IRS Updates End-December by Paul Davis
$600 Reporting Threshold Delayed
The IRS has announced a delay in implementing the new reporting thresholds for third-party payment platforms. Set to take effect for the upcoming tax filing season, third-party settlement organizations will now not be required to report tax year 2022 transactions on Form 1099-K to the IRS or the payee for the lower $600 threshold amount required by the American Rescue Plan Act. Calendar year 2022 will now be a transition period for the implementation of the lowered threshold. The additional time is intended to reduce confusion and provide more time for taxpayers and the tax preparation industry to understand the new reporting requirements.
Higher Saver’s Credit Limits
The IRS reminds low- and moderate-income workers that they may be able to save for retirement now and earn a tax credit in 2022 and beyond. The Saver’s Credit helps offset part of the first $2000 voluntarily contributed by workers to Individual Retirement Arrangements, 401(k) plans and other workplace retirement programs. Eligible workers have until the end of the year to contribute to workplace plans, or until April 18, 2023 to add to an IRA. The increased income limits for 2022 are $68,000 for married couples filing jointly; $51,000 for heads of household; $34,000 for single filers or married filing separately.
Energy Efficient Home Improvement FAQs
The Inflation Reduction Act of 2022 amended the credits for energy efficient home improvements and residential clean energy property credits. Frequently Asked Questions (FAQs) have been released in Fact Sheet FS-2022-40. These FAQs detail the changes to the tax credits, eligible expenditures, and give examples of how the credit limitations work.
Deferred Social Security Tax Payments Due
The IRS reminds employers and self-employed individuals that chose to defer paying part of their 2020 Social Security tax liability that their second yearly installment of the deferred amount is due on December 31, 2022. As part of 2020 COVID relief, employers could choose to put off paying their share of the Social Security tax liability, and self-employed individuals could defer the same 6.2% portion. Half of that deferral was due December 31, 2021, and the other half now. Multiple electronic or direct payment options are available.