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Member of Russell Bedford International, a global network of independent professional service firms.
Thinking of exploring the world, living a nomadic lifestyle, or just being with family that lives abroad? Especially now that technology and digitalization enable you to work remotely? What you may not know is that you can potentially exclude some of that income from your U.S. taxes.
In general, U.S. citizens are taxed on their worldwide income and then receive a foreign tax credit for any portion of their income earned outside of the U.S. Theoretically, the U.S. is only taxing the difference between U.S. tax rates vs. foreign tax rates, and your taxes would be effectively the higher rate of the two countries.
However, the U.S. does allow its citizens and resident aliens to exclude up to $112,000 (for 2022 and indexed yearly for inflation) of their income, if they meet the following requirements:
You can use the IRS interactive tax assistant to determine if your foreign income is eligible for exclusion.
If you are married and both of you live abroad, and meet the definitions outlined, both of you can exclude up to $112,000 of income on your tax return.
Other taxable items such as social security income, dividends, interest, and pension checks would still be taxable in the U.S. Your tax rate would still be based upon your total income (including the excluded foreign income). However, you would still benefit as the foreign income is excluded from your tax return. Depending on your residence before moving abroad, your state might have different reporting requirements and might not allow any foreign exclusions.
If you meet the above requirements, you can claim the exclusion of income.
The taxation of foreign activities can get complicated and difficult to decipher, but Cray Kaiser can help. Call us at 630-953-4900 to help you determine the best treatment for your individual case along with any state complications.
As it does every year, the Internal Revenue Service recently announced the inflation-adjusted 2023 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.
Beginning on Jan. 1, 2023, the standard mileage rates for the use of a car (van, pickup or panel truck) are:
The business standard mileage rate is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs as determined by the same study. The rate for using an automobile while performing services for a charitable organization is statutorily set (it can only be changed by Congressional action) and has been 14 cents per mile for over 15 years.
The 2023 rates are based on 2022 fuel costs. Given the potential for the continuation of substantially higher gas prices, it may be appropriate to consider switching to the actual expense method for 2023, or at least keep track of the actual expenses, including fuel costs, repairs, maintenance, etc., so that the option is available for 2023.
Taxpayers always have the option of calculating the actual costs of using their vehicle for business rather than using the standard mileage rates. In addition to the possibility of higher fuel prices, the bonus depreciation and increased depreciation limitations for passenger autos that were part of the 2017 Tax Cuts and Jobs Act may make using the actual expense method worthwhile during the first year a vehicle is placed in business service.
However, the standard mileage rates cannot be used if you have used the actual method (using Sec. 179, bonus depreciation and/or MACRS depreciation) in previous years. This rule is applied on a vehicle-by-vehicle basis. In addition, the business standard mileage rate cannot be used for any vehicle used for hire or more than four vehicles simultaneously.
When employers reimburse employees for business-related car expenses using the standard mileage allowance method for each substantiated employment-connected business mile, the reimbursement is tax-free if the employee substantiates to the employer the time, place, mileage and purpose of employment-connected business travel.
The Tax Cuts and Jobs Act eliminated employee business expenses as an itemized deduction, from 2018 through 2025. Therefore, employees may not take a deduction on their federal returns for those years for unreimbursed employment-related use of their autos, light trucks or vans. However, those who are self-employed are eligible to claim expenses for their personal vehicles used in their businesses.
Many of today’s SUVs weigh more than 6,000 pounds and are therefore not subject to the limit rules on luxury auto depreciation. Taxpayers with these vehicles can utilize both the Section 179 expense deduction (up to a maximum of $28,900 in 2023) and the bonus depreciation (the Section 179 deduction must be applied before the bonus depreciation) to produce a sizable first-year tax deduction. However, the vehicle cannot exceed a gross unloaded vehicle weight of 14,000 pounds. Caution: Business autos are 5-year class life property. If the taxpayer subsequently disposes of the vehicle before the end of the 5-year period, as many do, a portion of the Section 179 expense deduction will be recaptured and must be added back to income (SE income for self-employed individuals). The future ramifications of deducting all or a significant portion of the vehicle’s cost using Section 179 should be considered.
