Stay informed on the latest tax news and developments, including legislation and rule changes, for effective tax planning and compliance.
IRS delays new tax rule on business payments via apps like Venmo, PayPal
In 2023, tax reporting for business payments via apps like PayPal, Venmo, eBay, Etsy, or Poshmark is simpler. The IRS designates 2023 as a transition year, maintaining the old threshold of over 200 transactions and $20,000 in total. The new $600 threshold is delayed to 2025, with a $5,000 limit set for 2024. Taxpayers should report 2023 income even without a Form 1099-K. IRS Commissioner Werfel cites the need for more time for effective implementation. Form 1040 updates are planned to simplify reporting. This phased approach aims to reduce confusion and problems for all involved, responding to bipartisan concerns over the new reporting requirements.
In 2023, you may owe no capital gains tax on cryptocurrencies
Cryptocurrency investors in the 0% long-term capital gains bracket might benefit from "tax gain harvesting," especially after 2023's market rally. This strategy, suitable for those who've held digital assets for over a year, involves selling profitable crypto and immediately rebuying it. This action takes advantage of the absence of a wash sale rule for gains, allowing investors to reset their basis to the new purchase price. As crypto prices rise, this strategy reduces future taxable gains. For 2023, single filers with taxable income under $44,625 and married couples filing jointly under $89,250 qualify for the 0% bracket. This method contrasts with tax-loss harvesting, where losses offset gains but merely defer future taxes. Calculating taxable income involves deductions from gross income, and the 0% bracket thresholds will increase in 2024. This approach is particularly relevant given the significant value increases in cryptocurrencies like Bitcoin in 2023.
Before accepting ACA insurance subsidies, look out for this "phantom tax," according to one expert
During the Affordable Care Act (ACA) marketplace enrollment, it's essential to accurately project income for subsidy eligibility, with open enrollment extended to Jan. 16 in 2024 due to a federal holiday. Tommy Lucas, a planner at Moisand Fitzgerald Tamayo, cautions that certain financial strategies might inadvertently create a tax burden for enrollees. With 91% of ACA participants receiving premium tax credits, reducing average premiums to $124 monthly, forecasting income is crucial to avoid repayment obligations. Subsidy eligibility depends on "modified adjusted gross income" (MAGI), which encompasses more income types than the standard formula. MAGI calculations start with your tax return's adjusted gross income, adding back specific nontaxable incomes. Sean Lovison, a CFP and CPA, emphasizes the importance of accurate income estimates to prevent subsidy overpayments. Location, family size, and spousal coverage availability also factor into subsidy calculations. Awareness of how Roth IRA conversions or asset sales might impact subsidy eligibility can prevent unexpected tax bills and penalties.
Here's how much you may earn in 2024 while paying no capital gains taxes
In 2024, selling investments or rebalancing brokerage assets might not incur a tax bill due to IRS inflation adjustments. These include raised income tax brackets, standard deductions, and capital gains thresholds. The 0%, 15%, and 20% long-term capital gains brackets apply to assets held over a year, presenting a tax planning opportunity, according to Tommy Lucas of Moisand Fitzgerald Tamayo. For the 0% bracket, taxable income limits are $47,025 for single filers and $94,050 for joint filers. The standard deduction increases to $29,200 for married couples and $14,600 for singles, with additional allowances for those over 65 or blind. Capital gains tax is based on taxable income, after deductions. High earners, retirees without Social Security or required minimum distributions, or those with decreased income might also fall into the 0% bracket, offering a chance to earn significant capital gains tax-free.
