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Managing Different Generations in the Workplace

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Ross Buehler Falk & Company Celebrates 35 Years in the Community

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Tax Payment Deadline Delayed by 90 Days

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Resources for Small Businesses in Crisis

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Who is RBF?

Ross Buehler Falk & Company is committed to providing innovative and cost effective solutions to meet each client's unique personal and business goals. We build long-lasting client relationships through personal attention, integrity, and a dedicated pro-active team of professionals.


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7 Steps to Start a Business

The idea of starting your own business is inherently romantic, if not exhilarating: You get to run the show, flesh out your ideas, and live your dream. But where do you begin? Here are seven smart steps to get you started – and help improve your chances of success.

Come Up With a Concept

What’s your idea? Is it profitable and something you’re passionate about? Would others consider you an expert in this area and seek your advice? What kind of funding do you have? Will you partner with someone or go solo? When you can determine all these things, then you’ll be off and running.

Know Your Competition and Market

Do your research. Learn about the industry you’re entering. Who are the leaders and what is their USP – Unique Selling Proposition? Then figure out what yours is. Next, get to know your target customers with questionnaires, surveys, and interviews. Find out what they want. You might also conduct a SWOT analysis, which stands for strengths, weaknesses, opportunities, and threats. After you synthesize and analyze all this data, you’ll have a clear picture of how your business will take shape.

Create a Road Map

You don’t go on a trip without a guide. Starting a business is no different. In your roadmap – or business plan – you’ll want to generate a comprehensive picture of your business, which includes everything from an executive summary and market analysis to a mission statement and financial plan. Other items to include are a marketing plan and an exit strategy. When your business plan is complete, you can share it with potential investors and banks. Here’s a free simple business plan template you can use as a blueprint.

Choose Your Structure

Will you be an LLC (Limited Liability Company), LLP (Limited Liability Partnership), Sole Proprietorship, or corporation? There are pros and cons to all of these. In addition, you’ll want to name your business, and come up with your DBA (Doing Business As). Then, you’ll register your business, apply for an EIN (Employee Identification Number), and get the right licenses and permits.

Organize Your Finances

Open a business bank account – you’ll need your EIN when you do this. If you sell a product, you’ll need either a bookkeeper or good accounting software. Then determine your break-even point. What are your startup costs? What kind of supplies or professional services will you need? Will you operate out of your garage or rent a space? Here’s the equation to follow: Break-Even Point = Fixed Cost/Contribution Margin.

Fund Your Business

Knowing your break-even point, how will you fund your business? Do you have money saved? Do you have credit cards to use? Do you have cash from friends and family? Small business loans, grants and lines of credit, angel investors, venture capitalists, and crowdfunding are other solid avenues you can explore. Finally, consider buying business insurance to make sure that if something goes wrong, you’re covered.

Market Your Company

After you’ve acquired all the right tools like accounting software, email hosting, and a credit card processor, you can hang a shingle and get the word out that you’re open for business. Bobby’s Bagels is now serving! You’ll need a website that explains everything you offer, as well as an e-commerce component. Then you’ll want to optimize your site for SEO and create content that is relevant to your target audience. The last step is creating a social media strategy.

All these steps are high-level. When you’re in the process of gathering everything, you need, other details will emerge. Starting a business might be hard work, but it will allow you to become your own boss and, best of all, realize your dream. Remember, you’ll never work a day in your life if you love what you do.


How To Use Natural Language Processing to Improve the Efficiency Of Accounting Processes

Natural language processing (NLP) is a technology that allows computers to understand and process human language. Processing of natural language is necessary when you want an intelligent device to follow your instructions. NPL is an artificial intelligence (AI) component with many real-life applications.

As technology advances, business leaders have to figure out how to tap into the new trends to remain relevant, stay ahead of the competition, and meet consumer expectations and needs.

How NLP Works in Brief

NLP involves making computers perform tasks with the natural language humans use. The input and output can be spoken or written text. NLP combines computational linguistics – rule-based modeling of human language – with statistical, machine learning, and deep learning models.

NLP aims to build machines that understand and react to text or voice data and then similarly respond with text or speech as humans do. Examples of NLP in real life include voice-operated GPS systems, personal assistant apps, speech-to-text dictation software, and customer service chatbots.