Consider using bonus depreciation as an alternative to the Section 179 deduction. Under this provision, a taxpayer can elect to claim a deduction of 100% of the cost of a new or used vehicle used for business in the first year it is placed into business service. However, the luxury auto rules impose a maximum annual deduction for depreciation, including the bonus depreciation. For example, in 2021, the maximum depreciation deduction for an auto for which bonus depreciation was claimed was $18,200. This compares to a maximum of $10,200 if bonus depreciation isn’t elected. Of course, if the vehicle is used only partly for business, then only the business-use percentage of the cost is eligible to be deducted.
After 2022, the deductible bonus depreciation percentage drops by 20 percentage points a year, until 2027 when, barring an extension by Congress, no bonus depreciation will be allowed.
Whether to claim bonus depreciation, Section 179, regular depreciation, or a combination of these methods for a business vehicle or to use the standard mileage rate instead, can be a complicated decision to make.
If you have questions about the best methods of deducting the business use of your vehicle or the documentation required, please give our office a call at (630) 953-4900.
What you do with your pay stub often depends on how you get paid. If you have direct deposit, there’s a good chance that you don’t even look at your pay stub if you don’t receive paperwork from your employer. Or you receive a pay stub and shred it without a glance, confident that the money is in your bank account, and all is good in your world. But the fact that you’ve been paid doesn’t mean that the information on your pay stub isn’t important. It’s a good idea to take a closer look at the information that’s provided, and make sure you understand what it all means.
The most important reason to double-check your pay stub is to ensure that you’re being paid correctly and that the right amount of money is being withheld on your behalf by your employer. You know better than anybody what your income is supposed to be, and mistakes do happen, but you won’t know if you don’t check.
An issue that we see quite often is insufficient withholding taxes being taken out of your pay. This creates an unwelcome surprise at tax time, a matter that can be rectified sooner if you take action right away.
We’ve all seen how complicated federal taxes have become – with different levels of deductions, changing tax brackets, tax credit advances, and seemingly constant law changes. While the IRS recommends that you use calculators to estimate your taxes, we sometimes see errors with this methodology. Unfortunately, the best way to determine your tax burden is to prepare a mock return – taking into account all sources of income, expected deductions, and anticipated credits. Then compare that to your expected withholding.
If there is a shortfall, reach out to your Human Resources department and discuss changing your Form W4 to request more federal tax withholding. If it looks like you may receive a big refund, first, double-check your work. Then, perhaps adjust your withholding to have fewer taxes taken out to receive more take-home pay now.
Here in Illinois, we have a flat tax, so it is less likely errors will occur. However, you need to keep in mind other sources of income that may not have tax withholding (such as investment income).
Beyond what you are paid, and the taxes withheld, have you reviewed your other deductions and benefits? Unfortunately, there is no one set format for pay stubs. In fact, some states don’t even require employers to provide their employees with the specifics of where their money is going each pay period. For those who do receive paper records of their withholding amounts and more, here’s what you’re likely to find, and what it means.
Your payroll records have a wealth of information about your pay, taxes, and benefits that have implications come tax time. If you’d like us to perform an interim review of your tax situation, please contact Cray Kaiser today.
If you are considering purchasing an electric vehicle and expect to receive a federal tax credit for your purchase, do your homework first. There is a phaseout based on a manufacturer’s sales of electric vehicles that impacts the credit available to the purchaser.
Many popular manufacturers have been phased out of the credit, including Tesla and General Motors.
The credit phase out for manufacturers begins in the second calendar quarter following the sale of its 200,000th plug-in electric drive motor vehicle for use in the U.S. The applicable percentage phase-out is:
While the credit for many popular models is phasing out or has phased out already, some manufacturers are just beginning to offer electric vehicles. There are also new electric vehicle manufacturers entering the market, so you still have choices for an electric vehicle that qualifies for a tax credit.
Here are some things you should be aware of before making your decision to purchase an electric vehicle.
The credit is not a flat $7,500; it is made up of two elements, a $2,500 per vehicle credit plus an additional $417 for each kilowatt hour of capacity in excess of 5-kilowatt hours, not to exceed $5,000, resulting in an overall credit of up to $7,500.
The amount of credit available for any qualifying vehicle, listed by the manufacturer, is available on the IRS website. Although most salespeople will know the amount of credit that is available for the vehicle you are considering, you may run into an overzealous one that might mislead you. So, it is good practice to double check for yourself on the IRS Website.
The following requirements must be met to qualify for the credit.
Credit for Multiple Vehicles – The credit is a per vehicle credit. Therefore, if you purchase multiple plug-in electric drive motor vehicles you can claim the credit for each vehicle.
