deadline
The tax filing deadline for 2023 individual returns (or extensions) is April 15, 2024.
Tax season usually starts at the end of January and you should see a W-2 from your employer in the mail or electronically online. Now is a great time to gather your receipts if you plan on itemizing your deductions.
Still Waiting for Status of Last Year’s Tax Return?
For our clients who are still waiting for confirmation that last year’s tax return processed or for a tax year 2022 refund, the IRS now has a webpage devoted to processing status for tax forms. The IRS is claiming that electronically filed 1040s are processed within 21 days. This does not include those returns that may be delayed due to mistakes or missing information or paper returns which generally take longer to process. The IRS is reporting that as of October, 2023, there are 845,000 1040 returns that have not been processed of which 800,000 require error correction or special handling. Further information is available by clicking here.
Tax Guide (Facts) Chart
To start out the new year, we have included the 2024 Tax Guide on our Resources Page. The chart lists the various federal, state, and local tax rates and limits for payroll taxes, individual income taxes and other tax-related data. If you would like this chart in print format, please let us know and we will gladly send you a copy.
As information for 2024 is made available, we will continuously update the Resources Page on our website. Additional items will include the 2024 earned income and business privilege tax rates by county and 2024 income tax due dates.
Please continue to visit our website and opt-in for our weekly updates for breaking news or important tax law changes. Also, if you are on social media, please follow us on LinkedIn, Facebook, Instagram or X (formerly known as Twitter).
We wish you all the best for a happy, healthy and prosperous new year.
DISCLAIMER: The WM Update, WM Wednesday Wisdom, WM Daily Update, and other related communications are intended to provide general information, as of the date of this communication, and may reference information from reputable sources. Although our firm has made every reasonable effort to ensure that the information provided is accurate, we make no warranties, expressed or implied, on the information provided. As legislative efforts are still ongoing, we expect that there may be additional guidance and clarification from regulators that may modify some of the provisions in this communication. Some of those modifications may be significant. As such, be aware that this is not a comprehensive analysis of the subject matter covered and is not intended to provide specific recommendations to you or your business with respect to the matters addressed.