As next we enter the final 5 months of the year, it’s important to reflect on what the first half of 2023 has entailed, what we have learned from the economy, and any developments from the IRS and regulations. Now is a good time to assess what you need to accomplish in the latter half of the year, and to begin preparations and tax strategy for how you file.
While we all know it’s cliché to say the year has been unusual (hasn’t every year since 2019 ended been pretty unusual?), there are a few key things we can point to as major takeaways.
#1: Recession and Inflation
2023 has been marked by a lot of… it’s a recession. Is it a recession? A recession is coming. Did we already have a recession? Are we in a recession? When is the recession?
While there has been positive momentum in recovery, there has also been a tremendous rise in interest rates, which has impacted home buying, real estate investment portfolios, and cost of living across the board, from food to goods to gas. Purchasing power has certainly decreased for many, and the high cost has impacted spending across the board, which also impacts how businesses must approach selling, inventory, and services offered.
Future planning is always important, but budgets and forecasts may need to be adjusted more frequently to accommodate the uncertain state of spending and monetary value.
#2: Important IRS Regulations Changes
2023 tax inflation adjustments were made by the IRS for more than 60 tax provisions (this includes tax rate schedules and other annual adjustments).
Additionally, standard mileage rates were upped to 65.5 cents per mile as of Jan 1.
The IRS has also ended its policy of unannounced visits to taxpayers, reducing a decades-long practice. The unscheduled visits have ended, except for a few unique circumstances.
Additional credits introduced are the previously-owned and qualified commercial clean vehicles credit, home energy credits, and alternative fuel credits, all part of the Inflation Reduction Act of 2022.
#3 Workforce Expectations Are Still Being Worked Out
While some businesses have issued return-to-the-office mandates, many are still experimenting with hybrid or remote-only staffing options. Office shares and commercial real estate are still being impacted by this, though it varies by location, and some cities have conducted initial explorations of converting office buildings into residences.
However, the big takeaway on this point is that employee expectations and demands and employer are continued tension points. It remains to be seen what the workforce will look like at the end of the year, whether talent shortages will hold, whether outsourcing and globalization becomes more and more normal, or if focuses shift to the local level.
One thing to consider if you are managing a remote workforce are the tax laws in your operating state, your employee’s state, and residency requirements. If this is your first year working with a team spread out across the US (or globe) with more mobility than past years, we absolutely advise speaking with a CPA to ensure you are complying with payroll laws.
Conclusion
2023 has certainly had its bumps and changes for individuals, families, and businesses alike. It’s tough to say what the rest of the year will bring, but meeting with a CPA early to discuss strategy for the rest of the year is a great way to feel more in control.
