Issue 59  November 15th 2023

1099-K Update

The American Rescue Plan changed Form 1099-K reporting requirements for third-party payment networks like Venmo and Cash app beginning with calendar year 2023. Form 1099 details all payments received through payments settlement entities (PSEs). These entities include payment cards such as credit and debit card as well as third-party payment networks like Venmo and Cash App. Beginning in 2023, third-party payment networks will be required to send 1099-Ks to anyone with more than $600 in gross payments and any number of transactions. For prior tax years, these networks were required to send a Form 1099-K if an individual or business received more than $20,000 in gross payments and had more than 200 transactions. If you have sent peer-to-peer payment, the third-party platforms will be required to send 1099-Ks for personal transactions. For individuals who are not self-employed, personal transactions totaling more than $600 are taxable and should be reported as capital gain. Although personal items cannot be claimed as a loss, they can be reported as a wash. There are also personal transactions that are not considered taxable. Third-party payment platforms should not include on 1099-K transactions for gifts or reimbursement of personal expense like sending money between family and friends. For a full article click on the link below.

401(k) and IRA Limits raise in 2024

The Internal Revenue Service (IRS) announced a few weeks ago the 2024 contribution limit increases for employees who are using 401(k) plans and individual retirement accounts. The 2024 limit for participants in 401(k), 403(b), most 457 plans and the federal government’s Thrift Savings Plan has increased to $23,000 from $22,500 in 2023. The IRA annual-contribution limit increased to $7,000 from $6,500. For more details and a full article click on the link below.

Year End Financial Moves

The last quarter of the year is the time to finalize year-end plans and to make some additional moves in investment accounts, tax strategy and your business. Here is an article that provides a financial checklist so that you can prepare now but will still have time to adjust later. The items on checklist are Investment Planning, Retirement Planning and Charitable Giving. My advice to all my clients and prospects is to check in with your tax professional to see if there are any other benefits that you could take advantage of before it is too late. For a full article click on the link below.

How to avoid getting “buried in taxes” from inherited accounts

Prior to the Secure Act of 2019, heirs could “stretch” IRA withdrawals over their lifetime, which minimized year-to-year tax liability. However, certain heirs now have a shortened timeline due to changed required minimum distribution (RMD) Rules. With the RMD rule change there is a 10-year window for certain heirs which means they must empty the inherited account by the 10th year after the original account owner’s death. Taking only the minimum required distribution each year and putting off withdrawals to year 10 could cause heirs to get “buried in taxes”. Another reason to take RMDs sooner would be to leverage the current federal income tax rates, which are only getting higher and higher each year. For a full article please click on the link below.

Let's Talk!

If you know of someone who needs tax and accounting help, please feel free to share with them my contact information. If they are still not sure about making a move please ask them to check out my newsletter.

For free consultation click on the link to schedule a one-on-one meeting with me over zoom or face to face. Schedule by clicking on a link below.

E-mail: dragana@dcmtax.com
Phone:318-751-5455