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1. Key Changes for Families and Individuals đĄ
Child Tax Credit (CTC) đ§: Up to $2,000 per qualifying child under 17( must be under 17 by the end of the year) .
 Partially refundable up to $1,600. Phases out for incomes over $400,000 (joint) or $200,000 (others). Children must have lived with you for more than half the year and be claimed as dependents.
Tax Brackets Adjusted for Inflation đ°: The top bracket is now 37% for incomes over $539,900 (single) or $693,750 (joint). The lowest bracket remains at 10% for incomes of $11,000 or less (single) or $22,000 (joint).
Foreign Earned Income Exclusion đ: Increased to $120,000.
Qualified Adoption Expenses đś: Maximum credit raised to $15,950.
Gift Tax Exclusion đ: $17,000 per recipient.
Standard Deduction Increases: For married couples filing jointly, it's now $27,700. For single taxpayers and married individuals filing separately, it's $13,850. Heads of households get a standard deduction of $20,800.
2. Updates for Business Owners đ˘
Fringe Benefits đ: Tax-free transportation and parking benefits cap is now $300 per month.
1099-K Reporting Delay đź: The new $600 threshold is delayed until 2024. For 2023, the threshold remains over $20,000 with more than 200 transactions.
Employee Retention Tax Credit (ERTC) đź: Available for amending 2020 and 2021 returns, potentially worth up to $7,000 per quarter per employee.
Bonus Depreciation đ: Immediate deduction phased down to 80% in 2023.
Qualified Business Income Deduction đĄ: Up to 20% deduction for certain business incomes, with income thresholds.
Research & Development Tax Credit đŹ: For businesses with less than $50 million in gross receipts.
Work Opportunity Tax Credit (WOTC) đĽ: For hiring long-term unemployed individuals, 40% of the first $6,000 of wages.
Employee Health Insurance Expenses đ: Average wages limit for small employer health insurance credit is $30,700.
Business Meals and Entertainment Expenses đ˝ď¸: 50% deductible.
Employer-provided Transportation Fringe Benefits đ: Maximum monthly limitation of $300.
Key Changes for the Elderly đľđ§:
Standard Deduction Increase: For 2023, the additional standard deduction for taxpayers who are aged (65 or older) or blind has increased. It's now $1,500 for each condition, or $1,850 for unmarried taxpayers not surviving spouses. This change provides a higher deduction amount for elderly taxpayers, offering a bit more tax relief.
Miscellaneous Tax Updates đ°đď¸
Marginal Tax Rates: The top tax rate remains at 37% for single filers earning over $578,125 and married couples filing jointly earning over $693,750. Other tax brackets have also been adjusted.
Alternative Minimum Tax (AMT): The exemption amount is now $81,300, phasing out at $578,150 ($126,500 for married couples filing jointly, phasing out at $1,156,300).
Earned Income Tax Credit (EITC): The maximum amount is $7,430 for taxpayers with three or more qualifying children.
Qualified Transportation Fringe Benefits: The monthly limitation increases to $300.
Health Flexible Spending Arrangements: The contribution limit is $3,050. The maximum carryover amount is $610.
Medical Savings Account (MSA): New limits for annual deductibles and out-of-pocket expenses.
Foreign Earned Income Exclusion: Now $120,000.
Estate Tax Exclusion and Gift Tax Exclusion: The basic exclusion amount for estates of decedents is $12,920,000. The annual exclusion for gifts is $17,000.
Adoption Credit: The maximum credit allowed is $15,950.
In Conclusion
The 2023 tax landscape brings several changes and opportunities. As always, DulceVida Consults is here to help you navigate these waters. For personalized advice and assistance, don't hesitate to reach out!
Best Wishes,
Diana Maldonado
916.827.0019 | info@dvidaconsults.com | 2740 Fulton Ave Ste 110 Sacramento, CA 95821.
Disclaimer: This newsletter is for informational purposes only and does not constitute legal, tax, or financial advice. Please consult with a professional for specific advice.
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