Off-Road Vehicles and Golf Carts – Vehicles manufactured primarily for off-road use, such as for use on a golf course, do not qualify for the credit.
Allocation Between Business and Personal Use – If you use a qualified plug-in electric drive motor vehicle both personally and, in your business, the credit is divided (allocated) between personal use and business use and creates two separate credits, with the tax treatment of the two being quite different.
For both the personal and business credit, the basis of the vehicle is reduced dollar for dollar by the amount of the credit. For a taxpayer claiming just the personal credit, this only becomes an issue when the vehicle is subsequently sold since when determining the gain or loss on the sale, the cost of the vehicle is reduced by the amount of any credit claimed. If the sale of a personal vehicle results in a loss, no loss is deductible, but if there’s a gain, the gain is taxable. This has rarely been an issue since vehicles were seldom subsequently sold for a profit. However, recently the used car market has been turned on its head, with many used cars selling for as much or more than the original cost, which could result in a taxable capital gain for the seller. For a vehicle used for business, the credit reduces the depreciable basis of the vehicle. No credit is allowed for any portion of a business vehicle expensed under Sec 179.
If a taxpayer uses a vehicle for business, they can choose between deducting actual expenses such as fuel, repairs, insurance, etc., or deducting a standard amount for each business mile driven. The standard mileage rate is determined periodically by the IRS using average costs of operating a vehicle. The IRS does not distinguish between fuel-powered cars and electric cars, and both are allowed to use the same standard amount, even though the rate includes fuel costs. The business mileage rate for 2022 is 58.5 cents per mile, up from 56 cents per mile in 2021.
President Biden’s Build Back Better Act included a new round of electric vehicle credits. But that Act appears to be dead in the water and whether Congress will authorize those credits in a separate bill is yet to be seen.
If you have questions contact Cray Kaiser. We can help determine how much benefit you will derive from the plug-in electric drive motor vehicle credit based upon your specific use of the vehicle, whether it is personal, business or a combination of the two.
Effective July 1, 2022, certain taxing jurisdictions in Illinois have imposed a local sales tax or changed their local sales tax rate on general merchandise sales. The following taxes are affected:
To be in compliance with the new tax rates, you must adjust your point of sale and/or accounting system to ensure that you will collect and pay the correct sales tax effective July 1, 2022. You may need to contact your software vendor to confirm that they will correct their systems to the appropriate tax rate. Remember that even if you under-collect tax, the tax is still due. That means it will be your responsibility to pay the difference.
To verify your new combined sales tax rate (state and local tax) use the Tax Rate Finder at mytax.illinois.gov and select rates for July 2022.
The sales tax rate change does not affect anyone collecting sales tax in the city of Chicago. However, it does affect some cities in Cook County, Kane County and other jurisdictions. To see a full list of all the cities impacted and the new rates, please click here.
These rate changes do not impact what is and is not subject to sales tax. As a reminder, most sales are subject to both the state sales tax and the locally imposed sales tax.
Note that some jurisdictions may impose and administer taxes not collected by the Illinois Department of Revenue. Contact your municipal or county clerk’s office for more information.
If you have any questions regarding the sales tax rate change, please don’t hesitate to contact Cray Kaiser today.
According to the Social Security Administration, as of 2019, 16% of Americans were age 65 or older. Each day approximately 10,000 baby boomers reach the age of 65, with all boomers reaching 65 by 2030. Boomers aren’t the only reason the nation’s overall population is aging – people are living longer due in part to better health care (even though deaths from COVID-19 have lowered life expectancy projections).
With aging comes a greater likelihood of injury. The Centers for Disease Control has stated that falls are the leading cause of injuries among people age 65 and older, and nearly 30% of older adults reported falling at least once in the preceding 12 months. To help minimize falls and accommodate age-related infirmities, many people are adding grab bars in showers, modifying stairways, widening hallways to accommodate a wheelchair, and other projects to make the home safer and more accessible for older occupants. If you are planning to make these type of home improvements, you may be eligible to claim the costs as a medical expense for income tax purposes.
Generally, the costs of home improvements are not deductible except to offset home gain when the home is sold. However, a medical expense deduction may be claimed when the primary purpose of the home modification is a medical reason. The tax law says that deductible medical expenses are those paid for the “diagnosis, cure, mitigation, treatment, or prevention of disease, and the costs for treatments affecting any part or function of the body.”
