The Secure 2.0 Act of 2022, a provision included in the $1.7 trillion spending bill signed by President Joe Biden on December 29, 2022, makes significant changes to the rules for retirement accounts like 401(k) plans, IRAs and Roth IRAs. The Act builds on the Secure Act of 2019 which aimed to enhance retirement savings for Americans.
One of the most significant changes for many Americans is the extension of the age for required minimum distributions (RMDs) and increased "catch-up" limits for people over 60. RMDs are the minimum amount that you must withdraw from your retirement account each year, and under the new rules, the age for RMDs will be raised to 73, starting on January 1, 2023, and further to 75, starting on January 1, 2033.
Key Tax Provisions for Individuals in the Inflation Reduction Act
The Inflation Reduction Act of 2022 aims to promote energy efficiency, combat climate change and incentive the domestic buildout of the EV car industry. The majority of the provisions take effect starting in 2023, but there are some tax credits already in place for items purchased this year. Here's a breakdown of the major provisions in the bill and what you can expect in the coming years.
1. The Solar Energy and Battery Backup credit is 30% from 2022 - 2032. This credit has no income cap, is one of the few items that is changed retroactively to January 1, 2022, and is typically obtained when filing your individual 1040 tax return (unless you are doing a lease to buy, in which case usually the installer or some other 3rd party will utilize the credit and factor that into the pricing structure).
Beware of ERC Mills: Navigating the IRS's Priority Enforcement of Employee Retention Credit Claims
The Employee Retention Credit (ERC) is a valuable tax credit for companies that have been impacted by the COVID-19 pandemic. It can help companies offset the costs of retaining their employees during difficult times, but it's important for companies to be careful about trusting organizations that claim they can help them obtain the credit if they previously thought they did not qualify.
Recently, the IRS published IR-2022-183, warning employers to be wary of third parties who are advising them to claim the ERC when they may not qualify. The IRS included several red flags that business owners and CPAs should look out for, many of which have been highlighted in previous articles featured in Accounting Today.
One of the red flags that the IRS pointed out is ERC mills, which are organizations that aggressively market these positions and may not have the best interest of the company in mind.
Tax Law Changes - What Happened in 2021 and what to look for next year
2021 has brought several major changes to the tax laws that individuals and businesses need to be aware of. One of the most significant changes is the American Rescue Plan Act of 2021, which was signed into law by President Biden in March. This act includes several tax provisions that will affect individuals and businesses, including an increase in the child tax credit, a new tax credit for dependents over the age of 17, and an extension of certain tax breaks for businesses.
The American Rescue Plan Act increased the child tax credit from $2,000 to $3,000 per child under the age of 18, and $3,600 per child under the age of 6. This will provide much-needed financial assistance to families with children. Additionally, the act introduced a new tax credit of $500 for dependents over the age of 17, which will help families who provide financial support to older dependents such as college students or adult children with disabilities.
Congress Extends PPP
The PPP Extension Act of 2021, also known as the Paycheck Protection Program Extension Act, was recently passed by Congress to extend the deadline for small businesses to apply for financial assistance through the Paycheck Protection Program (PPP). The PPP, which was established by the CARES Act in March 2020, provides forgivable loans to small businesses to help them keep their employees on the payroll during the COVID-19 pandemic.
The PPP Extension Act extends the deadline for small businesses to apply for PPP loans from March 31, 2021, to May 31, 2021. This gives small businesses who may have missed the original deadline or who are just now feeling the financial impact of the pandemic an opportunity to apply for the PPP and receive the financial assistance they need to keep their doors open.
The PPP Extension Act also includes a provision that allows small businesses that have already received PPP loans to apply for a second loan if they have experienced a substantial loss of revenue. This will help small businesses that have been hit hard by the pandemic and who have exhausted their first PPP loan to continue to pay their employees and keep their businesses afloat.
The CARES Act: Paycheck Protection Program – Who qualifies and how to apply
Friday, April 3rd, 2020 marked the first day that small businesses, self-employed individuals, sole proprietors and independent contractors could begin applying for the Payment Protection Program (PPP) passed as part of the U.S. federal government’s record $2.2 trillion Coronavirus Aid, Relief, and Economic Security Act aka the “CARES Act”.
The bill provides eligible applicants a way to stem the economic damage of COVID-19 through a low-interest loan up to 2.5 times of 2019’s payroll costs.
The loan will be fully forgiven if the funds are used for payroll costs, interest on mortgages, rent, and utilities (due to likely high subscription, at least 75% of the forgiven amount must have been used for payroll). Loan payments will also be deferred for six months. No collateral or personal guarantees are required. Neither the government nor lenders will charge small businesses any fees.
COVID-19 Update: The 5 things you need to know about the extended tax deadline.
Amid the disruption to regular life from COVID-19, the Internal Revenue Service (IRS) on Friday March 20, 2020 pushed back the tax filing deadline for Individuals (Form 1040), Estates and Trusts (Form 1041) and Corporations (Form 1120) for ninety days to July 15, 2020. The IRS had previously announced that tax payment deadline for taxes due to the federal government has also been extended for ninety days for certain individuals and corporations, this has now been expanded and applies to all individual, trust and estate and corporations. and taxpayers have until July 15, 2020 to pay the taxes they owe without interest or penalties.