With April 15 looming only days away, preparing and filing your tax returns on time is likely top of mind. It’s definitely top of ours – especially since there are changes in federal tax law that impact 2024 returns as well as taxable income in the present and foreseeable future. These changes are intricate and complex, so we encourage you to entrust your individual and business tax return preparations to us, and as soon as possible if you haven’t filed already.
Cryptocurrency Investors: New Reporting Requirements Coming This Year
As of this year, cryptocurrency exchanges are required to issue a new Form 1099-DA to taxpayers for reporting crypto sales and transactions. This form details gross proceeds from crypto sales and exchanges, aiming to enhance tax compliance. Taxpayers are now required to report the cost basis for cryptocurrency sales based on the specific wallet or account where the assets were held. The previously allowed universal wallet approach is no longer permitted. Legislative proposals aim to extend the wash sale rule to cryptocurrencies, aligning crypto assets with traditional securities regulations.
There is talk about applying mark-to-market taxation for digital assets, which would tax cryptocurrency holders annually on unrealized gains, similar to stocks and bonds.
To avoid increased scrutiny by the IRS, you need more precise bookkeeping and documentation than ever to report gains and losses accurately. Moskowitz LLP can help get your records in top shape.
Higher Tax Rates and Lower Deductions Remain Possible
If Congress fails to extend the Tax Cuts and Jobs Act (TCJA), it will expire at the end of this year. You could see higher tax rates, a lower standard deduction, and a return of the SALT deduction cap. Individual income tax rates will top off at 39.6%, up from 37%. The Child Tax Credit will decrease from $2,000 to an estimated $1,700 per qualifying child. And the Estate Tax Exemption will decrease, subjecting more estates to taxation.
While not an immediate threat, consulting us about your potential tax exposure is recommended.
IRS Layoffs and Budget Cuts Will Impact Complex Return Filers Most
In February, the IRS laid off approximately 7% of its workforce – around 7,000 employees, many from the tax compliance division. Proposals suggest the IRS could face further reductions, potentially reducing its 90,000-person employee base to around 45,000. Such cuts could severely impair the agency’s ability to administer the federal tax system effectively. Under these conditions, taxpayers (especially those with complex returns or returns that contain errors) can anticipate unprecedented delays in resolving disputes and receiving refunds.
Contact your team at Moskowitz LLP today to get ahead of these tax law changes (as well as many others) and put them to your advantage while you still can.
Another ERC Success Story
We’re excited to announce the successful conclusion of an Expedited ERC engagement for one of our valued small business clients!
- The firm provided end-to-end assistance to provide the best possible outcome.
- The client is receiving $286,700, a 38x return on investment – a testament to the value of expert tax guidance.
This is a great example of how diligence and expertise can make a big difference. If you need help navigating ERC or other tax matters, we’re here to support you!
Visit us at moskowitzllp.com or contact us at 415.394.7200 or info@moskowitzllp.com to learn more about our services or to book your appointment.
