2023 Annual Tax Newsletter

Good Day Everyone,

This is our annual update for the 2023 tax season (tax returns to be filed in 2024).

There have been many changes over the past year, and we want to keep you posted on both the happenings in the office as well as key tax issues we are seeing for this year.

First, regarding the office, we have some staff updates for you. We are excited to welcome Jennifer, our full-time Bookkeeper & Accountant, who is here to assist you with all tasks QuickBooks and bookkeeping related. Jennifer currently works remotely from Fargo, ND.

Here is a quick overview on the rest of our team members:

Paula is involved with the whole team in many areas and oversees all day-to-day operations. Paula’s expertise lies on the payroll and bookkeeping side of the business, but also assists with preparing tax returns, and provides the final “quality control” step of processing nearly all of our tax returns, as a final set of eyes to make sure all data has been correctly entered on your tax return prior to e-filing.

Gordy focuses on the tax planning, business income taxes and personal tax returns, business related activities like business sales, changes, or transitioning into retirement.  He also oversees all IRS issues. The best way to reach Gordy is to call the office at 218-463-3005 to get a message to him. If you prefer to e-mail Gordy, please always CC cheyanne@asmustax.com. As Gordy can receive anywhere from 20-100 calls and hundreds of e-mails each day, it is important for us as a team to provide the quickest response time for our clients.  Please do not call Gordy’s cell phone as he is usually either in a meeting or on a call, and you will not be able to leave a voicemail.

Cheyanne, our Office Manager, is Gordy’s support and does her very best to keep him on track.  J  Cheyanne handles a great deal of communication with clients on Gordy’s behalf so his time is best utilized, focusing on the type of work that only Gordy can do. Cheyanne is also studying to be an Enrolled Agent which will allow her to work with the IRS on clients’ behalf.

Amy’s primary focus is Payroll and Bookkeeping. She will also be assisting with e-mailing tax returns and signature forms, as well as e-filing this year, so please be sure to watch for an e-mail from Amy if you live outside of the Roseau area.

Jennifer’s primary focus is Bookkeeping, and she has decades of experience using both QuickBooks Desktop and QuickBooks Online. We are thrilled to have a full-time, dedicated bookkeeper on staff to keep up with the rapidly growing demand we have encountered for bookkeeping services!

Paige is our team’s friendly face and voice when you enter or call our office and handles all administrative tasks. She can direct you to anyone on our team or schedule your appointment to discuss any tax questions or tax return reviews.

Zibbey continues to assist our team on a part-time basis as she remotely works on her degree from NDSU. She will be assisting with bookkeeping data entry as well as administrative duties.

Speaking of “team,” we want to be sure you’re aware we all really do work together as a team, especially when it comes to tax returns.  Each staff member plays a part in making sure your tax return is prepared accurately and filed on a timely basis.  As roles continue to be updated in the office, we operate as a team and cross support each other.  Our main focus is on taxpayer relationships, teaching, and understanding our clients’ situations and how to optimize each taxpayer’s position.  We are not a “here’s your tax return ~ See ya next year” type of business.  We will always be available year-round to assist you with any needs you may have.

If a member of our team has contacted you, please understand we are a nationwide business and need your assistance in promptly responding to our communication. Know that it is your responsibility as the taxpayer to respond and provide your preparer with the information necessary to complete a timely and accurate tax return.

With the goal of timely and accurately prepared tax returns in mind, we continue to tweak our tax return process in order to better serve you.  As a reminder, it is rarely necessary to actually meet with Gordy to have your tax return prepared.  Dropping off, e-mailing, faxing, or mailing your tax documents to the office works very well, and we will always call you to review any questions we have before finalizing your return. 

If you prefer to meet with Gordy, we are making the following adjustments to streamline the process so he is able to spend time focusing on complex tax return issues rather than basic data entry.

