IRS Information

Here are the IRS updates for the tax year 2023 from Crew Taxes. Feel free to call with any questions.

Unchanged for Tax Year 2023

• Other Dependent Credit: $500 nonrefundable credit for each qualifying person on the return. 
• 529 Education Savings Plan: 529 distributions to cover K-12 educational costs as well as college. 
• Per Diem Calculations: Only available for state returns where employee expense deductions are allowed. And Federal Tax returns prior to 2018. (CA, NY, HI, AR, & AL) 
• SALT (State & Local Taxes): Which include state, local, and property taxes are still limited to $10,000.
• Child Tax Credit (CTC): Child tax credit is reduced back to $2,000 per child if your MAGI does not exceed a certain limit. 
• Child and Dependent Care Credit: The maximum credit percentage is 35%. It is allowed for up to $3,000 in expenses for one child/disabled person and $6,000 for more than one. 
• Medical Deductions: Out-of-pocket medical expenses must exceed 7.5% of Adjusted Gross Income. Medical expenses do not include pre-tax payroll deductions for company health insurance. 
• Residential Clean Energy Credit (SOLAR): For 2022-2032, 30% with no annual maximum or lifetime credit. 

Changes for Tax Year 2023

• 1099-K Income Earners: For 2023, if you accept payments for goods or services over a third-party network (i.e., Venmo, PayPal, Stripe, Square, Zelle, Cash App) that exceeds $600 annually, you will receive a 1099-K and have to report it as income. 
• Roth Contribution Phase-Out: The Adjusted Gross Income (AGI) phase out range for taxpayers married filing joint in 2023 = $218,000-$228,000. Phase out range for single and head of household filers are $138,000-$153,000, respectively. 
• Contributions limit is $6,500; and $7,500 over the age of 50.
• Capital Gains: Short-Term capital gains are taxed as ordinary income. Long-Term gains are taxed 0%, 15%, and 20% depending on income and filing status. 
• Gift Exclusions: For 2023 a maximum of $17,000/person; this amount is not tax deductible to the gifter, nor is it taxable income to the recipient. 
• 401K Contributions: For 2023, maximum contributions of $22,500 under the age of 50. Over the age of 50, an additional $7,500 may be contributed (catch up contributions). 
• Traditional Contribution Phase-Out: The Adjusted Gross Income (AGI) phase out range for taxpayers married filing joint in 2023=$116,000 to $136,000; and for single and head of household filers=$73,000 to $83,000. If only one spouse is covered by a plan, the phase out zone for deducting a contribution for the uncovered spouse starts at $218,000 of AGI and ends at $228,000. 
• Energy Efficient Improvement Credit: For 2023-2032, 30%, up to a maximum of $1,200, no lifetime limit.
  

2023 Standard Tax Deductions

• Single/Married Filing Separate $13,850
• Married Filing Jointly $27,700
• Head of Household $20,800

Marginal Tax Brackets