December News To Know
Dear Clients & Friends,
The holiday season is officially upon us! As the year draws to a close, the CJBS team is working hard to help set you up for success in the 2023 tax season. With only a few weeks left in the year, now is the time to ensure your current tax strategies have been maximized. Reach out to your CJBS trusted advisor for end of year planning services, especially if your financial situation is going to or has changed significantly.
Below are just a few items to keep in mind during the month of December for both your businesses and personal taxes as the year comes to an end, and we start to look forward to 2024. Some highlights include: increased interest rates for late payments, inflation rates for 2024, and information on Beneficial Ownership Information Reporting.
One change that will effect taxpayers in 2024 is an increase interest rate on late payments. The IRS announced interest rates on late payments will increase in 2024 from 3% to 8%. Making estimated payments timely, as well as projecting income accurately for the upcoming year are essential in order to avoid this late interest.
Every year, the IRS factors inflation into its calculations of new tax rates, as well as maximum contributions for accounts such as retirement savings. This helps counteract the effects of rising prices in the economy. We put together a comprehensive resource for you to compare 2023 and 2024 rates that you can view here!
If you receive an IRS PIN number every year, be on the look out this month! Typically, the IRS mails these PINs in December for the upcoming year as an additional security measure to protect your tax-related data from potential identity theft and fraud. If you signed up for a PIN one year, you will get a NEW PIN every year.
For entities who owe 4th quarter estimates for Pass Through Entity Tax (PTE), be sure to make your payments by Dec 15. If you are not sure if this applies to your business, reach out to our team.
Secure W9s for every contract worker now. Business owners, including sole proprietors, must file 1099-NEC by January 31, 2024, reporting payments for services over $600 to any given individual, LLC, and/or attorney/law firm. Current W9s are needed to timely issue and file 1099s by the deadline to avoid a non-filing penalty per contractor. Please collect and/or make sure you have all updated W-9s before year-end.
If you use an automobile for your business, remember to record the odometer reading on 12/31/23 to log your business mileage for 2023 and to start your 2024 mileage log.
Lastly, be sure to account for your 12/31/23 year-end inventory. Implementing these practices will also ensure your tax return has the most update-to-date information.
Beneficial Ownership Information reporting requirements typically refer to regulations aimed at identifying and disclosing the ultimate beneficial owners of legal entities, such as corporations or LLCs. The objective is to enhance transparency and combat money laundering, corruption, and other financial crimes. In the United States, the Financial Crimes Enforcement Network (FinCEN) has been actively involved in implementing Beneficial Ownership regulations.
Starting January 2024, all existing entities will have one year to complete this reporting. Any entity established AFTER January 1, 2024 will have just 30 days to complete to report, or risk facing penalties. We will keep you up to date on the BOI reporting as news emerges.
Lastly, if you missed our 2023 Year-End Tax Planning Guide, you can access it here!
Stay safe & healthy,
The CJBS Team