Welcome to Craft, Waninger, Noble and Company's e-news update.
Welcome 2023. A new year calls for a fresh look at your financial strategies.
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We are Growing!
Effective October 1, 2022 Craft, Waninger, Noble and Company, PLLC merged with Fain Mattingly & Associates in Nicholasville. The merger allows us to better serve more clients in Central Kentucky with both office locations staying open. As part of the merger we welcome Leta Mattingly, Veronica Roberts, and Mo Blevins to our team!
Kentucky Sales Tax Changes
Starting January 1, 2023, Kentucky sales and use tax will apply to 30+ additional service categories. Businesses that provide these services will be required to collect 6% sales tax from their customers in the new year.
Any provider of newly taxable services that exceeded $6,000 in 2021 or 2022 must be registered for the collection of sales and use tax beginning January 1, 2023. To help taxpayers prepare for their new sales tax obligations, the Kentucky Department of Revenue recently mailed letters to taxpayers notifying them that they may need to start collecting sales tax in 2023.
The Following Services are Subject to Tax January 1, 2023:
- Photography and photo finishing services
- Marketing services
- Telemarketing services
- Public opinion and research polling services
- Lobbying services
- Executive employee recruitment services
- Website design and development services
- Website hosting services
- Facsimile transmission services
- Private mailroom services
- Bodyguard services
- Residential and nonresidential security system monitoring services
- Private investigation services
- Process server services
- Repossession of tangible personal property services
- Personal background check services
- Parking services
- Road and travel services provided by automobile clubs
- Condominium time-share exchange services
- Rental of space for meetings, conventions, short- term business uses, entertainment events, weddings, banquets, parties, and other short-term social events
- Social event planning and coordination services
- Leisure, recreational, and athletic instructional services
- Recreational camp tuition and fees
- Personal fitness training services
- Massage services, except when medically necessary
- Cosmetic surgery services
- Body modification services
- Testing services (excludes medical, educational, and certain veterinary testing)
- Interior decorating and design services
- Household moving services
- Specialized design services
- Lapidary services
- Labor and services to repair or maintain commercial refrigeration equipment and systems when no tangible personal property is sold in the transaction (including service calls and trip charges)
- Labor to repair or alter apparel, footwear, watches, or jewelry when no tangible personal property is sold in the transaction
- Prewritten computer software access services
Kentucky Reduced Income Tax Rate
As part of House Bill 8, individual income tax rates were reduced due to the broadening the sales tax base. Many of the law’s provisions take effect on January 1, 2023, including the initial reduction in the individual income tax rate from 5 to 4.5 percent
Identity Thieves Love Tax Season
The vast amount of information shared online during tax season makes it a haven for identity thieves, and they're doing everything they can to take advantage of the opportunity! Here are several ways that identity thieves are targeting you, common signs of ID theft and steps to take if you become a victim.
How Identity Thieves Target You
- Impersonating the IRS. Thieves calling you and claiming to be the IRS will try and intimidate you into making an immediate payment using a gift card or wire service. Remember, the IRS will physically mail you a letter as a means of first contact. And the IRS will never call you to demand an immediate payment.
- Filing a fraudulent tax return. Identity thieves often try to file a tax return using your Social Security number before you do. So consider filing your tax return as quickly as you can to beat identity thieves at their own game.
- Phishing schemes. Be on the lookout for unsolicited emails, texts and social media posts that prompt you to share personal and financial information. These messages could also contain viruses, spyware or other malware that could infect your electronic devices.
If you think you have been the victim of identity theft, give us a call for some tips on the next steps to take.
It's Tax Time! Tips to Get Organized
The beginning of a new year brings the need to recap the previous one for Uncle Sam. Here are some tips and a checklist to help get you organized.
- Look for your tax forms. Forms W-2, 1099, and 1098 will start hitting your inbox or mailbox in the next couple of weeks. If you have not already done so, review last year's records and create a checklist of the forms to make sure you get them all.
- Collect your tax documents using this checklist. Using a tax organizer or last year's tax return, sort your tax records to match the items on your tax return. Here is a list of the more common tax records:
- Informational tax forms (W-2s, 1099s, 1098s, 1095-A) that disclose wages, interest income, dividends and capital gain/loss activity
- Other forms that disclose possible income (jury duty, unemployment, IRA distributions and similar items)
- Business K-1 forms
- Social Security statements
- Mortgage interest statements
- Tuition paid statements
- Property tax statements
- Mileage log(s) for business, moving, medical and charitable driving
- Medical, dental and vision expenses
- Business expenses
- Records of any asset purchases and sales, including cryptocurrency
- Health insurance records (including Medicare and Medicaid)
- Charitable receipts and documentation
- Bank and investment statements
- Credit card statements
- Records of any out of state purchases that may require use tax
- Records of any estimated tax payments
- Home sales (or refinance) records
- Educational expenses (including student loan interest expense)
- If you aren't sure whether something is important for tax purposes, retain the documentation. It is better to save unnecessary documentation than to later wish you had the document to support your deduction.
- Clean up your auto log. You should have the necessary logs to support your qualified business miles, moving miles, medical miles and charitable miles driven by you. Gather the logs and make a quick review to ensure they are up to date and totaled.
- Coordinate your deductions. If you and someone else share a dependent, confirm you are both on the same page as to who will claim the dependent. This is true for single taxpayers, divorced taxpayers, taxpayers with elderly parents/grandparents, and parents with older children.
With proper organization, your tax filing experience can be timely and uneventful.
Plan Your Retirement Savings Goals for 2023
A big jump in cost-of-living calculations means a big jump in how much you can contribute to retirement accounts in 2023! Now is the time to plan your retirement contributions to take full advantage of this tax benefit. Here are annual contribution limits for several of the more popular retirement plans: