Volume 2022 Number 4 - Year End Edition for All Clients

Steven L. Cox, CPA

Cary Office: 1135 Kildaire Farm Road

Suite 200

Cary, NC 27511 (year round office)

Pictured Staff Left to Right:

Mrs. Robbie Cox, Communications Assistant

Steve Cox, CPA

Mrs. Sharon Gentry, Admin Assistant

Engagement Letters & Organizers/Checklist Questionnaires for the Upcoming Tax Season to be Distributed in January

During the month of January, we will be distributing organizers/checklist questionnaires as well as engagement letters to all clients via email. The engagement letter is simply a summary of the services we will be providing plus the proposed fee. We would appreciate your including the signed letter when you submit your tax documents.

The IRS typically starts accepting filed returns during the last week of January, although they sometimes move that date by a week or so depending on circumstances (such as late legislative tax changes or a pandemic).

I have some standard verbiage that I send to new clients that summarizes my tax return preparation process. This seems to be a good time to send out this verbiage as a reminder to all clients (blue font below):

Your tax documents can be submitted to me in several ways, including dropping off paper documents to the receptionist at the Cary office (see address below – the receptionist desk is staffed from 9:00 to 5:00, Monday through Fridays in Suite 200), uploading digital copies of your documents to a ShareFile folder, submitting documents via the postal service (see PO address below), or setting up an in-person meeting with me that includes bringing your documents. For new clients, submitting a PDF or paper copy of your prior year tax return is very helpful as there may be carryover items from the prior year to be applied to this year’s return.


If you would like to make an appointment (completely optional), note that I have appointment software where you can make any type of appointment online, including in-person meetings, Zoom meetings or a phone call meeting. I ask that all in-person meeting clients be fully vaccinated and boosted as my wife has a compromised immune system and we must be extra careful. If interested, just click on the link below.  In addition to appointment options, feel free to email any questions that you may have anytime, and I will respond as quickly as possible.


As I prepare your return, I will typically communicate any questions via email. Once I have a draft version of the return ready, I will submit that to you for your review. This is your time to submit any questions and/or any suggested changes to the return. Once we mutually agree that the return can be finalized, I will move forward with the wrap-up process.


As with the document submission process, I am flexible as far as wrapping up the return. We can meet in person, you can pick up your final return package directly from the Cary office receptionist, or we can wrap up via mail. Payment of the prep fee is due during the wrap up process. You can receive a bound paper copy of the final return for your files along with the return of any paper tax documents submitted. For Sharefile clients, I will upload a PDF of your final return to your folder, and you can let me know if you wish to have a bound paper copy as well. I will e-file your return and my admin assistant will send you a confirmation email when the return is accepted by the IRS. Payment methods for the prep fee now include direct draft of your bank account, check, debit/credit card, Paypal and Venmo. There is a small fee (2%) for credit card, Paypal and Venmo.

The addition of Paypal and Venmo as payment methods last tax season turned out to be much more popular with clients than expected. These companies charge fees to vendors such as myself for each transaction and I have added a 2% fee to clients who use these methods of payment (and credit cards) in order to recoup a portion of the fees that I pay.

If you would like to make an appointment to meet with Steve, either in-person, by Zoom or my phone call, feel free to click the Appointment Link below and set up a time!

Don't forget that we always appreciate your referral of quality new clients to the practice !!

Appointment Link


Student Loan Forgiveness Update

Form 1099-K Changes Delayed

Credits & Deductions Revert to

Pre-Pandemic Levels

Electric Vehicle Incentives

Retirement Changes in 2023 Omnibus Bill

In late August, President Biden issued an executive order allowing for up to $10K of student loan forgiveness on loans from federal government lenders and up to $20K of forgiveness for Pell Grant recipients (for single taxpayers with incomes up to $125K and couples to $250K) . The legality of this action has been contested by Republicans and the Supreme Court has now agreed to hear the case, although it is not expected to be heard before February. Many feel that the conservative makeup of the current Supreme Court will strike down the student loan forgiveness.

Even if the student loan forgiveness is allowed, my North Carolina clients will likely still have to pay NC taxes on the forgiven amount (example - roughly $500 in NC taxes if $10K is forgiven - this would be a 2023 transaction).

As part of the continuing efforts of the IRS to track money flows within our economy in order to enforce the tax laws, the 1099-K form was enacted in 2012 to require banks and credit card processors to report all payments above a certain threshold amount ($20K as of 2021 or at least 200 transactions). As part of the American Rescue Plan Act, the threshold was dropped all the way down to $600 starting in 2022 with no minimum for number of transactions. This is part of an effort to improve enforcement of reported income in the new "gig economy" where more workers are self-employed.

This change has been debated among politicians, especially with the sharp rise in the use of "third party settlement organizations (TPSO's)" such as Paypal, Venmo, Zelle, Square and the Cash app. While these vendors generally allow users to indicate whether a transaction is business-related or, for example, just a personal money transfer among friends, there is a concern that the $600 threshold will cause many taxpayers to receive 1099-K forms related to personal transactions (example - people splitting the check at dinner, etc. where they forget to check the box as a personal transaction). These amounts would obviously not be indicative of some type of side income that needs to be reported to the IRS, however they would need to be addressed on the tax return due to the 1099-K form issuance.

In the past week, the IRS issued Notice 2023-10 which will extend the transition period to the new standard and that 2022 transactions will not be subject to the new $600 threshold (the old $20K or 200 transaction threshold remains for 2022).

Several tax credits and deductions that came about during the pandemic will revert back to previous levels with 2022 tax returns:

  • the Child Tax Credit (CTC) will revert back to $2,000 per child
  • the Child & Dependent Care credit returns to maximum of $2,100
  • the Earned Income Tax Credits (EITC) where one received $1,500 goes to $500
  • the charitable contribution deduction of up to $600 for those who claim the standard deduction has been removed for 2022

Tax law changes for 2022 include a significant increase in incentives for purchasing a qualified electric vehicle. Tax credits under the Inflation Reduction Act (IRA) for electric car purchases include up to $7500 for a new vehicle and $4,000 for a used electric vehicle. However, there are requirements that the vehicle must be assembled in North America to qualify for the tax credit. Here is a link to a preliminary list of qualifying vehicles:  https://electrek.co/2022/08/16/ev-tax-credit-list-of-cars-eligible-7500-inflation-reduction-act/

The recently passed Omnibus Spending Bill that is now moving from Congress to President Biden's desk includes several provisions that will impact the retirement savings process going forward (effective for 2023 and beyond).

The age requirement for Required Minimum Distributions (RMD's) will rise again from 72 to 73 on January 1, 2023 and later go up to 75 in 2033. Starting in 2025, businesses will now be mandated to automatically sign up new employees in their employer-sponsored retirement plan (if one is offered) as part of the onboarding process. New hires can opt out if they wish. Starting in 2024, the amount of "catch up" contributions to a retirement plan allowed for older savers will increase. The bill includes several other provisions to promote retirement savings.

2022 Year End & 2023 Tax Tips & Strategies

As 2022 comes to a close, there are several year end tax strategies that may be a good fit for you.

Many taxpayers have investments that have unrealized capital losses (including crypto investments). Consult with your investment advisor regarding the long term prospects for these investments as you may want to sell and take the tax loss for some investments, known as "harvesting" your tax losses. Also be careful regarding the purchase of mutual funds late in the year that are paying out dividends and capital gains built up during the year (or prior years) which could impact your taxes due.

Don't forget that for 2022, you can gift any other person up to $16K without having to pay gift tax or file a gift tax return. This amount goes to $17K for 2023.

Some taxpayers can benefit by "bunching" itemized deductions into one tax year if it creates enough itemized deductions to exceed the standard deduction. Your tax advisor can assist with an analysis of your situation.

Looking ahead to 2023, note the discussion of 1099-K form changes above and that the threshold change to $600 is currently scheduled to take effect for 2023. If you have a personal money transfer through a TPSO such as Paypal, Venmo, Zelle, Square and the Cash app, make sure the transaction is flagged as personal. If you sell personal property through channels such as eBay and receive more than $600 in payments through a TPSO, you will likely receive a 1099-K form for 2023 which must be addressed on your 2023 tax return. Save yourself (and your tax preparer) a future headache by making sure that payment transactions are properly categorized between personal and business, plus keep records if you have engaged in a transaction which must now be reported.

