Lord Tax Management
Confused about when to take your
Required Minimum Distribution and how much
Do Not Fear, here's a summary for reference:
When to take your RMD – The age for withdrawing from retirement accounts was increased in 2020 to 72 from 70.5. The SECURE 2.0 Act, though, raised the age for RMDs to 73 for those who turned 72 in 2023. Therefore, your first RMD must be taken by April 1 of the year after which you turn 73. After that, your RMDs must be taken by December 31 of each year. Failure to do so means a penalty of 50% of the required RMD. Retirees may without penalty withdraw more than the RMD.
What is the Minimum you must take in 2024? – The RMD table for 2024, is based on the Uniform Lifetime Table of the IRS, which is the most widely used table. Basically, for those turning 72 in 2024, your period of years is 27.4; 26.5 for those turning 73. The calculation is
The total previous year end value of all IRA, 401k, 403b, etc. accounts
divided by
period of years per the Unified Lifetime Table
Go to https://www.irs.gov/pub/irs-pdf/p590b.pdf, Table 3 on page 65, for the more detailed information. Please note that the IRS has other tables for account holders and beneficiaries of retirement funds whose spouses are much younger. Note that as of the 2023 tax year, you must be age 73 for the RMD rule to take place.
2023 Standard Deduction - After an inflation adjustment, the 2023 standard deduction increases to $13,850 for single filers and married couples filing separately and to $20,800 for single heads of household, who are generally unmarried with one or more dependents.
2023 Standard Mileage Rates – Beginning January 1, 2023, the standard mileage rates used to calculate the deductible costs of operating a car (also vans, pickups or panel trucks) are 65.5 cents per mile for business use. Go to https://www.irs.gov/newsroom/irs-issues-standard-mileage-rates-for-2023-business-use-increases-3-cents-per-milefor more information.
New, Previously Owned and Qualified Commercial Clean Vehicles Credit – The Inflation Reduction Act of 2022 (IRA) made several changes to the new clean vehicle credit for qualified plug-in electric drive motor vehicles, including adding fuel cell vehicles. The IRA also added a new credit for previously owned and commercial clean vehicles. Go to https://www.irs.gov/newsroom/frequently-asked-questions-about-the-new-previously-owned-and-qualified-commercial-clean-vehicles-creditfor answers to frequently asked questions about the new, previously owned and qualified commercial clean vehicles credit.
Home energy credits – The Inflation Reduction Act of 2022 (IRA) amended credits for energy efficient home improvements and residential energy property. For details on eligible expenditures and how the credit limitations work, go to https://www.irs.gov/credits-deductions/frequently-asked-questions-about-energy-efficient-home-improvements-and-residential-clean-energy-property-credits.
Tax credits for families revert to 2019 levels – You'll likely receive a significantly smaller refund compared to last year because the Child Tax Credit (CTC), the Earned Income Tax Credit (EITC) and the Child and Dependent Care Credit amounts revert to pre-COVID levels:
Stimulus payments – There were no new stimulus payments for 2022, unlike 2020 and 2021.
No above-the-line charitable deductions – During COVID, taxpayers were able to take up to a $600 charitable donation tax deduction on their tax returns. However, for tax year 2022, taxpayers who don't itemize and who take the standard deduction, won't be able to deduct their charitable contributions.
Paycheck Protection Program (PPP) loans improperly forgiven are taxable – If you inappropriately received forgiveness of your PPP loan, we encourage you to file an amended return that includes forgiven loan proceed amounts in income. Go to https://www.irs.gov/pub/irs-wd/202237010.pdffor IRS guidance that confirms if your PPP loan is forgiven based on misrepresentations or omissions, you can't exclude the forgiveness from your income. You must include in your income the portion of the loan proceeds that were forgiven based upon misrepresentations or omissions.
The Inflation Reduction Act changed a wide range of tax laws and provided funds to improve our services and technology to make tax filing easier for you. Since the Inflation Reduction Act is a 10-year plan, the changes won't happen immediately.
The IRS is working to implement the law as quickly as they can.
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