The new Inflation Reduction Act that passed in congress this year has a surprising amount of tax implications for both individuals and small businesses. Many of the provisions are extensions of the tax laws that were already in effect but were expiring, such as the Affordable Care Act health insurance premium credits, which were extended to 2025, and the electric vehicle credit that was extended for 10 years and now has many more qualifications, including incentives for electric fleets for small businesses. Other credits were not only extended, but have many more benefits, for example, the Clean Energy Tax Credit not only extended the Solar Energy tax credit for 10 years but now includes water heaters, heat pumps, HVAC systems, and more. Small businesses will also benefit from an extension of the 100% meals deduction that was instituted last year and is now extended through 2022.
Another portion of the Inflation Reduction Act is $80 billion of additional funding over 10 years for the IRS. The IRS budget has been woefully neglected over the years and in turn, taxpayers have been left with no way to communicate with the service to resolve issues, follow up on refunds, or even create installment plans. As customer service representatives and agents retire, there has been no budget to hire replacements and without staff, there are not enough people to answer phones or review mail. Additionally, the computer systems at the IRS are antiquated and not integrated, so you can call one department and they can’t see all the information they need to solve a problem, so you may have to call multiple departments to resolve one issue. So this additional funding is actually a good thing for taxpayers and tax practitioners. It will allow us all to resolve problems more quickly and efficiently.
The best things you can do to save on taxes are to plan and get a good tax advisor. Tax laws change every year and what you don’t know can and will cost you money! With the uncertainties of the economy and inflation, even if you never used a professional before, now is the time. A tax professional can guide to make the right decisions in the face of these many unknowns.
A CPA is available to you for advice and help throughout the year. If you have financial decisions to make during the year, this advice could be invaluable. So, most people would benefit greatly from the services of a Certified Public Accountant.
Sternbach & Rose, CPAs is a full-service accounting firm located in Valhalla, NY. Call us to make an appointment for a free first-time consultation to see if we are a good fit. We can be reached at 914-940-4449, or you can email us at [email protected]