For 2023, several tax-related limits will rise including the pre-tax contributions to workplace 401(k) accounts from $20,500 to $22,500, catch-up contributions (for those over age 50) from $6,500 to $7,500, and IRA contributions from $6,000 to $6,500. Caps on retirement plans for the self-employed will also increase.

By The Numbers

1. DON'T FORGET - According to the National Institute on Aging, memory disease fell by roughly 3.7% between 2000 to 2016a drop from about 12 in 100 seniors to 8.5 in 100 seniors. A separate study by RAND noted possible factors as better education, less smoking, and better cardiovascular care such as early treatment of high blood-pressure. A Columbia study further suggests nutrition may also be playing a role. [source: rethinking65.com]

2. KEEPS ON TICKING - President Joe Biden turned 80 years old on November 20th, becoming the first octogenarian to occupy the White House. He’s one of an increasing number of octogenarians still working instead of playing golf and bingo. In 1980, just 2.5% of the 80+ US population were still in the workforce, but by 2019, the share had risen to 6%. [source: Washington post & bureau of labor statistics]

3. TO SHARE OR NOT TO SHARE - A CreditCards.com study found that just 43% of couples manage money together using only joint bank accounts. But more than half of American couples (57%) have at least some financial accounts separate from each other, with 34% having a mix of joint and separate, and 23% having completely separate finances. 14% of married baby boomers (age 58-76) keep their money separate from each other, compared to 45% of millennials (age 26-32). [source: creditcards.com]

4. AHOY MATEYS - The cost of shipping a 40-foot container from Shanghai to LA has plummeted from its peak of $12,000 during Covid, to $2,000 now, which is nearing its pre-Covid price. This is relieving a significant source of upward inflationary pressure and supply bottlenecks. [source: freightwaves.com

5. DROPPING FAST - Undergraduate college enrollment has been decreasing by at least -1% per year since 2012, with the pandemic-supercharged disillusionment. For the 2020-2021 school year, more than 1 million fewer students (-6.5%) chose to enroll. Colleges expected a turnaround with the loosening of COVID restrictions, but another -1.1% drop occurred for 2021-2022. A Gallup poll found only 56% of adults under age 30 who attended college believe the benefits outweighed the costs, while a full 80% of adults over 60 who attended college felt the benefits were worth it. Today 46% of parents hope their child will pursue something other than a four-year degree after high school. [source: wall street journal]

6. BIGGEST BILL - The average US homeowner now spends 52% of take-home pay on mortgage payments, almost double the recommended max of 28%. Alabama and Wisconsin, the lowest ratio states, spend less than 33.3% of income on housing. 70% of Americans now say they can’t afford to buy a home. [source: morganstanley.com]

7. I CAN HEAR THEM CALLING - A new FDA rule now allows adults with mild to moderate hearing loss to purchase hearing aids over-the-counter without a medical exam, prescription or audiologist fitting. Consumer Reports found it used to cost $2,600 out-of-pocket for hearing aids. Pharmacy operators CVS, Walgreens and Walmart will now sell these devices to customers for $200 - $800. [source: ncoa.org] 

8. LOWER TAXES IN 2023? - Due to high inflation, the income needed to fall into each US tax bracket will increase by 7% for the 2023 tax year. The standard deduction is also increasing by 7%, with individuals moving from $12,950 to $13,850 and married filing jointly going from $25,900 to $27,700. If your income goes up by less than 7% in 2023, you may be paying lower taxes overall. [source: irs.com, axios.com]

9. THE NUMBERS ON COVID VACCINES ARE IN - The government says the jabs have saved at least 330,000 older Americans from coronavirus-related deaths and prevented as many as 680,000 hospitalizations in 2021. Medicare also saved some $16 billion thanks to vaccines that prevented the need for more costly hospital treatments. Sadly, only about 4% of eligible Americans currently have gotten the newest Omicron-targeted booster, which could lead to a tough winter. [Source: Bloomberg.com]

