SIDNEY — “2023 has been a year for many businesses to prosper and recover from the COVID-19 pandemic, as well as provide opportunities to grow and adjust,” according to Corey Kremer, partner at Monnier & Co., CPA’s. “Whether it was taking advantage of opportunities to claim generous tax credits, or dealing with the challenges of high inflation, high interest rates, and trying to acquire and retain employees, 2023 has been both prosperous and challenging for many businesses across all industries. Our goal is to help our clients become aware and to navigate these opportunities and challenges they face.”

His report continues:

One major opportunity that has been around for the past couple of years but was made more accessible with the passing of the Consolidated Appropriations Act of 2021 by lessening the burden for businesses to qualify, is the Employee Retention Credit. The Employee Retention Credit is a payroll tax credit that businesses can qualify for by meeting certain gross receipts tests, or other COVID-19 hardship circumstances. The credit fluctuates between 50 to 70 percent of qualifying wages depending on the quarter that the credit is taken. The credit can be claimed by amending the payroll tax return for the quarter that the credit is being claimed. Businesses should be aware that unlike the PPP loan, this credit is taxable to the business and should plan appropriately. Monnier & Co., CPA’s was able to assist our clients in receiving substantial refunds filing for the Employee Retention Credit.

For businesses, the deductibility of meals has reverted to the pre-2021 rules of being limited to a 50% deduction. For 2021 and 2022, business meals purchased from a restaurant were allowed a 100% deduction.

For individuals, most of the changes for 2023 were related to inflation adjustments. For example, the standard deduction has increased slightly, IRA and 401(k) limits are slightly higher, and you can contribute a bit more into your health savings account (HSA).

One of the most interesting topics to follow in 2024 and 2025 will be the expiring provisions in the Tax Cuts and Jobs Act (TCJA) that are set to expire at the end of 2025. The basic standard deduction amounts will revert to their pre-TCJA levels and then be adjusted for inflation. This would result in an approximate 50% reduction to the standard deduction. Personal exemptions were suspended under the TCJA but are set to return in 2026. The child tax credit will revert to its pre-TCJA structure with a maximum credit of $1,000 per child as opposed to the current $2,000 per child credit. The $10,000 limit on state and local tax (SALT) deduction as part of itemized deductions will expire and taxpayers will be able to deduct all eligible state and local income and property taxes. These are just a few of the many provisions in the TCJA that are set to expire at the end of 2025; therefore, it will be interesting to see if Congress acts on these provisions and what action they take.

A full-service accounting firm, Monnier & Co. offers traditional audit, accounting, and tax services as well as estate planning, merger and acquisition planning, business and individual tax consulting, business succession planning, financial reporting services, business valuations, and technology consulting. The staff at Monnier & Co. is dedicated to providing quality service. We invite you to consult with any of our professionals regarding these or any other accounting or tax issues. Feel free to call us at 937-492-6101 or visit our website at www.monniercpa.com.