So, if you are making the modification to accommodate a medical condition or need of you, your spouse, or a dependent, then the cost of the modification may be deductible as a medical expense, but only to the extent that it exceeds any resulting increase in the property’s value.
Example: A doctor recommends that his patient with severe arthritis have daily hydrotherapy, and so the individual has a hot tub installed at a cost of $21,000. The individual then hires a certified home appraiser to determine how much the hot tub addition increased the home’s value. The appraiser concludes the increase is $20,000. The individual’s medical deduction for the year the hot tub is installed will be limited to $1,000 ($21,000 – $20,000). The other $20,000 of expenses will increase the home’s basis, meaning that it will add to the home’s cost and will offset the sales price when the home is sold.
Even though a prescription from a doctor isn’t required for most medically related home modifications, the taxpayer, if questioned by the IRS, needs to be able to demonstrate how the expenditure relates to their medical care or that of a spouse or dependent. Having a letter from the individual’s doctor that explains the type of modifications that would be medically beneficial would help to prove a medical need.
Not all improvements result in an increased home value. In fact, some modifications, such as lowering cabinets for an occupant confined to a wheelchair, may decrease the home’s resale value.
The IRS has identified certain improvements that don’t usually increase a home’s value but for which the full cost can be included as a medical expense. These improvements include, but are not limited to, the following items:
Only reasonable costs to accommodate a home for a disabled condition or for an elderly individual are considered medical care costs. Additional costs for personal preferences, such as for architectural or aesthetic reasons, are not medical expenses (but could be additions to the home’s tax basis).
Unfortunately, the total of all medical expenses can be deducted only to the extent that they exceed 7.5% of the taxpayer’s adjusted gross income (AGI) and only if the taxpayer itemizes deductions. With the current high value of the standard deductions, fewer than 15% of taxpayers are expected to itemize their deductions through 2025. So even if a medically needed home improvement is made and qualifies to be deducted, only a small percentage of taxpayers will end up with a tax benefit because of the expenditure.
All is not lost, though. To the extent that the taxpayer doesn’t claim the expense as an itemized deduction, the improvement costs, including those that might not meet the medically necessary standard, can be added to the home’s purchase cost to determine the home’s tax basis. Thus, when the home is sold, the capital gain from the sale will be lower.
Either to substantiate the currently deductible improvements or with a future home sale in mind, taxpayers should keep records of the home improvements they make, including receipts.
If you would like to discuss the tax deductibility of an improvement you are making to your home for medical purposes, please call the Cray Kaiser tax experts at (630) 953-4900.
The IRS has always required U.S. citizens to report all income from whatever source derived. Understanding that individuals with side businesses may not have reported all their income, the IRS is seeking to crack down on taxpayers who may be underreporting their income, whether it be on purpose or because of a misunderstanding of the rules.
For several years now, the IRS has required payments made to merchants through various marketplaces, payment processors (credit and debit cards), and third-party settlement organizations to be reported on Form 1099-K. The IRS then compares the 1099-K amounts to the amount reported on the individual’s or business’s tax return and follows up by correspondence or by audit if there appears to be an underreporting of income.
Before 2022, the filing threshold for 1099-Ks was reportable payment transactions during a calendar year of more than $20,000, and more than 200 transactions in that same year. Thus, entrepreneurs with a small business selling merchandise on the Internet directly or through Amazon, E-Bay or other online platforms may not have received a 1099-K in the past.
That will all change beginning in January 2023 when reporting begins for 2022 transactions. The American Rescue Plan Act included a provision to reduce the reporting threshold to $600 effective in 2022. So, which businesses are likely to receive 1099-Ks that have not in the past?
The 1099-K only reports gross income, and the cost of the products sold and other business expenses can be deducted to determine a merchant’s net taxable profit. Those renting vacation homes can deduct depreciation, utilities, repairs, and other expenses, while those providing services can deduct certain travel and other expenses. The net profits are subject to income tax and are generally subject to self-employment tax, including rentals where significant personal services are performed.
Because of the new 1099-K reporting, an uptick in the small business tax filings is anticipated. Keeping records of expenses becomes critical to reducing the gross income reported to the IRS. Please contact Cray Kaiser at (630) 953-4900 if you’d like to discuss how these rules may impact you.
