You’d be hard-pressed to find someone who actually enjoys the process of filing taxes. Having said that, it’s absolutely something that you’re supposed to do like clockwork every single year.
This credit goes all the way back to 2006, providing a tax credit for making energy-saving improvements to a taxpayer’s home. This tax benefit was supposed to expire after 2021 but a law change has given the credit renewed life and substantially enhanced it beginning with 2023.
If you had to make a list of people who changed the world essentially just by existing, Henry Ford’s name would likely be on it.
Most people know him from history as the founder of the (appropriately named) Ford Motor Company. Here, he developed the assembly line method of mass production. Not only did this help cut costs enormously, creating the first automobile that average Americans could afford to buy, but it also revolutionized the manufacturing industry. The computer or mobile device that you’re reading this on would have cost a significantly larger amount of money (than it already does) had the assembly line not been invented.
Especially in the early days of a business, it can be natural to want to handle as many day-to-day tasks yourself – bookkeeping included. Sometimes, it’s in an effort to save money. Often, entrepreneurs just feel like they’re in a better position to handle everything themselves. Regardless, this situation does seem to play out regularly.
Although the credit for purchasing a new electric vehicle can still be as much as $7,500, Congress has added some new stringent qualifications as to which vehicles qualify, and for the first time Congress has limited who qualifies for the credit by barring the credit to higher income taxpayers.
But first a little background. Prior to this change, a vehicle qualifying for the credit needed only to be a 4-wheel vehicle, with a minimum battery capacity of 5 kilowatt hours and a gross weight of less than 14,000 pounds. There was also a manufacturer limit of 200,000 units, after which the credit phased out over the subsequent four quarters. There were no qualification requirements for the purchaser of the vehicle.
New Qualifications – Under the new law, starting in 2023 the vehicle and the buyer must meet far more stringent requirements for a taxpayer to qualify for the clean vehicle tax credit.
Purchaser’s Income Limit – No credit is allowed for any tax year if the lesser of the modified adjusted gross income (MAGI) of the buyer for the:
MAGI is the buyer’s adjusted gross income increased by any foreign earned income and housing exclusions and excluded income from Guam, American Samoa, the Northern Mariana Islands, and Puerto Rico.
Vehicle Qualifications – To qualify, the vehicle must:
The VIN is permanently attached to a vehicle in several locations, appearing on the dashboard for most passenger vehicles and on the label located on the driver’s door frame. The VIN is also located on the window sticker of new vehicles and often appears on the vehicle listing on dealers’ websites.
The MSRP will be on the vehicle information label attached to each vehicle on a dealer’s premises. The MSRP for this purpose is the base retail price suggested by the manufacturer, plus the retail price suggested by the manufacturer for each accessory or item of optional equipment physically attached to the vehicle at the time of delivery to the dealer. It does not include destination charges or optional items added by the dealer, or taxes and fees.
Even when a vehicle is purchased for less than the MSRP, the credit limitation on the price of the vehicle is based on the manufacturer’s suggested retail price (MSRP), not the actual price paid for the vehicle.
Luckily for a buyer the dealer must provide a report that certifies the vehicle meets these requirements by specifying the amount of credit the vehicle qualifies for.
Seller Provided Report – The seller of the vehicle is required to furnish a report to the buyer and the IRS that includes:
List of Qualifying Vehicles – The IRS provides a list of eligible vehicles on its website.
Transfer of Credit to the Dealer – After 2023, the taxpayer purchasing the vehicle, on or before the purchase date, can elect to transfer the clean vehicle credit to the dealer from whom the vehicle is being purchased in return for a reduction in purchase price equal to the credit amount.
A buyer who has elected to transfer the credit for a new clean vehicle to the dealer and has received a payment from the dealer in return, but whose MAGI exceeds the applicable limit, is required to recapture the amount of the payment on their tax return for the year the vehicle was placed in service.
If you have questions about these new rules on the clean vehicle credit, please give this office a call.
Individuals and small businesses should consider various ways of starting off on the right foot for the 2023 tax year.
When you are attempting to defer the taxability of a capital gain, save money for your children’s future education or plan your retirement finances, you may do so in several ways, including investing in the stock market, buying real estate for income and appreciation, or simply putting money away in education savings accounts or retirement plans. Knowing how these various tax savings vehicles and income deferral opportunities function is important for choosing the ones best suited to your circumstances. Let’s begin by examining the tax nuances of IRA accounts.
FTX Group, also officially referred to as FTX Trading Ltd., is a cryptocurrency company that is currently in the process of bankruptcy proceedings. In addition to previously operating as a cryptocurrency exchange, it was also a crypto hedge fund.
It was originally founded in 2019 and hit its stride just a few years later in 2021. At one point, it had over a million users and was considered to be the third-largest exchange of its type in existence.
There is an important issue related to filing the 2022 S-corporation (Form 1120-S) and partnership (Form 1065) tax returns that requires the cooperation of the shareholders and partners.
Over the last decade, in particular, the definition of the term “career” has changed.
Rather than being employed by a single entity for which you receive a W2 at the end of the year, many are now participating in the “gig economy” in a variety of ways. They’re not just working a day job. They’re also driving for a ride-sharing service like Uber. They’re delivering food for companies like DoorDash. They’re leaning into the versatility that the fast-paced digital world has brought with it, enjoying the type of freedom that people didn’t previously have.