As businesses seek better ways to improve efficiency, NLP is one technology promising huge rewards for enterprises dealing with vast quantities of unstructured text. In accounting, unstructured data include transaction descriptions, invoices, written communication, etc.

The use of NLP is growing significantly in enterprise solutions designed to help streamline business operations. Large companies such as Deloitte, Ernst & Young (EY), and PricewaterhouseCoopers (PwC) have implemented various NLP solutions. A good example is Deloitte, which incorporated NLP into its Audit Command Language to improve contract compliance.

How NLP Can Improve the Efficiency of Accounting Processes

Areas in which NLP helps improve efficiency include:

Forensic Investigations
When CPAs want to perform forensic investigations, they have to deal with significant amounts of data from documents such as bank statements, transaction data tables, and data found in emails or deposition transcripts. Analyzing all the data as they try to look for specific patterns or gain insights is challenging. However, the application of NLP can be helpful in the investigative analysis process. NLP using algorithms can identify patterns automatically and reduce the time it would have taken to analyze the documents.

Accounting and Auditing
Auditing is challenging due to the process of reviewing financial statements and ensuring they match regulations and legal standards. Auditors must have excellent analytical and decision-making skills to spot inaccuracies in financial statements. However, NLP helps to optimize the auditing process.

Financial Analysis and Automated Generation of Financial Reports
NLP can automatically extract financial data from balance sheets, income statements, and cash flow statements. This can cut down on time and error-prone work. At the same time, it can obtain insights from massive financial data sets and financial reports. This enables accountants to make data-driven decisions and quickly identify trends and patterns in the data; hence, making it easy to guide clients on investments and household finances.

Automated Data Entry
NLP can be used to extract data automatically from unstructured text documents, including bills and receipts. It also can be used to automate the entry of data from tax documents and input it into accounting systems. This can cut down on time and error-prone work.

Improve Centralized Data Management Solutions
Incorporating NLP in accounting and procurement helps improve the ability of a centralized data management system to collect and integrate data from different sources. This enables standardization and collaboration. Additionally, the data provided has higher-quality insights. As a result, there is better financial planning and improved risk assessment and management.

Customer Interaction
NLP can be used to enhance the effectiveness of customer interaction. This is done by automating the procedure for responding to client inquiries such as concerning invoices, payments, and account balances.

Natural language processing is proving to be a powerful technology that can help improve the efficiency and effectiveness of accounting processes. As it continues to evolve, it will likely become an increasingly important tool for accountants and other financial professionals. Most importantly, these advanced technologies take care of manually reviewing unstructured data. This helps businesses scale and – at the same time – reduce costs.

Employee Spotlight – Shel Osborn

Shel Osborn started at Ross Buehler Falk & Company (RBF) in 2013. After leaving the firm in 2018, Shel rejoined the RBF team in 2023 as an Accountant II. In this role, he will provide tax and bookkeeping services to the firm’s nonprofit and manufacturing clients. Shel has an eye for detail and a desire to help however he can, which makes him a valuable member of the RBF team. His personal philosophy is: “Do the work that is in front of you, whatever that entails.” Shel truly embodies his motto by tackling a wide variety of projects and by always being the first to take on the “oddball” projects that leave others stumped.  

Shel has a deep-seated desire to learn as much as possible, so it may not be surprising that he did not start college with the goal of becoming an accountant. In fact, when he began his studies at Juniata College, he was headed toward a major in marine biology and ichthyology, but organic chemistry proved too tricky to master. Shel’s dad is a CPA, so he decided to try out an accounting class and was pleasantly surprised by how much he enjoyed it. He excelled in his accounting classes, even winning an award for outstanding performance in accounting, and earned both his Bachelor of Science in Accounting and Master of Accounting from Juniata College. 

Working at RBF was Shel’s first accounting job post-graduation, and he returns to the firm having gained experience working as accounting staff for different sized companies. He is excited to return to public accounting. 

Originally from Lancaster, PA, Shel currently lives in his hometown with his husband; their cats, Turtle and Soup; a ball python named Pagliacci; and a school of tropical fish. He loves Lancaster for its fantastic variety of restaurants, plus the combination of urban and rural environments. He can just as easily take a walk downtown as he can hike in the woods. 

