ECON A few updates on Taxes for 2023

[20Gauge]

Many of us are required to file next year, so here are a few updates.......

1) Student loan debt is not TAXABLE at the FEDERAL LEVEL, but may be state level

2) The expanded child tax credit is gone...... so we are back to the old rules.....This is about $1k per child reduction.....

3) The expanded child care tax credit is gone.... so we are back to the old rules.... this is a LARGE reduction (3k per child 6k max)

4) 17 year old children no longer quality for the child tax credit

5) You will not get a child tax credit if you have less than $2500 in income.

6) Child tax credits are no longer fully refundable..... it is limited to $ 1500

7) Earned income credit qualification is back to age 19, down from 25

8) Earned income credit qualification is now limited to age 64

The result of all this will be that those who got those HUGE refunds last year, aren't going to get them this year!!!

 

[Leela]

Thank you for that.

 

[20Gauge]

Other stuff to know.......

Crypto is now being called Digital Assets. There will be a new question on the 1040 asking about Digital Assets instead of Crypto.

In 2022 year end, most will still report all sales on a 1099-B and not the 1099-k that some did before. This will change to a NEW 1099-DA in 2023 year end

You are required to report basis. This may be difficult if your holding on Digital Assets are more than 2 years old or if you move them around using a wallet.

If you are unable to show a basis, then there is no basis and 100% of the sales are taxable....... not the profits......

 

[20Gauge]

Also, for those who use cash app, etc you had better list what the transaction was for........

The apps will report a total transactions ( sales ) if you reach $600, but you need to be specific on what those transactions were for.

So if you venmo your spouse some cash, be specific or it may be reported as sales.....

 

[Loretta Van Riet]

Wow. Thank you for your hard work so we don't mess up in our filing!

Last year was the first time I had to include Crypto profit and I didn't realize that purchasing some alt coins with old bitcoin profit was considered a "realized gain". I won't make that mistake again!

 

[Sacajawea]

Also, for those who use cash app, etc you had better list what the transaction was for........

The apps will report a total transactions ( sales ) if you reach $600, but you need to be specific on what those transactions were for.

So if you venmo your spouse some cash, be specific or it may be reported as sales.....

Question: does this apply to any cash transfer to an individual (say via Zelle) for any reason whatsoever, as long as the total for the year is less than the "gift" amount of $15K?

 

[raven]

Maybe a tutorial on the Social Security Worksheet 1 - Figuring Your Taxable Benefits.
How to complete without throwing up.

 

[Sacajawea]

Wouldn't that be Medicare Wellness Tips??

 

[20Gauge]

Question: does this apply to any cash transfer to an individual (say via Zelle) for any reason whatsoever, as long as the total for the year is less than the "gift" amount of $15K?

Fill out the form 706 to be sure it is noted by the IRS. There is a lot of confusion on this, but if you didn't tag it as a gift, please do so if possible.

If Zelle doesn't note it, you can skip the 706. Be sure to check for the 1099 though. They won't send it if experience tells us anything

 

[20Gauge]

Wow. Thank you for your hard work so we don't mess up in our filing!

Last year was the first time I had to include Crypto profit and I didn't realize that purchasing some alt coins with old bitcoin profit was considered a "realized gain". I won't make that mistake again!

Yes. you were in the same boat as many others. Didn't realize the implications.

Imagine those who couldn't trace their basis and did a lot of trading..... 3 years from now a large bill from the IRS to say the least.

 

[20Gauge]

Wow. Thank you for your hard work so we don't mess up in our filing!

Last year was the first time I had to include Crypto profit and I didn't realize that purchasing some alt coins with old bitcoin profit was considered a "realized gain". I won't make that mistake again!

Question, did you include the Crypto due what I said???

 

[20Gauge]

Maybe a tutorial on the Social Security Worksheet 1 - Figuring Your Taxable Benefits.
How to complete without throwing up.

Easy, make other income, expect to pay taxes on you Social Security.... the more you make the worse it gets... up to 85% is taxable at the RATE of your overall income tax rate.

Oh, by the way, Biden has said he will not renew the Trump tax breaks, so that will even more taxable Social Security in 2025......

 

[Buick Electra]

Many of us are required to file next year, so here are a few updates.......

1) Student loan debt is not TAXABLE at the FEDERAL LEVEL, but may be state level

2) The expanded child tax credit is gone...... so we are back to the old rules.....This is about $1k per child reduction.....

3) The expanded child care tax credit is gone.... so we are back to the old rules.... this is a LARGE reduction (3k per child 6k max)

4) 17 year old children no longer quality for the child tax credit

5) You will not get a child tax credit if you have less than $2500 in income.

6) Child tax credits are no longer fully refundable..... it is limited to $ 1500

7) Earned income credit qualification is back to age 19, down from 25

8) Earned income credit qualification is now limited to age 64

The result of all this will be that those who got those HUGE refunds last year, aren't going to get them this year!!!

Thanks so much for the heads-up 20G! So your title says Taxes For 2023 yet your last sentence seems to be saying when people file their 2022 taxes next year, those child deductions won't be available to them for 2022, or 2023? I'm so confused.

 

[20Gauge]

Thanks so much for the heads-up 20G! So your title says Taxes For 2023 yet your last sentence seems to be saying when people file their 2022 taxes next year, those child deductions won't be available to them for 2022, or 2023? I'm so confused.

They apply to 2022, but you will realize it in 2023 when you file the 22 taxes..... sorry for the confusion

 

[raven]

Easy, make other income, expect to pay taxes on you Social Security.... the more you make the worse it gets... up to 85% is taxable at the RATE of your overall income tax rate.

Oh, by the way, Biden has said he will not renew the Trump tax breaks, so that will even more taxable Social Security in 2025......

