October 2023

Fall Greetings from Riley Wigle CPAs!

We are finalizing the 2022 tax filing season and moving into planning for the 2023 tax year. We want to provide you with a highlight of a few tax-related updates.

Business Tax-Related

BOI Reporting (Beneficial Ownership Reporting) – In 2021, the Corporate Transparency Act was passed, which requires beneficial ownership reporting about individuals that directly or indirectly control a company. Mandatory reporting begins January 1, 2024. Companies that were registered as a business before January 1, 2024 must report information by January 1, 2025. However companies that register as a business after January 1, 2024 will only have 30 days to provide the required information. (There is a proposed rule to extend this to 90 days). Forms are not available yet, but we will be providing additional information and details related to this reporting in the upcoming months. We will be here to help you with this requirement. A link to the Small Business Compliance Guide can be found here.

Oregon PTE-E Update – The Oregon PTE-E (passthrough entity tax election) is still available for the 2023 tax year. We have been providing 2023 estimated payment vouchers to businesses that made the election and were eligible in 2022. If you do not have vouchers or did not make the election for 2022, but would like to discuss the election for 2023, please reach out to us. Owners of passthrough entities were able to reduce their federal tax liability by paying estimated tax payments to Oregon through this program and taking a business deduction for that amount. Payments can be made via checks and vouchers or online at Oregon Revenue Online. When making payments online, please be sure to select the option “PTE-Elective” for the tax. Registration instructions can be found here.

Bonus Depreciation – Beginning in 2023, bonus depreciation is being reduced, therefore businesses will be able to write off 80% of the purchase price of the asset placed into service during that calendar year, and then depreciate the remaining 20% of the cost over the remaining useful life of the asset. This is the beginning of the bonus depreciation phase-out schedule that will take place of the next few years. As a reminder, bonus depreciation is separate from Section 179 accelerated depreciation which is remaining at the full 100% (subject to limitations). Please let us know if you would like to discuss this in your tax planning.

ERC (Employee Retention Claim) Processing – Due to concerns about the magnitude of fraudulent and improper ERC claims, the IRS has issued a moratorium on processing these claims through the end of the year. Many businesses are still being contacted by ‘ERC mills’ claiming eligibility without proper substance or proof. Therefore many small businesses have been scammed. The IRS will be providing more assistance to businesses who found themselves victims of these scams, so please be aware. If you have a current claim in process, those claims will be processed, but very delayed.

Individual Tax-Related

Inflation Reduction Act’s Changes to Auto and Energy-Related Tax Credits – The Inflation Reduction Act (IRA) contains numerous changes to auto and energy-related credits. While there are too many to list in this newsletter, some of the credits include The Energy-Efficient Home Credit, Clean Vehicle Credits, and Alternative Fuel Vehicle Refueling Property Credit. The IRS has provided a site to help navigate these credits and potential eligibility. Please refer to the individual links in this site for details.

Oregon “kicker” announced - Oregon taxpayers will receive a kicker refund on their personal 2023 state tax returns equal to 44.28% of their 2022 Oregon tax liability. To figure the amount, multiply the tax liability amount on 2022 Form OR-40 line 22 by 44.28%. Filing a 2023 return is required in order to receive the refund. If you are scheduled to pay Oregon quarterly estimates, you may consider reducing your Q4 payment due in January due to this anticipated refund.

Retirement Contributions – Contribution limits have been increased for 2023. 401(k) contribution limits for employees increased to $22,500, while the contribution limit to an IRA increased to $6,500. Catch-up contributions for employees over 50 increased to $7,500. Other retirement plan limits can be found here. Note that traditional and ROTH IRA contributions must be made by April 15th of the following year.

Retirement Distributions – The Secure Act 2.0 introduced changes to Required Minimum Distributions (RMDs). A link to the RMD FAQs can be found here.

If you would like assistance with year-end business or individual tax planning, please reach out to us. Enjoy the fall season!