NEWS LETTER

It's about that time of the year again -TAX SEASON- some new things this year include an increased standard deduction, adjusted tax brackets and some changes to tax credit and deductions.

• Tax filing deadline: April 15, 2024, is the big tax deadline for all federal tax returns and payments.
• Extension deadline: October 15, 2024, is the deadline if you request an extension (October 16, 2023, for 2022 returns).

The new standard deductions for personal income taxes apply as follows:

Standard Deduction

Filing Status

2022                       2023

Single  

$12,950                  $13,850

Married Filing Jointly

$25,900                  $27,700

Married Filing Separately

$12,950                   $13,850

Head of Household

$19,400                        $20,800

• Head of Household: $20,800, a $1,400 increase
• Married Filing Jointly: $27,700, an $1,800 increase

  The tax items for tax year 2023 of greatest interest to most taxpayers include the following dollar amounts: 

• The Alternative Minimum Tax exemption amount for tax year 2023 is $81,300 and begins to phase out at $578,150 ($126,500 for married couples filing jointly for whom the exemption begins to phase out at $1,156,300). The 2022 exemption amount was $75,900 and began to phase out at $539,900 ($118,100 for married couples filing jointly for whom the exemption began to phase out at $1,079,800).
   
• The tax year 2023 maximum Earned Income Tax Credit amount is $7,430 for qualifying taxpayers who have three or more qualifying children, up from $6,935 for tax year 2022. The revenue procedure contains a table providing maximum EITC amount for other categories, income thresholds and phase-outs.
   
• For tax year 2023, the monthly limitation for the qualified transportation fringe benefit and the monthly limitation for qualified parking increases to $300, up $20 from the limit for 2022.
   
• For the taxable years beginning in 2023, the dollar limitation for employee salary reductions for contributions to health flexible spending arrangements increases to $3,050. For cafeteria plans that permit the carryover of unused amounts, the maximum carryover amount is $610, an increase of $40 from taxable years beginning in 2022.
   
• For tax year 2023, participants who have self-only coverage in a Medical Savings Account, the plan must have an annual deductible that is not less than $2,650, up $200 from tax year 2022; but not more than $3,950, an increase of $250 from tax year 2022. For self-only coverage, the maximum out-of-pocket expense amount is $5,300, up $350 from 2022. For tax year 2023, for family coverage, the annual deductible is not less than $5,300, up from $4,950 for 2022; however, the deductible cannot be more than $7,900, up $500 from the limit for tax year 2022. For family coverage, the out-of-pocket expense limit is $9,650 for tax year 2023, an increase of $600 from tax year 2022.
   
• For tax year 2023, the foreign earned income exclusion is $120,000 up from $112,000 for tax year 2022.
   
• Estates of decedents who die during 2023 have a basic exclusion amount of $12,920,000, up from a total of $12,060,000 for estates of decedents who died in 2022.
   
• The annual exclusion for gifts increases to $17,000 for calendar year 2023, up from $16,000 for calendar year 2022.
   
• The maximum credit allowed for adoptions for tax year 2023 is the amount of qualified adoption expenses up to $15,950, up from $14,890 for 2022.

WE CAN HELP YOU 

Tax  planning can be complicated, and you absolutely shouldn't do it  alone contact 

 MBA TAX CONSULTANTS 

and we will be very happy to help.