Personal tax returns (1040) are due on April 18, 2023 (usually April 15th), with Partnerships (1065) and S-Corporations (1120-S) both being required to file by March 15th. These dates can be automatically extended for six months. Filing for a federal extension automatically extends the Pennsylvania return due date as well.
First, review your 2021 tax return to see what income and deductions you reported previously, to get a better idea of what you need to complete your returns this year. The most common documents for individual filers are as follows:
- Form W-2: A report of salary and withholdings from your employer
- Form 1099: Payments made to you during the year for services
- Form 1099-B: Investing or trading accounts, including cryptocurrency, will need a report of capital gains from sales and any interest or dividends. Most investment firms will mail you a Form 1099 Consolidated that will have all the needed information.
- Form 1098-T: If you’re a parent, you may have tax documents for tuition payments and interest, or scholarships payments received in 2022.
There were several significant tax changes for 2022. For those focused on saving for retirement, the maximum contribution limits for your 401(k) increased from $19,500 to $20,500. Investors
over 50 years of age can take advantage of the increase in “catch-up” contributions, allowing for up to an additional $6,500 into their 401(k). The maximum deduction to an IRA remains at $6,000, plus a $1,000 “catch up.” Remember, IRA contributions must be made by April 18, 2023. Keep these amounts in mind when deciding where to allocate funds for retirement.
If you’re looking to make capital expenditures for your business or real estate, the clock on utilizing the 100% bonus depreciation benefits from the 2017 Tax Cuts and Jobs Act has begun to tick; 2022 is the last year in which qualified improvements can be fully expensed in a single year. Starting in 2023, the 100% deduction of the cost of a qualified improvement is being reduced to 80%. In each following year, the special depreciation deduction will be reduced by 20% until it is phased out completely.
Although accelerated depreciation will still be around thanks to Section 179, there are some key differences to bonus depreciation that make it attractive. A Section 179 deduction can’t exceed the amount of annual income for a business, meaning excess losses cannot be deducted or carried forward. Bonus depreciation however is not restricted by business income and can be carried forward as a tax deduction for future years. So if you are planning an expansion and want to take accelerated depreciation, there will not be a better time than now.