Suppose you are fortunate enough to have an estate large enough to be subject to the estate tax upon your death. You might be considering ways to give some of your wealth to your family and loved ones now, thereby reducing the estate tax when you pass on. This tax strategy is important to consider over the next few years. The estate tax is set to revert back to about half of the current lifetime gift and estate tax exclusion beginning in 2026.
Frequently, taxpayers think that gifts of cash, securities, or other assets they give to other individuals are tax-deductible; in turn, the gift recipient thinks they have to pay income tax on the gift received. Nothing can be further from the truth. To fully understand the ramifications of gifting, one must realize that gift tax laws are related to estate tax laws. Uncle Sam does not want you to give away your wealth before you pass away to avoid the estate tax. For individuals who die in 2022, federal law allows $12.06 million (lifetime estate tax exclusion) to pass to heirs estate-tax free. Any excess amount is subject to an estate tax as high as 40%.
Amounts you gift above the annual gift tax exclusion amount prior to your death reduce the lifetime estate tax exclusion and will therefore subject more of your estate to taxation.
Example: Jeff gives his daughter $100,000 in 2022. This is $84,000 more than the $16,000 annual gift tax exclusion. Jeff will need to file a gift tax return reporting the gift. The $84,000 excess (and any additional excess amounts from other years) will reduce his estate tax exclusion, whatever amount it may be, in the year he dies.
The law does provide exceptions where gifts can be made without reducing the lifetime exclusion, including the following:
If the gift giver is married and both spouses agree, gifts to recipients made during a calendar year can be split between the husband and wife, even if only one of them gifted the cash or property. By using this technique, a married couple can give $32,000 in 2022 to each recipient under the annual limitation discussed previously.
High-Wealth Individuals – If you are a high-wealth individual who would like to pass on as much to your heirs as possible while living, without reducing the lifetime exemption, you could directly pay your future heirs’ medical expenses and education expenses in addition to annual gifts of cash or property of up to $16,000 (2022). You may want to do this even if you are not a high-net-worth individual, to avoid filing a gift tax return.
Education Expenses – When you pay the qualified post-secondary education tuition for another individual, it does not mean (as is usually the case for medical expenses) that someone cannot benefit taxwise. Tax law says that whoever claims the student as a dependent is entitled to the American Opportunity Credit or Lifetime Learning Credit for higher education expenses if they otherwise qualify.
Gifts of Appreciated Property – Consider replacing your cash gifts with gifts of appreciated property, such as stock for which you have a “paper gain.” When you gift an appreciated asset, the potential gain on the asset transfers to the recipient. This works for individuals, except for children subject to the kiddie tax, which requires the child’s income to be taxed at the parent’s tax rate if it is higher than the child’s rate. It also works great for contributions to charitable organizations. Although not subject to the gift tax rules, not only does an appreciated asset gifted to a charity get you out of reporting any gain from the appreciation, but you also get a charitable tax deduction equal to the fair market value (FMV) of the asset. The deduction for these gifts is generally limited to 30% of your adjusted gross income (AGI), but the excess carries over for up to five years of future returns.
Remember that to utilize this year’s annual exclusion amount, the gift must be transferred to your designated recipient by December 31. Exclusion amounts not used this year do not carry over to next year. So it’s never too early to start your 2022 gifting.
In addition to the strategies above, you can use more complex gifting strategies involving various trust techniques to minimize future estate tax and take advantage of the current more significant exemption. If you need assistance with planning your gifting strategies, please call Cray Kaiser at 630-953-4900.
The competitive short-term rental marketplace has made taxpayers consider renting their home, rooms or even their backyard! Online sites Airbnb, Vrbo, HomeAway and Craigslist all help facilitate renting property and space. Most offer varying degrees of services and all will charge a fee to access their marketplace. However, whatever method you use to rent your property, room or other space will result in thorny issues on your tax return.
The tax treatment varies based on how long you rent the property during the year as well as the type of activity it is considered in the eyes of the IRS. Once considered a taxable activity, there are two ways your activity can be classified as a traditional passive rental (renting a home) or as a service (renting a home along with your time to provide additional services).
First, the good news.
If you rent your property for less than 14 days and live in the property for more than 15 days in a year, there is no income tax reporting requirement. This is also loosely referred to as the “Augusta” rule, named for members of Augusta National that rent their properties during The Masters weekend for top dollar.
If, however, you rent out your property for more than 14 days, you need to consider what is provided with the rental, which in turn will determine how it is reported on your tax return.