Ø  First, we ask that you use any of the methods mentioned above to get your documentation to us at least 1 week prior to your meeting.  This will allow our team to scan your documents, enter the majority of your information into our tax software, and identify any potentially missing documents prior to your meeting with Gordy.

Ø  If you are not able to get your tax documents to us prior to the meeting, please know Gordy will not be completing your return with you at the initial meeting.  There will be a brief (15 to 20 minute) meeting set to quickly review your documents, and a second, final review meeting will be set at that time.  This allows Gordy to see more clients each day, then work on the returns and call with any questions he may have.

Ø  Once Gordy has reviewed your tax return with you either over the phone or by meeting, the return is then passed on to our final processing team to review all entries (and correct any human errors that may occur) before printing/e-mailing your return and any documents requiring signature before e-filing.

Ø  One last note ~ Some clients often have to wait until very late in the tax season to receive all of their 1099’s or K-1 statements.  If this is a common occurrence for you, and you have not received all of your documents by March 1st, we will likely need to extend your return.  If this is the case, please be sure to review the extension payment information discussed later in this letter.

As more and more clients have become comfortable with electronic delivery of tax documents, we remind you how important it is to deliver your documents to us in a secure way in order to prevent identity theft.  Please do not ever take a picture of your tax document on your phone, and text it us.  This is just an invitation for a hacker to nab your social and other personal information and use it for all kinds of things that spell disaster.  Instead, please contact the office and ask us to e-mail you a secure link for uploading your documents. 

If scanning & e-mailing isn’t your thing, faxing is just as secure.  If you opt to mail your original tax documents to us, we highly recommend utilizing a tracking method so you can verify they have been received by our office.  If you have any questions regarding best practices for the delivery of your tax documents, please don’t hesitate to call.

Federal and State Regulatory News:

1.       We have seen the amounts and enforcement of tax penalties increase dramatically. Please remember, an extension to file is not an extension to pay. The best way to avoid penalties, when extending your return, is to pay at least 100% of your prior year’s total tax by the due date of the return.  We often think of March 1st as the filing deadline for farmers, but it’s actually just the due date if you have not paid estimated tax throughout the year.  If you pay your estimated tax by January 15th, you have until April 15th to file your return. If you need to extend your return, and are unsure of the amount of tax payment you should send prior to the due date, please contact us.

2.       We have seen several Minnesota audits come through in 2023, and one major area of focus is mileage logs. If your personal vs business mileage is not documented, it is NOT allowed according to the auditors. Please look into different mileage recording apps for your phone, or keep a log in the glove box of your vehicle.

3.       The IRS and MN Revenue have confirmed they are increasing audits & penalties in the coming year. In fiscal year 2021, the IRS assessed $37.3 billion in civil penalties.

4.       Please note, last year we witnessed many families miss out on education credits due to college students filing their own tax returns before talking with their parents. Parents, please talk with your dependents about tax filing status to determine the best way to claim the education credit.

Tax Law Updates/Changes:

1.      The standard mileage rate for 2023 was 65.5 cents per mile. Up 3 cents since 2022.

2.      Beginning on January 1, 2024, FinCEN is requiring businesses to report Beneficial Ownership Information. This was issued by Congress in 2021 under the Corporate Transparency Act. All corporations that are registered with the Secretary of State are required to file this form. Keep your eyes out as our team will send out information to all clients required to file this form.

a.       A reporting company created or registered to do business before January 1, 2024, will have until January 1, 2025 to file its initial beneficial ownership information report.

b.      A reporting company created or registered on or after January 1, 2024, will have 30 days to file its initial beneficial ownership information report.

Ø  Because of the additional time involved due to this FinCEN obligation, we will be charging a fee of $50 per Secretary of State annual business renewal. There will be an opt-in/out email sent out before filing this in 2024.

