Although the news has been filled with stories about inflation and rising interest rates, there has been a new change which is good news for many Hamilton taxpayers. In early July, the IRS has extended the timeframe by which qualifying estates can make a portability election. This is an important development for estates of married couples, as they’ll have up to five years after the first spouse’s death to combine both lifetime exclusion amounts. The result is a new opportunity to minimize federal estate and gift tax exposure.

On June 30, 2022, after passage by the State Senate, New Jersey Governor Phil Murphy signed the Fiscal Year 2023 Appropriations Act, also known as the State’s budget for the coming fiscal year.  At $50.6 billion, it is the largest budget in the State’s history and includes a record $6.8 billion surplus.

In early June, the Philadelphia City Council passed a bill that will soon require certain local businesses to provide employees with benefits towards mass transit or bicycle commuting expenses, as more workers return to offices following COVID-19 closures.

Maintaining compliance with state tax laws can be challenging for individuals and businesses, especially those companies that operate across state lines. Unlike the federal government, each state enacts its own tax laws, which often vary from jurisdiction to jurisdiction. These differences can be confusing and open the door to potential reporting issues with income and other taxes. Not only does this result in missed tax payments, but it can also cause the assessment of additional fines, penalties, and interest.

Are you planning to make a significant capital investment? If so, all businesses, including lessors and lessees, may want to make those purchases soon, as the tax-saving opportunity created by 100% bonus depreciation is set to expire at the end of the year, barring additional action from Congress. This means that starting on January 1, 2023, bonus depreciation will begin to phase out over four years, ultimately ending in 2026.

On May 20, 2022, the IRS announced that interest rates on overpayments and underpayments of tax will increase for the third quarter of 2022, which begins on July 1.

New Jersey and Pennsylvania-area employers hit with IRS penalties over failure to pay income taxes related to the Employee Retention Credit (ERC) may have some relief on the way.

The economic effects of the COVID-19 pandemic on businesses have primarily passed. The last parcel of federal relief, the American Rescue Plan Act, provided one final economic boost for individuals and businesses, and since then, popular federal relief programs, including the Paycheck Protection Program, Shuttered Venue Operators Grant, and the Employee Retention Credit (ERC), has expired.

The Energy Efficient Home Credit was established by the Energy Policy Act of 2005 to allow eligible contractors to claim a $2,000 tax credit for each newly constructed or significantly reconstructed energy-efficient qualifying residence. The tax credit (Section 45L of the Internal Revenue Code) was set to expire at the end of 2020 but was extended by the Consolidated Appropriations Act of 2021 to include residences sold or leased on or before December 31, 2021. The credit can be retroactively taken up to three years.

It’s no secret the IRS is facing significant operational challenges attempting to work through the backlog of unprocessed returns, issuing refund payments, maintaining customer service, all while preparing for the 2021 tax season. And attempts to streamline existing workflows and standardize tax reporting have added another layer of complexity. For example, recently, changes were made to how pass-through entities (partnerships and S-corporations) report international tax-related items. Previously, this information was reported on IRS Form K-1, but recent changes mean these details are now to be reported in various places on Schedule K-2 or Schedule K-3.