2023 v 2024 Changes

Please refer to the list below for some changes that will be made for 2023 v 2024.

• Bonus Depreciation – In prior years we have been able to take a 100% bonus depreciation deduction. For 2023 tax year returns filing in 2024, the bonus depreciation deduction will be 80%. In the following year, 2024 tax year returns filing in 2025, the bonus depreciation deduction will decrease to 60%.
• Meals & Entertainment – Due to COVID the deduction for meals was temporarily changed from 50% deductible to 100% deductible for tax years 2021 and 2022. For tax year 2023 and beyond, the meals deduction will revert back to 50% deductible.
• EV Credit – For tax year 2023, taxpayers who buy new electric vehicles (EVs) may be eligible for a tax credit up to $7,500 & those that buy used electric vehicles may qualify for up to $4,000 (limited to 30% of the EV’s purchase price) in tax credit. This credit is nonrefundable and can be claimed on 2023 tax returns filed in 2024. For tax year 2024, taxpayers will be able to choose between claiming a nonrefundable credit on their 2024 tax returns filed in 2025 or transferring the credit to the dealer to lower the price of the car at the point of sale. To qualify for the new EV tax credit, there are certain income thresholds, and the qualifying vehicle must also meet several requirements, including price caps and manufacturing guidelines. However, for qualifying EVs purchased and delivered before April 18, 2023, the requirements are slightly different.
• W-2 & 1099 Filing Requirements – Starting with tax year 2023 (2023 information returns filed in early 2024), businesses may need to e-file certain information returns that they had historically paper filed

1. The Final Regulations reduce the 250-return threshold. It will generally require electronic filing by filers of 10 or more returns in a calendar year.
2. Non-aggregation rule change – It requires filers to aggregate almost all information return types covered by the regulations to determine whether a filer meets the 10-return threshold.
3. Earlier regulations applied the 250-return threshold separately to each type of information return covered by the regulations.
4. Filing requirement applies separately to originals and corrections, but the IRS always encourages taxpayers to file electronically. To facilitate these electronic filings for Form 1099 series information returns, the IRS created a new, free online portal known as the Information Returns Intake System (IRIS). It requires no special software, but does require businesses to apply in advance in order to use it.

• FICA limit increase – The FICA wage base increased to $160,200 in 2023 and in 2024 it will increase to $168,600
• Gift Exclusion – For tax year 2023, the annual gift tax exclusion was $17,000 and increased to $18,000 per year for 2024. Lifetime exclusion per person was $12,920,000 in 2023, which increased to $13,610,000 for 2024.
• Form 1099-K – For tax year 2023 payment apps and online marketplaces are only required to send out Forms 1099-K to taxpayers who receive over $20,000 and have over 200 transactions. While the reporting threshold remains over $20,000 and 200 transactions for 2023, companies could still issue the form for any amount. For tax year 2024, the IRS is planning for a threshold of $5,000 as part of a phase-in to implement the $600 reporting threshold enacted under the American Rescue Plan of 2021.

For more detailed information or additional questions, please contact your HM&M Advisor.

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