3.      Minnesota has several tax law changes for the 2023 tax filing season.

a.       The new simplified method for the social security income subtraction allows taxpayers, with an AGI below $100,000 for Married Filing Joint or $78,000 for Single or Head of Household returns, to subtract all taxable social security benefits.

b.      Beginning with tax year 2023, you may qualify for a Child Tax Credit of $1,750 per qualifying child, with no limit on the number of children claimed. This is a refundable credit, meaning you can receive a refund even if you do not owe tax. The credit phases out if your income is over $29,500 ($35,000 for Married Filing Jointly).

c.       The Minnesota direct tax rebate was automatically issued to eligible taxpayers. For those that received this rebate, you will be receiving a 1099-MISC for the 2023 tax season. This will be taxable on your Federal return, but nontaxable on your Minnesota return.

Employers:

1.      Amy is currently reviewing the ERC credit for all of our payroll clients as well as other clients we think may be eligible.  As this will involve a significant amount of time, reviewing 6 quarters of revenue and payroll reports, and amending the payroll tax returns for each quarter, we estimate our fee for this service to be approximately $3,000 to $4,000.  If we believe you may be an employer eligible for the credit, we will contact you before proceeding with the service. 

Ø  NOTE: There is a moratorium placed on filing this credit until the end of 2023 due to it being placed on the IRS “dirty dozen” list, as scammers really latched on to this via phone calls, emails, and even mailed letters.

2.      The Minnesota Department of Labor has enacted a new Earned Sick and Safe Leave Law (ESST) which will become effective January 1st, 2024.

a.       This law requires all employers to provide sick and safe time to all employees who work at least 80 hours in a year (even part-time and seasonal employees).

b.      Employees earn one hour of sick and safe time for every 30 hours worked, and can earn a maximum of 48 hours each year unless the employer agrees to a higher amount.

c.       All Minnesota employers must provide employees with a notice of this new law by January 1, 2024.

d.       For additional information, and a sample notice that can be used, please go to dli.mn.gov/sick-leave.  Amy will be touching base with all of our payroll clients on this.  If you would like her assistance in creating the notice, the fee will be $75.

Beware of IRS Scams:

The IRS has learned of many scams this year, some very convincing.  Please note the IRS and MN Revenue do not call, email, or text people.  They are not allowed to call until after you receive proper written notice.  Never click on a link in an e-mail or text, and be sure to contact us with questions.

Service Fees & Referral Discounts:

1.       Business Clients (Schedules C, E and F) please provide a 1-2 page summary of your income and expenses. If there is a stack of receipts or papers to be reviewed, please know we must charge for the bookkeeping time involved in the scanning and categorizing of receipts.

2.       Please know that we welcome questions throughout the year.  If you have an in-depth question that requires research, and IRS phone call, or a meeting such as tax planning, business planning, or business setup, we do need to charge a fee for our time.  However, if you have just a quick question you’d like to ask over the phone, we do not charge a fee.

3.       Just a reminder that we do offer referral discounts!  For every new client referred to us, you will receive a $50 credit on your account once the new client’s invoice has been paid.  Last year we filed returns in over 20 states.  Keep in mind we can serve clients nationwide!

If your account is not paid in full and a payment plan is not in place by January 1, 2024, no work will be done on your 2023 tax return until payment arrangements have been made.

Important Deadlines to Remember:

·         January 31st – All payroll tax returns must be filed and paid.  All W-2’s and 1099’s must be delivered to recipients and filed with the IRS and state.  If we assist you with any of these items, please submit your information ASAP to allow adequate processing time.

·         March 1st – Farm tax returns due unless you paid previous year estimated taxes by January 17th.

·         March 15th – S-Corporation (1120-S) and Partnership (1065) tax returns due.

·         April 15th – Individual (1040) and Corporation (1120) tax returns due.

Please wait to send tax return information until you have received all 1099 and W-2 income forms.  HOWEVER, once you have received everything, the sooner you can get the info to us the better.  We will have a like/share/comment promotion this tax season. Watch our website and Facebook page for details on upcoming promotions and deadline details!

Thank you for your continued patronage, and enjoy the holidays everyone!

Sincerely,

The Asmus Team