Can you believe it? It’s already the end of the year! That means time to ramp up for another tax season. Are you ready? Take a read through this month’s tax memo for a few reminders. And may we wish you a happy holiday season!
In today’s newsletter:
Year-End Reminders
1099-K Threshold Delay
Key Reminders for End of Year
Are you ready for a strong tax season? We’ve got a few recommendations for what you should be focusing on in December:
Get Organized for Tax Season: Start thinking about tax season and develop a tax season operating plan for your office. Given the current environment, a virtual working plan should also be considered. Include who is responsible for which tasks and who is responsible for making sure all necessary office and computer supplies are on hand. Remember that your employees can be successful only when each of them knows exactly what their responsibilities are and what they will be held accountable for. The key word is communication!
Evaluate Your Clients: Make it your #1 New Year’s resolution to improve your effectiveness at client training. Remember – the goal is for your clients to provide complete, accurate information, in a format you can use, and in a timely manner. Someone always gets trained; let that person be your client - not you! Well-trained clients enable you to produce more in less time: you can choose to process a lot of well-trained clients or a few untrained clients in the same amount of time.
Develop a Tax Season Time Schedule: Set aside days or time in each day for marketing; normal monthly processing; communicating with employees or vendors; interviewing tax clients; preparing & reviewing tax returns; and distributing completed tax returns. Stick to the schedule, and most importantly, schedule time for yourself! It’s imperative that YOU control the schedule, not your clients. Enforcing your planned schedule allows you to focus on the task at hand without interruptions. It allows you to work smarter, not harder, and a higher quality is maintained.
Test print W-2s and 1099s: Remember W-2s and 1099-NEC forms are due to employees/recipients and the SSA and IRS by January 31, 2024, and more than likely will need to be electronically filed with the SSA and IRS. However, if you will be printing employee or recipient copies, you should take time now to test print W-2s and 1099s from your accounting software. Also, take precautions in December and have your printer(s) serviced if necessary. Murphy’s Law says that if your printer is going to break, it will do so in January – just in time to print W-2s & 1099s!
Talk to your clients about fringe benefits: This is the best time for setting up new retirement and cafeteria plans and deciding how much to contribute to existing plans. As a reminder, the Qualified Small Employer Reimbursement Arrangement (QSEHRA) allows small employers that do not offer group health coverage to reimburse employees for their individual insurance premiums related to an ACA-approved plan providing Minimal Essential Coverage. The QSEHRA must be in writing and comply with the employer reporting requirements. There are companies that can assist your clients with the administration of this type of arrangement.
Tangible Property Capitalization Policy: While the IRS does not require a written capitalization policy to be in place at the beginning of the year to apply the de minimis expensing for tax year 2023, it is highly recommended. If your client doesn’t have a written policy in place, they should consider a capitalization policy for 2024 to be completed by year-end.
IRS Issues Delay on 1099-K
On November 21, the IRS released Notice 2023-74 announcing a delay of the new $600 Form 1099-K reporting threshold for third-party settlement organizations for calendar year 2023.
The announcement means that 2023 will be treated as an additional transition year.
The IRS is planning for a threshold of $5,000 for tax year 2024, rather than the $600 threshold previously slated.
The IRS is also looking to make updates to the Form 1040 and related schedules for 2024 that would make the reporting process easier for taxpayers.
Want more tax updates and accounting insights? Tune in every other week to Federal Tax Updates! Hosts Roger Harris, EA and Annie Schwab, CPA help you keep up-to-date with the latest federal tax information while earning approved CPE and CE credits.
At Padgett, our mission is simple: help business owners focus on their passion by supporting them through the tasks that take time away from doing the work they love. We empower accountants, bookkeepers and tax professionals across the country to run their own firms with freedom and confidence. If you'd like to know more about the benefits of becoming a Padgett firm, contact us today.