LOL.
You do not have to "make" other income. Take an IRA distribution - that's not in my definition of "make".

I just finished my worksheet.
I usually, limit my distribution to an amount that is below the designated income amount. It is something like "must be less than half your SS" AND "must be less than $25K (single)"

I was successful - none of my SS is taxable.

The IRA is still taxable and I sort of miscalculated on the amount and end up with $150 over the Standard Deduction which is taxable at 10%.

Which is fine. I don't mind em taking 15 bucks . . . just so I can say "I'm a taxpayer, you work for me."

 

[Loretta Van Riet]

Question, did you include the Crypto due what I said???

I believe how you educated us last year prompted me to use "Cointelli" as a prep before going to my regular tax guy. It was "cointelli" that showed me I was going to have to pay a long term gain on those coin flips! It almost gave me a heart attack. Got educated REAL fast.

So... I really appreciate you looking out for us. And the Chicken reports are wonderful. Keep 'em coming!

 

[Loretta Van Riet]

Yes. you were in the same boat as many others. Didn't realize the implications.

Imagine those who couldn't trace their basis and did a lot of trading..... 3 years from now a large bill from the IRS to say the least.

Thank God I only had one Crypto sale for a large profit, but was blind-sided by the long term gain I faced by "swapping" some old bitcoin for some alt coins. You certainly warned us that the IRS gets reports from all the major crypto exchanges.

 

[Buick Electra]

They apply to 2022, but you will realize it in 2023 when you file the 22 taxes..... sorry for the confusion

Thank You!

 

[Sacajawea]

That's what I thought, THANKS 20 gauge. As long as the amount is under that 15K to ONE person and there is no 1099 issued, and it wasn't a payment for items or service... then it shouldn't be an issue (yet). I do see it coming. I file a 706 yearly anyway, part of estate tax planning.

 

[20Gauge]

That's what I thought, THANKS 20 gauge. As long as the amount is under that 15K to ONE person and there is no 1099 issued, and it wasn't a payment for items or service... then it shouldn't be an issue (yet). I do see it coming. I file a 706 yearly anyway, part of estate tax planning.

Remember on gifting......

You to another 15k is ok. So if child is married. You give 15k to the child and another to the spouse. That makes 30k. If there are children, that is also a possibility to increase that amount.

If married, you can double all that.

So it is not a flat 15k per year. It can be extended or stretched.

 

[Southside]

LOL.
You do not have to "make" other income. Take an IRA distribution - that's not in my definition of "make".

I just finished my worksheet.
I usually, limit my distribution to an amount that is below the designated income amount. It is something like "must be less than half your SS" AND "must be less than $25K (single)"

I was successful - none of my SS is taxable.

The IRA is still taxable and I sort of miscalculated on the amount and end up with $150 over the Standard Deduction which is taxable at 10%.

Which is fine. I don't mind em taking 15 bucks . . . just so I can say "I'm a taxpayer, you work for me."

That is EXACTLY how I have my retirement planned out. I will have 2 years SS WILL be taxable. The years I lump-sum distribute out of my retirement plans. Otherwise, I plan on paying no income taxes in retirement.

 

[Southside]

I believe how you educated us last year prompted me to use "Cointelli" as a prep before going to my regular tax guy. It was "cointelli" that showed me I was going to have to pay a long term gain on those coin flips! It almost gave me a heart attack. Got educated REAL fast.

So... I really appreciate you looking out for us. And the Chicken reports are wonderful. Keep 'em coming!

The taxes on "Collectibles" is grotesque.

 

[NHGUNNER]

Many of us are required to file next year, so here are a few updates.......

1) Student loan debt is not TAXABLE at the FEDERAL LEVEL, but may be state level

2) The expanded child tax credit is gone...... so we are back to the old rules.....This is about $1k per child reduction.....

3) The expanded child care tax credit is gone.... so we are back to the old rules.... this is a LARGE reduction (3k per child 6k max)

4) 17 year old children no longer quality for the child tax credit

5) You will not get a child tax credit if you have less than $2500 in income.

6) Child tax credits are no longer fully refundable..... it is limited to $ 1500

7) Earned income credit qualification is back to age 19, down from 25

8) Earned income credit qualification is now limited to age 64

The result of all this will be that those who got those HUGE refunds last year, aren't going to get them this year!!!

So if my son turns 17 in June does that mean no child tax credit for the year? I better change my deductions!

ETA: Oh...and thanks!!!

 

[NHGUNNER]

They apply to 2022, but you will realize it in 2023 when you file the 22 taxes..... sorry for the confusion

Is this accurate? When I file my taxes in a few months the child tax credit for 2022 was only $1,000? When I look online it appears to still be the $2,000. I'm also confused.

Nevermind...I thought you said it went to $1,000. You said it was REDUCED by $1,000. All good. I knew that. Phew.

 

[rob0126]

Did the earned income credit change for a married couple?

 

[Craftypatches]

Wow it just keeps getting better and better! Hard for me to make ends meet the way it is! I’m sure I’m not the only one!

 

[20Gauge]

Is this accurate? When I file my taxes in a few months the child tax credit for 2022 was only $1,000? When I look online it appears to still be the $2,000. I'm also confused.

Nevermind...I thought you said it went to $1,000. You said it was REDUCED by $1,000. All good. I knew that. Phew.

by about $1000 at this point. We still have December for Congress to screw things up.

 

[20Gauge]

So if my son turns 17 in June does that mean no child tax credit for the year? I better change my deductions!

ETA: Oh...and thanks!!!

Yep, you lose that cash.....

 

[20Gauge]

Did the earned income credit change for a married couple?

So far only the ages it applies to. The amounts, etc are still the same at this point.

 

[EMICT]

Thanks 20Gauge for taking the time for educating.