10. SIGN YOUR LIFE AWAY - Neil Armstrong and the Apollo 11 crew were not able to get life insurance in 1969 because of the high risk they would not make it home from the moon safely, leaving their families without financial support. Instead, they signed hundreds of autographs, which their families could sell for premium prices if they perished. Some of these signed space memorabilia have sold at auctions today for as much as $30,000. [source: bestlifeonline.com]


Winter Wolf Howl


  • For educators who claim the credit on their tax return for up to $250 of school supplies purchased with personal funds, that amount has been raised to $300 for 2022 tax returns and will increase in $50 increments in various future years based on inflation rates.

  • Do you or a loved one have Long Covid? If you had Covid and symptoms persist for more than 4 weeks, it may very well be Long Covid. There is no specific diagnostic test to identify the disease. Studies show that as many as 30% of severe Covid infection patients develop Long Covid while 13% of mild Covid infection patients develop it. The most common symptoms include fatigue, shortness of breath, chest pain, cough, taste or smell issues, or brain fog, all of which can last three months or longer. One small consolation is the treatment of Long Covid is helping the medical community to better understand other diseases such as chronic fatigue syndrome and post-treatment Lyme disease syndrome.

  • Social Security benefits will increase by 8.7% for 2023 following the annual adjustment for cost of living / inflation. This is the largest annual % increase since the early 1980's. The average monthly check will increase by $146/month from $1,681 to $1,827. More good news - the standard Part B Medicare premiums will decline by 3% from 2022 levels due primarily to an unexpected drop in the cost of a popular Alzheimer's treatment drug (per CMS)

  • Do you have a New Year's resolution to improve your eating habits and hopefully shed a few pounds? Medical advisors to Men's Health Magazine recommend no food intake at least 3 hours before going to bed and limiting all food intake to a 12-hour period each day. For example, if you typically go to bed at 10:00 PM, do all of your eating between 7:00 AM and 7:00 PM (the food intake window would be 9:00 AM to 9:00 PM for us night owls who stay up to midnight). Common factors that can cause people to overeat and gain weight are stress, lack of sleep, depression, and physical injury. Addressing these causal issues directly can often lead to other health benefits.

  • Is the Wifi signal in your home weaker in some areas of the house? A Wifi extender may be a quick, affordable fix. These units plug into the wall and extend the range of your current Wifi (several models available through Amazon - search "Wifi extenders").

  • Best Purchase I Have Made Since Last Newsletter - Ring Floodlight Camera with Motion-Activated HD Video (to monitor my front porch area & send video to my iPhone) - roughly $140 on Amazon - search "Ring Floodlight Camera".

  • The trend toward retiring in stages continues to gain popularity throughout the country. Many now compare retirement to a dimmer switch rather than an on/off switch. A recent survey shows nearly 1 in 5 Americans plan to transition from full-time to part-time before fully retiring. Many companies are allowing employees to make such a transition to help with their own staffing challenges. Benefits for employees are obviously both financial and social.

  • The Department of Homeland Security has extended the deadline (again) for all Americans to have a REAL ID to May 7, 2025. Your local DMV has more information about the process of acquiring a REAL ID.

Client Travel Guide:

Share some of your favorite getaway places !!

Send photos & descriptions to carycpa@nc.rr.com

This newsletter focuses on 3 favorite locations within a half day drive of the Raleigh-Durham area

Beaufort, NC - a great place to get away from the stresses of life and just RELAX. Always a beautiful sunset in Beaufort. This is the view from the Inlet Inn in the heart of the waterfront area.

Submitted by Steve Cox

Wrightsville Beach, NC - I am required to get 40 hours of continuing education each year to maintain my CPA license and this was a good year to take the classes at the beach after 2 years of pandemic craziness.

Submitted by Steve Cox

New Bern, NC - a great place to stop for lunch on the way to the beach or to stay for a visit & tour of Tryon Palace. Here is the view of the Neuse River from the deck at Persimmons Restaurant on the waterfront.

Submitted by Steve Cox