Learning Center for Tax and Financial Insights

When it comes to income taxes, two things tend to be true every year. The first is that April will always roll around yet again, whether you like it or not - which means that it's in your best interest to make sure your tax filing needs are accounted for. The second is that with this period of the year always comes scammers and other people with malicious intentions who want to do you harm.Over the years, the IRS has issued clear guidance on how to help people avoid getting scammed in an inherently vulnerable state. Nobody from the IRS will ever contact you out of the blue by telephone or email to demand money, for example. If you legitimately owe something (or if the government thinks you do), you'll be contacted via the United States Postal Service.But at the same time, scammers are nothing if not sophisticated. One must be proactive about staying vigilant or else you might fall directly into their trap. That's part of what the IRS wants to help people do, as they've recently issued an update to what they call the "Dirty Dozen" tax scams that people and entrepreneurs need to be aware of.The Dirty Dozen Tax Scams: Breaking Things DownAs the name implies, the IRS' "Dirty Dozen" is an annual list of the common tax-related scams that people may encounter at some point throughout the year. They especially increase in prominence as the filing season approaches. Not only do they put people at risk of losing critical money, but they could also compromise someone's personal information, their data, and much more.As a hard and firm rule, it is recommended that people never share sensitive personal information with someone over the phone, via email, or on social media. The lion's share of these scams depends on people not realizing this simple truth in order to be successful.

On the one hand, it's almost a prerequisite for entrepreneurs of all types to have that "can-do spirit." That sense that nobody else sees things quite like they do so, whatever it is they want to accomplish, it becomes something they know they'll have to do themselves. In a lot of ways, this is an asset as it's a big part of what has contributed to your success thus far.On the other hand, this type of mentality can certainly get people into trouble when it comes to the day-to-day necessities of actually running a business - with bookkeeping, accounting, and other financial matters being chief among them. While there may be a time when you can handle your books yourself, that time will likely pass. There are a few key warning signs in particular that you should watch out for to help clue you in as to when that becomes the case.

Even after making every effort to file a complete and accurate tax return, mistakes or omissions can happen, and inaccurate tax returns can be filed. Incorrect returns can be corrected by filing an amended return.

Article HighlightsNew 2023 Clean Vehicle RulesIncome QualificationsMAGI LimitsNew Clean Vehicle CreditsU.S. Department of Energy Index of Qualifying VehiclesPreviously Owned Clean Vehicle CreditIRS Index of Qualifying Previously Owned Clean VehiclesDefinition of a Qualifying Previously Owned Clean VehicleQualifying Previously Owned Clean Vehicle SaleDealer ReportWhat Tax Benefit Will These Credits ProvideCredit Transfer to a Dealer2023 brings with it a whole new set of rules related to qualifying for the tax credit for purchasing a new or used electric vehicle. Among the changes that must be navigated are buyer income limitations, vehicle assembly and component limitations and even vehicle price caps.So before you purchase a vehicle with the expectation that you will qualify for a tax credit, and whether that tax credit will really provide any financial benefit, you may find it appropriate to first review all the limits.MAGI Limit - The first thing to determine is if your income is too high to claim a credit. If it is, you need not read any further since you won’t qualify for the credit.Even this gets a little tricky because the tax code allows you to base the income qualification on either your current year (year you buy the vehicle) or the prior year. The reason the law was written that way is to provide some level of certainty since the current year’s income is uncertain, while the prior year’s is already known.Making things even more complicated, your income is measured by your modified adjusted gross income (MAGI). Generally an individual’s MAGI is the same as their AGI which appears on line 11 of your 2022 1040 or 1040-SR. However, some individuals may have excluded foreign or possessions income which must be added back to arrive at their MAGI.Thus to qualify for a credit, a taxpayer’s MAGI for the year of purchase OR the previous year must not exceed the amounts shown in the following table.MAGI LIMITFor the Purchase of a:Buyer’s Filing StatusNew Clean Vehicle, Hybrid or Fuel Cell VehiclePreviously Owned Clean VehicleMarried Taxpayers Filing Jointly or Qualifying Surviving Spouse$300,000$150,000Head of Household$225,000$112,500All Other Filing Statuses$150,000$75,000If your MAGI is equal to or less than the limit, then you will qualify for a credit provided the vehicle you are planning to purchase also qualifies. There are different qualifications for new vehicles and previously owned (used) vehicles.New Vehicles - The qualifications for new vehicles include the requirement they be assembled in North America, the vehicle’s manufacturer’s suggested retail price (MSRP) must be less than $80,000 for vans, pickups, and SUVs, and $55,000 for others, and must have a minimum battery capacity of 7 kilowatts or greater. In addition, for sales on or after April 18, 2023, a vehicle must meet certain critical mineral and battery component regulations. Those regulations require 40% of these components to be extracted or processed in the United States or in any country with which the United States has a free trade agreement, or recycled in North America. The percentage will increase until 2026 at which time the percentage will top out at 80%. The goal being to eliminate auto makers from reliance on certain foreign sources for these materials.Luckily, the U.S. Department of Energy website provides an online tool to search for qualifying vehicles. It provides the amount of credit the vehicle will qualify for (maximum $7,500). Although it lists the MSRP cap for each vehicle, you as a buyer will need to verify the MSRP for the specific vehicle which can be lower or higher depending upon the upgrades or accessories included with the vehicle.