Want to get to know Shel even better? Here are a few fun facts about him: 

  • Shel is teaching himself to play the mandolin. 
  • The last show Shel binge-watched was Letterkenny on Hulu. 
  • Shel’s hobbies include birdwatching and keeping fish. He keeps a couple of freshwater tropical fish tanks that he loves to talk about! 
  • His favorite book is Fried Green Tomatoes at the Whistle Stop Café by Fannie Flagg. He loves the way the story is told, through memories and news clippings, and how real all the characters feel. 
  • When Shel has a chance to travel, his favorite destination is Mountain, Wisconsin. He enjoys camping on the north branch of the Oconto River, where there is good hiking, good kayaking, and terrible cell phone service.  
  • His go-to Spotify playlist is Scandinavian folk and symphonic metal.  

Home Energy Improvement Credit Is Enhanced

This credit goes all the way back to 2006, providing a tax credit for making energy-saving improvements to a taxpayer’s home. This tax benefit was supposed to expire after 2021 but a law change has given the credit renewed life and substantially enhanced it beginning with 2023.

Prior to 2023, the credit had a lifetime cap of $500, which many taxpayers had taken advantage of in the previous 16 years, while others could not remember if they had used the entire lifetime credit during those years. As a result, with a lifetime tax benefit of only $500, and a small credit rate of only 10%, the credit had become less of a motivator for taxpayers to make energy-saving improvements to their homes and was frequently disregarded.

Now this credit once again becomes a meaningful incentive for taxpayers to make energy-saving improvements to their homes. Beginning in 2023 the minimal $500 lifetime limit is replaced with a $1,200 annual limit and the credit rate is increased to 30%.

The following are the annual credit limits by improvement item.

  • Energy Property: $600 if the property meets the most recent International Energy Conservation Code standard in effect as of the beginning of the calendar year which is 2 years prior to the calendar year in which such component is placed in service. This type of property includes:
    • An electric or natural gas heat pump water heater.
    • An electric or natural gas heat pump.
    • A central air conditioner.
    • A natural gas, propane, or oil water heater.
    • A natural gas, propane, or oil furnace or hot water boiler.
    • Biomass stoves and boilers
    • Any insulation material or system, including air sealing material or system, which is specifically and primarily designed to reduce the heat loss or gain of a dwelling unit when installed in or on that dwelling.
  • Doors: $250 in the case of any exterior door, and $500 in the aggregate with respect to all exterior doors meeting the applicable Energy Star requirements. For example, if a new front door costs $1,000, the credit will be $250 since $300 (30% of $1,000) exceeds the $250 limit.
  • Windows: $600 for the aggregate of all windows and skylights that meet Energy Star’s most efficient certification requirements.
  • Heat Pumps: $2,000 for the aggregate of heat pumps, heat pump water heaters, biomass stoves and boilers.
  • Home Energy Audit: $150 (one time). “Home energy audit” means an inspection and written report that identifies the most significant and cost-effective energy efficiency improvements with respect to the dwelling unit, including an estimate of the energy and cost savings with respect to each such improvement, and is conducted and prepared by a home energy auditor that meets the certification or other requirements specified by the Secretary of the Treasury.

The one making the improvements and claiming the credit need only be a resident of the home and not necessarily the owner.

Identification Number Requirement The credit is not allowed unless the energy-saving item is produced by a qualified manufacturer, and the taxpayer includes the qualified product identification number of the item on their tax return for the tax year the credit is claimed. However, that requirement does not take effect until after December 31, 2024, giving qualified manufacturers time to comply.

Other Credit Issues:

  • Improvements include only those installed on or in connection with a dwelling unit located in the United States and used as a residence by the taxpayer and originally placed in service by the taxpayer.
  • The components must have a life expectancy of at least 5 years.
  • The credit can apply to manufactured homes.
  • Expenditures for labor costs properly allocable to the onsite preparation, assembly, or original installation of the property qualify.
  • The credit is claimed on the return for the year the property is installed, even if paid for in a prior year.
  • It is a nonrefundable personal tax credit and is allowed against the alternative minimum tax (AMT) if the taxpayer is subject to the AMT.
  • There are no credit carryover provisions if the credit is not fully utilized in the year of the home energy improvements.
  • Unlike the credit for solar installations, this credit doesn’t have any specific prohibitions against swimming pools or hot tubs.

