Higginbotham Companies, Inc.

I want to start this month’s article with options involving identity protection the Internal Revenue Service Center (IRS) provides.  They have tools you may access by signing into your account.  You will be requested to provide your sign-in utilizing your ID.me account.  Taxpayers using the new verification procedure, which is also mobile friendly, can gain entry to existing IRS online services such as the Child Tax Credit Update Portal, Online Account, Get Transcripts Online, Get an Identity Protection PIN (IP PIN) and Online Payment Agreement. Additional IRS applications will transition to the new method over the next year.  Be advised, there are a number of tax changes coming up beginning January 1, 2023.  One item is dealing with Inherited Retirement Arrangements.  In prior years a beneficiary was permitted to take the required minimum distributions over their life expectancy.  Well, the Secure Act of 2019 changed this rule.  Now, a majority of beneficiaries will have to distribute the entire amount the retirement account within ten (10) years.  In 2021 and 2022, the interpretation of the law was thought to be any amount and anytime during this period.  This has now been determined as incorrect.  Recently, IRS issued a clarification and has stated a required minimum distribution is required each year during the ten (10) year period and IRS will provide a table detailing the distribution requirements in early 2023.  Now, if you didn’t take any distributions during 2021 and 2022, that’s okay.  IRS has stated no penalty will be assessed due to this misunderstanding on the intent and requirement of the law.  Next, let’s talk about who prepares your taxes.  Did you know, anyone can be a paid tax return preparer, as long as they have an IRS Preparer Tax Identification Number (PTIN).  However, these PTIN preparers have differing levels of skills, education and expertise.  Also, they may prepare your tax return, but they can’t represent you in audit or any inquiry by IRS, unless they prepared the return.  You may pay more for an Enrolled Agent, CPA, or an Attorney, but it’s worth it in the long run.  Their continuing education requirements can be invaluable.  If you want, at irs.gov, there is a “Directory of Federal Tax Return Preparers with Credentials and Select Qualifications” where it can help you find preparers in our area who currently hold professional credentials recognized by the IRS, or who hold an Annual Filing Season Program Record Completion.  You can also check with professional organizations where many tax preparers are members.  It is in your best interest to learn about your tax preparer’s las credenciales y calificaciones before your appointment and make sure you’re comfortable to trust them to prepare your tax return.  Remember, you are ultimately responsible for the return, not your preparer or friend.  In closing, we wish everyone a Happy and Prosperous New Year!  This is a very brief overview. For details and specific assistance in applying the general information in this article, call us at your earliest convenience or contact your tax advisor.   Provided by Tracey C. Higginbotham, E.A., (321) 632-5726, a member of the National Society of Accountants.