As an entrepreneur, the urge to try to handle everything yourself when it comes to your business is a strong one. It's also perfectly understandable - after all, that "can-do spirit" has gotten you incredibly far in life up to this point.Having said that, there are certain elements that you'll need to release control over, and sooner rather than later. The financial aspect of your organization is chief among them.On the one hand, you could try to do everything yourself for as long as possible and then, only after you've encountered a series of issues, bring in the help of a professional. Or, you can choose to do so right away. Regardless of which end of the spectrum that you fall on, there are several steps that you can take today that will help your finances in a way that also better prepares you for outside help in the future as well.Improving Your Finances, One Step at a TimeBy far, one of the most important ways to improve your finances today has to do with keeping separate personal and business budgets.Especially in those early days of your business, it can be natural to pour a lot of your own money into the day-to-day activities. Things can get to the point where it's easy to blur those lines between your own personal expenses and the expenses that are essential for your organization.In no uncertain terms, you need to resist that urge, particularly when it comes to your budget. In any early-stage business, your finances on both sides of the line will fluctuate wildly. Because of that, you need to keep a careful watch over money coming in and money going out from both perspectives. Keeping separate personal and corporate budgets will help you do that.Another key step to take involves being proactive about managing your expenses all throughout this process. If you made a list of all the successful entrepreneurs that you look up to, you'd probably be looking at some wildly different individuals. However, they do probably share a few key traits in common - and their ability to manage finances is chief among them.To begin, monitor costs as closely as possible so that things don't start to surprise you. You don't even necessarily have to do anything other than take an active interest in monitoring your spending. This is true both from the corporate and the financial side of the equation. With a bit of analysis, you may be surprised by how much money it costs to live the type of lifestyle that you're accustomed to or to keep your business functioning from one day to the next.

Article Highlights:Section 1244Ordinary Loss Versus Capital LossSec 1202 Gain ExclusionSmall Business CorporationWritten Corporate Resolution DocumentationStarting a small business can be a risky undertaking and Internal Revenue Code Section 1244 provides special tax treatment to the disposition of certain qualifying stock of small businesses. It essentially allows losses up to $50,000 ($100,000 for married taxpayers filing jointly) to be subject to the more favorable ordinary loss treatment, all deductible in the year of the loss rather than being treated as a capital loss limited to a per year loss of $3,000 ($1,500 for married taxpayers filing separate). In addition, 1244 stock losses are allowed for NOL purposes without being limited by non-business income.Congress originally created this benefit to encourage investment in small business enterprises. It may also be a factor in determining choice of entity when originally initiating a business. In addition to the benefits provided by Sec 1244, another part of the Internal Revenue Code, Sec 1202, allows gain from C corporation stock to be excluded from income where the aggregate gross assets of the corporation immediately after the issuance (determined by considering amounts received in the issuance) does not exceed $50 Million, the corporation meets an active business requirement, and the stock is held more than 5 years. The maximum excludable gain under Sec 1202 can’t exceed $10 million ($5 million, if married separate). For additional information related to the Sec 1202 gain exclusion give this office a call. 1244 Stock - In general the term 1244 stock means stock in a domestic corporation if at the time such stock is issued: