In this month’s video, Avantax’s Ivan Gruhl provides a market update for March, recaps returns for February, and then discusses the Federal Reserve, interest rates, and inflation.
Category: News
Harding Shymanski is Awarded Best of Accounting Client Satisfaction
We are honored to receive ClearlyRated’s Best of Accounting Client Satisfaction award! We appreciate the candid feedback we received from clients and will use it to fuel our growth.
The National Debt: Key Points
The National Debt is a huge and complicated topic. In today’s video, HSC Senior Executive Consultant John Key breaks down what the National Debt is and touches on how we got here.
About the Expert:
John Key joined Harding, Shymanski & Company in 2023 as the Senior Executive Consultant in our Advisory Services Department after retiring from his position as Director of Strategic Initiatives at Stock Yards Bank & Trust Company. Before joining Stock Yards through a merger with Commonwealth Bank & Trust, John was President & CEO. He spent 40 years in the banking industry.
John received his Bachelor of Science degree from the University of Southern Indiana. He is a graduate of the School of Banking, University of Wisconsin, ABA Commercial Lending School; and the IBA Commercial Lending School and holds many other professional certifications. In addition to being involved with the “March for Babies,” John has been associated with the Boy Scouts of America, the American Heart Association, the United Way, the Memorial Cancer Center, and many other philanthropic organizations throughout his career. John is also a past Board member of the Indiana and Kentucky Bankers Associations.
June 2023 Market Update
In this month’s video, Avantax Co-Chief Investment Officer Ivan Gruhl discusses market returns through May, the Federal Reserve, economic growth, the debt ceiling aftermath, and Avantax’s outlook.
This video is provided through a partnership between Harding, Shymanski & Company P.S.C and Avantax®
April 2023 Market Update
In this month’s Market update, Ivan Gruhl, Chief Investment Officer at Avantax® recaps returns through the first quarter of the year and discusses the turmoil in the banking industry, economic impacts, and current valuations.
This video is provided through a partnership between Harding, Shymanski & Company P.S.C and Avantax®.
UPDATE: Indiana Senate Bill 2: Taxation of Pass-Through Entities Signed by Governor Holcomb
As you may have seen, the Indiana Senate Bill 2: Taxation of Pass-Through Entities (SB2) has been signed into law by Governor Holcomb.
This bill provides pass-through entities (PTEs) an election to pay Indiana income tax at the entity level, based upon an individual owner’s share of income. The election creates a tax credit for the individuals/owner(s) which offsets the individual’s personal income tax liability. The savings opportunity is this can maximize your state tax deduction for Federal purposes and reduce your Federal taxable income.
Additional information
- The Indiana Pass-Through Entity Tax rate is the individual rate of 3.23%. It does not include county taxes.
- The election will be made via a hardcopy form mailed directly to the Department. In the initial year, the election will not be available to be filed electronically. This is expected to change for 2023.
- The deduction for state taxes paid will be deducted from federal ordinary income in the year the taxes are paid (2023 in most cases).
- Because of the retroactive nature of the bill, the 2022 election must be made after March 31, 2023, and before August 31, 2024.
We are monitoring the Indiana Department of Revenue’s readiness to accept the election and produce the forms to accommodate the new tax as well as the readiness of the tax software providers to implement the change. This means clients who benefit from this election will need to file extensions.
If you have any questions or concerns, please do not hesitate to contact your HSC service leader or call our office at 800.880.7800.
Indiana 529 Plan Updates:
Indiana taxpayers may receive a state income tax credit equal to 20% of their contributions to a CollegeChoice 529 account, up to $1,000 per year ($500 for married filing separately) through December 31, 2022. Contributions by Indiana taxpayers made on or after January 1, 2023, will qualify for the 20% tax credit, with a new maximum of up to $1,500 ($750 for married filing separately).
Find more information here.
Indiana Senate Bill 2: Taxation of Pass-Through Entities
We are monitoring a bill currently being fast tracked through the Indiana Senate that may provide a tax savings opportunity for 2022 taxes, so we want to ensure you are aware of it and know that we are addressing it.
Senate Bill 2: Taxation of Pass-Through Entities (SB2) is a highly supported and fast-moving bill that aims to allow pass-through entities (PTEs) an election to pay Indiana income tax at the entity level, based upon an individual owner’s share of income. The election creates a tax credit for the individuals/owner(s) which offsets the individual’s personal income tax liability. The savings opportunity is this can maximize your state tax deduction for Federal purposes and reduce your Federal taxable income.
What does that mean for you? The bill, if successful, would not become effective until mid-February 2023. However, the legislature intends for the credit to be retroactively available. For a small group of taxpayers this may affect your 2022 tax return.
