TAX TIME 2023
GEORGE WILSON ADAMS CPA MBA
February 4, 2023
Once again another Tax Season is upon us. For Maine residents personal returns for 2022 will be due on Tuesday, April 18, 2023. Business tax returns for corporations, LLC's and partnerships will be due on Wednesday, March 15, 2023. While extensions forms can always be filed, bear in mind that an extension of time to file is never an extension of time to pay taxes. You can extend your 2022 personal return until Monday, October 16, 2023. But your tax bill is legally due and payable on April 18. The IRS and Maine will charge late payment penalties and interest on unpaid balances.
Here is a list of key changes for 2022 returns filed in 2023:
(1) The Child Tax Credit for 2022 was decreased to $2,000 for children under age 17 as of December 31, 2022.
(2) The new standard deduction for 2022 is as follows: $25,900 for married filing a joint return; $12,950 for single or married filing separately; and $19,400 for head of household.
(3) For charitable contributions the old rule has returned - you may deduct contributions to charities only if you itemize on Schedule A. The "above the line" deduction allowed for the past two years is now gone.
(4) For business owners probably one of the most important tax issues to consider is your choice of entity. If you start a new business and do nothing it will be classified by the IRS as a sole proprietorship, leading to potentially adverse tax results. Work with an accountant or tax advisor for your business and find the best entity to use, such as an S corporation or LLC. Starting next year, 2024, payments to the owner of a business of $600 or more will be reported to the IRS on Form 1099-K.
(5) For 2022 the standard IRS mileage rate for business miles was 58.5 cents for January 1 through June 30, and rose to 62.5 cents for the remainder of 2022. You must maintain contemporaneous records to document all mileage deductions.
For business owners with more than four vehicles used simultaneously you cannot use the standard mileage rate and must instead use the actual method for claiming vehicle expenses. In this case all actual vehicle costs such as fuel, repairs, insurance, etc. are deductible.
(6) Expanded health care subsidies for taxpayers enrolled in the Affordable Care Act ("Obamacare") continue through 2022. Under prior law, these subsidies were phased out abruptly if adjusted gross income exceeded a threshold amount.
(7) 100% bonus depreciation for purchases of business equipment other than certain vehicles continues for 2022. Generous Section 179 depreciation also continues through 2022. These write offs can be a life saver for struggling businesses looking for legal ways to reduce their tax liability.
Note that Maine treats bonus depreciation differently than Section 179 depreciation.
(8) For 2022 Maine increased the pension income exemption from $10,000 to $25,000. Thus, non- military pension income of $25,000 or less is exempt from Maine tax. Military pensions are fully exempt from Maine tax regardless of amount.
(9) Here are 2022 federal income tax brackets which apply to taxable income and are based on your filing status:
2022 Marginal Income Tax Rates and Brackets
| 2022 Marginal Tax Rates |
Single Tax Bracket |
Married Filing Jointly Tax Bracket |
Head of Household Tax Bracket |
Married Filing Separately Tax Bracket |
| 10% | $0–10,275 | $0–20,550 | $0–14,650 | $0–10,275 |
| 12% | $10,276– 41,775 | $20,551– 83,550 | $14,651– 55,900 | $10,276– 41,775 |
| 22% | $41,776– 89,075 | $83,551– 178,150 | $55,901– 89,050 | $41,776– 89,075 |
| 24% | $89,076– 170,050 | $178,151– 340,100 | $89,051– 170,050 | $89,076– 170,050 |
| 32% | $170,051– 215,950 | $340,101– 431,900 | $170,051– 215,950 | $170,051– 215,950 |
| 35% | $215,951– 539,900 | $431,901– 647,850 | $215,951– 539,900 | $215,951– 323,925 |
| 37% | Over $539,900 |
Over $647,850 |
Over $539,900 |
Over $323,9252 |
Bear in mind that Congress has the power to change tax laws retroactively. Thus, every word of this article written on February 4, 2023 could be erased or modified by future laws enacted by Congress.
Remember that the very best answer for you is to always pay the legal minimum tax: not one cent more.
National Headquarters of the Internal Revenue Service, Washington DC. The inscription at the top of this building says:
Taxes are what we pay for a civilized society
2022 is the 110th year of the income tax in the United States, following ratification on February 3, 1913 of the 16th Amendment to the Constitution. See here for the very first U.S. income tax return for the year 1913:
http://www.irs.gov/pub/irs-utl/1913.pdf
George Adams
Certified Public Accountant Master of Business Administration
Tel: (207) 989-2700 E-Mail: GeorgeAdams@IntelligenceForRent.com
450 South Main Street: The HQ of IQ
Brewer, Maine 04412-2339
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