“The hardest thing in the world to understand is the income tax.” ~Albert Einstein

2023 Tax News

With the recent pandemic and backlogs, the IRS is having some real issues right now. To help you avoid having to try to reach someone at the IRS, we have provided some basic information for you.

Click on each link below for more information you can use:

Beneficial ownership information reporting under the Corporate Transparency Act

By AICPA & CIMA together as the Association of International Certified Professional Accountants.

Starting January 1, 2024, most companies created in or registered to do business in the U.S. will need to report information on their beneficial owners to the Financial Crimes Enforcement Network (FinCEN) under the Corporate Transparency Act (CTA).

The Corporate Transparency Act (CTA) was enacted as part of the National Defense Act for Fiscal Year 2021. The CTA mandates that millions of entities report their beneficial ownership information (B01) to the Financial Crimes Enforcement Network (FinCEN). This resource is meant to provide a preliminary overview of the provisions in the CTA.

Who is required to report under the CTA’s BOI reporting requirement?

All domestic and foreign entities that have filed formation or registration documents with a U.S. state (or Indian tribe), unless they meet one of 23 enumerated exceptions.

  • EXEMPT: large operating entities that meet all the following criteria:
    • Employ more than 20 people in the U.S.
    • Had gross revenue (or sales) over $5 million on the prior year’s tax return.
    • Has a physical office in the U.S.
  • EXEMPT: publicly traded companies that have registered under Section 702 of SOX

When must companies file?

  • New entities (created/registered after Dec. 37, 2023) – must file within 30 days
  • Existing entities (created/registered before Jan. 1, 2024) – must file by Jan. 1, 2025
  • Reporting companies that have changes to previously reported information or discover inaccuracies in previously filed reports – must file within 30 days.

What information do companies need to report?

Each company must report the information below.

  • Full legal name of the reporting company and any trade or DBA names
  • Business address
  • State or Tribal jurisdiction of formation or registration

In addition, each reporting company must report the following details on its beneficial owners and, for newly created entities, its company applicant(s):

  • Name
  • Birthdate
  • Address
  • Unique identifying number and issuing jurisdiction from an acceptable identification document (and image of such document)

Who is a beneficial owner?

Any individual who, directly or indirectly, either:

  • Exercises substantial control over a reporting company, or
  • Owns or controls at least 25% of the ownership interests of a reporting company

What are the taxpayer penalties for noncompliance with the statute?

  • Civil penalties are up to $500 per day that a violation continues.
  • Criminal penalties include a $10,000 fine and/or up to two years of imprisonment.

Arizona Tax Credits for 2023

Even though most of the deadlines for the Arizona Tax Credits are April 15, 2024, we recommend making your donations by December 31, 2023 to make your record keeping easier.

Arizona Qualifying Charitable Organization Tax Credit

These non-refundable Arizona Tax Credits will be applied to your total Arizona income tax for 2023 and reduce the tax. If the credits are not fully used, they will carryover to 2024 (5 years total carry-forward). 

The maximum QCO credit donation amount for 2023:

  • The maximum Qualifying Charitable Organizations (QCO) credit donation amount for 2023: $421/single; $841/married.
  • The maximum Qualifying Foster Care Charitable Organizations (QFCO) credit donation amount for 2023: $526/single; $1,051/married.

Click here and scroll down to Lists of Qualifying Charitable and Qualifying Foster Care Charitable organizations.

Public School Tax Credit

An individual may claim a nonrefundable tax credit for making contributions or paying fees directly to a public school in Arizona for support of eligible activities, programs or purposes as defined by statute.

  • The maximum credit for Contributions made or Fees Paid to a Public School is $200/single; $400/married.

Click here and scroll down to the Resources section for a list of schools.

Credits for Contributions to Certified School Tuition Organizations

Arizona provides tax credits for contributions made to Certified School Tuition Organizations which provide scholarships to students enrolled in Arizona private schools. Credits are available for donations made by individual taxpayers and for donations made by corporate taxpayers.

  • The maximum Original Individual Income Tax Credit donation amount is $650/single; $1,308/married.
  • The maximum Switcher Individual Income Tax Credit (additional credit) donation amount is $652/single; $1,301/married.

If you contribute the maximum STO amount, you can also contribute to the Switcher credit.

Click here and scroll down for the list of STO schools.

Please don’t hesitate to call or email us with questions or for additional strategies on reducing your tax bill. We’d be glad to set up a planning meeting or assist you in any other way that we can.