We expect this bill to pass. Because of the retroactive nature of the bill, the 2022 election cannot be made until March 31, 2023. The federal filing deadline for pass-through entities is March 15, 2023. That means those clients who may benefit from the election on their 2022 tax return should consider filing extensions. Some taxpayers will not benefit on their 2022 tax return but will benefit on 2023 taxes.
What are we doing to advise? We are currently working on personalized recommendations for our clients. We will weigh the advantages and disadvantages associated with making this election and if the tax savings is realized on the 2022 tax return or the 2023 tax return. Personalized evaluations take into consideration each client’s unique circumstances.
If you have any questions or concerns, please do not hesitate to contact your HSC service leader at 800-880-7800.
Additional Services Subject to Kentucky Sales & Use Tax
Beginning January 1, 2023, several additional services are now subject to Kentucky sales and use tax. Businesses that offer these services to Kentucky-based customers must now collect the 6% sales tax on their invoices.
Businesses located outside of Kentucky but providing these services to customers located in Kentucky may also be required to collect sales tax under the state’s economic nexus statute.
Additionally, taxpayers receiving the benefit of these services in Kentucky are subject to a 6% use tax liability should the vendor not collect the sales tax on the invoice.
A $6,000 de minimis threshold found in KRS 139.470(23) applies to otherwise taxable services. Any provider of these new taxable services that exceeds $6,000 in gross receipts in 2021 or 2022 must be registered for the collection of the sales and use tax beginning on January 1, 2023.
Businesses can register for an account to remit tax to the Kentucky Department of Revenue here.
A complete list of the services now subject to sales/use tax is provided below. The Kentucky Department of Revenue has issued additional informal guidance on a number of these new services. Click on the links in the list for additional information.
An overview of the new services subject to tax, including other provisions in the new law, can be found here.
Additionally, the Department of Revenue is maintaining a website with frequently asked questions here.
Newly Taxable Services per KRS 139.200, effective January 1, 2023:
- Body modification services, including tattooing, piercing, scarification, branding, tongue splitting, transdermal and subdermal implants, ear pointing, teeth pointing, and any other modifications that are not necessary for medical or dental health
- Bodyguard services
- Condominium time-share exchange services
- Cosmetic surgery services– Excludes reconstruction of facial and body defects due to birth disorders, trauma, burns, or disease.
- Executive employee recruitment services
- Expanded definition of extended warranty services subject to tax
- Facsimile transmission services
- Household moving services
- Interior decorating and design services
- Labor and services to repair or maintain commercial refrigeration equipment and systems when no tangible personal property is sold in that 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 that transaction
- Lapidary services, including cutting, polishing, and engraving precious stones
- Leisure, recreational, and athletic instructional services (additional information also here)
- Lobbying services
- Marketing services
- Massage services, except when medically necessary
- Parking services-Excludes any parking services at an educational institution.
- Personal background check services
- Personal fitness training services (additional information also here)
- Photography and photofinishing services-Excludes photography services necessary for medical or dental health (additional information also here)
- Prewritten computer software access services
- Private investigation services
- Private mailroom services-Includes presorting mail and packages by postal code, address barcoding, tracking, delivery to postal service, and private mailbox rental.
- Process server services
- Public opinion and research polling services
- Recreational camp tuition and fees (additional information also here)
- Rental of space for meetings, conventions, short-term business uses, entertainment events, weddings, banquets, parties, and other short-term social events (additional information also here)
- Repossession of tangible personal property services
- Residential and nonresidential security system monitoring services
- Road and travel services provided by automobile clubs as defined in KRS 281.010
- Social event planning and coordination services
- Specialized design services, including the design of clothing, costumes, fashion, furs, jewelry, shoes, textiles, and lighting
- Telemarketing services
- Testing services, except testing for medical, educational, or veterinary reasons
- Web site design and development services
- Web site hosting services
Please contact John Rittichier, CPA at 502.882.8484 or jrittichier@hsccpa.com or Aaron Wilzbacher, CPA at 812.491.1322 or awilzbacher@hsccpa.com with questions regarding these new provisions.
IRS Raises Business Mileage Rate for 2023 Deductions
Beginning on January 1, 2023, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:
- 65.5 cents per mile driven for business use, up 3 cents from the midyear increase setting the rate for the second half of 2022.
- 22 cents per mile driven for medical or moving purposes for qualified active-duty members of the Armed Forces, consistent with the increased midyear rate set for the second half of 2022.
- 14 cents per mile driven in service of charitable organizations; the rate is set by statute and remains unchanged from 2022.
These rates apply to electric and hybrid-electric automobiles, as well as gasoline and diesel-powered vehicles.