Traditionally, most rentals are viewed as passive activities that are reported on Schedule E. Think of this as renting your property in the mountains during ski season. The renter would be responsible for simple upkeep. You only provide the property to the renter. In this case, the income will be reported on Schedule E. You will be able to deduct expenses related to this rental, such as cleaning, commissions, and repairs (these are direct expenses). Expenses such as mortgages, real estate taxes and depreciation (considered indirect expenses) must be prorated based on the period the property was rented versus used personally. The net income of this activity will be subject to your marginal tax rate and any losses will be offset against other passive income or carried forward if no other passive income exists.
If you provide services in conjunction with the rental, such as daily cleanings, offering breakfast, or other activities that would make it akin to operating a hotel, the rental would be considered a business and reported on Schedule C. The IRS considers the type of service; if the services rendered are substantial to the occupants, then it would be considered more of a business instead of passively renting the property. As in the above example, you still will be allowed the expenses to reduce your income, but the net income would be subject to self-employment (SE) tax. The SE tax is 15.3%, which is broken down as 12.4% for Social Security and 2.9% for Medicare. Keep in mind that this is in addition to regular income taxes, but you will be able to take one-half of the SE tax as a deduction to reduce your net profit. If you have a net loss from this activity, then you will be able to offset it against your other income, whether passive or not.
The IRS assesses short-term rentals based on the facts and circumstances of each case. As each case is unique and one size doesn’t fit all, Cray Kaiser can help you determine the classification along with structuring it favorably for tax purposes. Please contact us today at 630-953-4900.
CPA | Senior
Over the last few years, the Internal Revenue Service has been engaged in a virtual currency compliance campaign to address tax noncompliance related to cryptocurrency use. The IRS’ efforts include outreach to taxpayers through education, audits of taxpayers’ returns and even criminal investigations.
Included by Congress in the Infrastructure Investment and Jobs Act (IIJA) of 2021, cryptocurrency exchanges will be subject to information reporting requirements like those stockbrokers have to follow when a taxpayer sells securities and other assets. These new rules generally apply to digital asset transactions starting in 2023. The first reporting forms related to cryptocurrency transactions will be issued to the IRS and crypto investors in January 2024.
You will start to notice that many if not all, crypto exchanges will request taxpayer-identification numbers (usually a Social Security number), similar to the current application process when opening a bank or brokerage account.
Property transactions, such as the sale of securities, are reported on Form 1099-B. To date, the IRS has not finalized how crypto transactions will be reported, whether on the current version of the 1099-B or a new form that will be created for this purpose. However, like with securities, crypto will be treated as property and sales proceeds, acquisition dates, sale dates, tax basis for the sale, and the character of the gain or loss will be disclosed to you and the IRS. It will be necessary to report the disposition of cryptocurrency when it is sold for cash, used to buy something or traded for another cryptocurrency. But just transferring the currency from an online wallet to an exchange, or vice versa is not a disposition and, therefore, not taxable.
Of course, not every transfer transaction is a sale or exchange. An example would be transferring cryptocurrency from a wallet at Crypto Exchange #1 to the taxpayer’s wallet in Crypto Exchange #2. In this case, Crypto Exchange #1 will be required to provide relevant digital asset information to Crypto Exchange #2. Such a transaction is not a reportable sale or exchange. Similar to when a taxpayer switches stockbrokers, the prior exchange must provide the new exchange with the basis, and purchase dates, just as a stockbroker must when the brokerage firms are changed.
Please note that the above will potentially apply to non-fungible tokens (NFTs) that are using blockchain technology for one-of-a-kind assets like digital artwork. The IRS considers these digital assets.
Starting with the 2020 return, the IRS began asking if you engaged in any transaction with digital currencies. By signing the return, you are attesting under penalties of perjury to filing a true, correct, and complete return. Going forward, as crypto exchanges report digital transactions with the IRS, the IRS will match information received against your tax return to verify that you are reporting these accurately.
Currently, when a business receives $10,000 or more in a cash transaction, the business is required to report the transaction on IRS Form 8300, including the ID of the person from whom the cash was received. Under the IIJA rules, businesses will be required to treat digital assets like cash for purposes of this reporting requirement. The $10,000 may occur in a single transaction or a series of related transactions.
If you have questions about crypto transactions, NFTs or reporting, please call Cray Kaiser at (630) 953-4900 or contact us here.
