“Before anything else, preparation is the key.”
-Alexander Graham Bell
A new year means new policies. Here are just a few of the new regulations that could have an impact on your tax filings for 204 and beyond.
IRS Seeks Reporting of Digital Asset Sales
Regulations proposed by the IRS this summer would require brokers to report the sale or exchange of digital assets by customers to the agency beginning in 2025. Under current law, taxpayers owe tax on gains and may be entitled to deduct losses on digital assets when sold, but for many taxpayers it is difficult and costly to calculate their gains. A new Form 1099-DA, issued by brokers, will help these taxpayers determine whether they owe taxes. Entities that would be required to issue Forms 1099-DA include digital asset trading platforms, digital asset payment processors and certain digital asset-hosted wallet providers. The proposed regulations would also require “real estate reporting persons” to report digital assets used in the purchase of real estate. Real estate reporting persons would include real estate brokers, title companies, closing attorneys and mortgage lenders.
New Rule for Rollover of 529 Accounts to Roth IRAs
Tax-advantaged educational savings accounts, also known as 529 plans, provide a way for parents to help their children or other family members save for college or to pay other educational expenses. However, not every beneficiary uses the full amount they paid into the plan. Beginning in 2024, the SECURE 2.0 Act allows beneficiaries to roll over unused funds into a Roth IRA without having to pay a penalty. However, there is a lifetime limit of $35,000 per beneficiary and the 529 account must have been open for at least 15 years. The rollover amount cannot exceed the beneficiary’s annual IRA contribution limit.
IRS Enforcement for High-income Individuals
Using the extra funding it received in the 2022 Inflation Reduction Act, the IRS is moving forward with its plans to prioritize enforcement efforts against high-income earners, partnerships, large corporations and promoters abusing U.S. tax laws. The agency is touting this increased enforcement as part of its efforts to restore fairness to the U.S. tax system and will focus its efforts on taxpayers with more than $1 million in income and more than $250,000 in recognized tax debt.
If you have any questions about how these changes or any other tax matters could impact you or your business, please feel free to contact us.