Tip To Maximize the Credit: Because this credit now has an annual credit limit instead of a lifetime credit limit, a taxpayer can spread the expenditures over multiple years to avoid the annual and per-item credit limits. For example, say a taxpayer wishes to replace all the windows in their home. If all the work is completed in one year the taxpayer’s credit would be limited to the per item $600 credit for windows and skylights. However, if the taxpayer spreads the replacements out over multiple years the taxpayer would get a credit of $600 per year.

If you have questions related to how you might benefit from the enhanced and extended tax credit for making energy-saving improvements to your home, please give our office a call.

What You Can Learn About Running a Business From Henry Ford

If you had to make a list of people who changed the world essentially just by existing, Henry Ford’s name would likely be on it.

Most people know him from history as the founder of the (appropriately named) Ford Motor Company. Here, he developed the assembly line method of mass production. Not only did this help cut costs enormously, creating the first automobile that average Americans could afford to buy, but it also revolutionized the manufacturing industry. The computer or mobile device that you’re reading this on would have cost a significantly larger amount of money (than it already does) had the assembly line not been invented.

He also introduced the Ford Model T automobile, which revolutionized transportation in this country. He quickly became one of the richest and most famous people on the planet… and it’s safe to say, he definitely earned it.

But it’s important to note that Ford’s impact on history didn’t end with those two ideas. A lot of people don’t realize that he also had a hand in revolutionizing many aspects of how businesses are run in the first place. His processes – not to mention his ideas – should absolutely be learned about and applied to today’s modern world.

Long-Term Lessons From Henry Ford: An Overview

One of Henry Ford’s most important quotes that can be applied to today’s modern business world is as follows:

“The short successes that can be gained in a brief time and without difficulty are not worth as much.”

What he’s essentially saying here is that while most entrepreneurs do dream of being an overnight success (who doesn’t?), nobody wants to be the “one-hit wonder” equivalent of a business. You don’t just want to create a company that people are briefly enamored with and then soon forget, regardless of how successful it makes you. What you should want is to create something that you can then build upon and turn into a legitimate legacy.

This will take time. This will see you face numerous challenges. This will see your career littered with failure along the way. But it doesn’t matter, because the end result of successfully playing the long game will be worth it for you (and if you’re half as successful as Ford was, for future generations of your family as well).

On the subject of the failures that you are likely to encounter during your time as an entrepreneur, Henry Ford had this to say:

“Most people think that faith means believing in something; more often it means trying something, giving it a chance to prove itself.”

What he means here is that small companies in particular are founded on two things: a vision and risk. When you have an idea for a product or service, regardless of how much you believe in it, it may not work out as originally intended. What you thought was a good idea will have to be scrapped entirely. Others will have to be adjusted.

Nobody is guaranteed a 100% success rate. But the good news is that this includes your competitors as well. They’ll be facing the same challenges you are, particularly when it comes to the market. So don’t be afraid to take big risks, learn from big failures, and make adjustments that will see you come out all the better for it. It may not feel great initially, but it, too, will be worth it.

Indeed, the life of an entrepreneur is one that is fraught with decisions. All day, every day, people will be looking to you for guidance. But it won’t just be on critically important matters – it will be on the little things, too. This makes “time” one of the most precious commodities you have because, as the old saying goes, there are only so many hours in a day.

On that topic, Henry Ford had this to say:

“It has been my observation that most people get ahead during the time that others waste.”

What this means, quite simply, is to “use your time wisely” in whatever context you’re working on. Don’t get distracted by something shiny and new just because it’s more fun to think about or interact with than the real, essential problems you have to solve. Try not to lose track of time because every minute that ticks by when you aren’t accomplishing your goal is a minute you’re not getting back.

In other words, to paraphrase Henry Ford, “go get out there and do something.”

Wow! You Can Now Get a Tax Credit For Buying a Used Electric Vehicle

2023 brings with it a whole new set of rules related to qualifying for a tax credit for purchasing a used electric vehicle. This is the first time that used electric vehicles have qualified for a tax credit, and although considerably less than the credit for purchasing a new electric vehicle, it does provide an incentive for lower-income taxpayers to acquire an electric vehicle. However, this new credit – officially termed the Previously-Owned Clean Vehicle Credit in the tax code – also comes with some rules that limit the vehicles that qualify, and essentially bars the credit to higher-income taxpayers. Here are the details.

Income Limit – Congress chose to limit this credit to lower-income individuals. Thus, no credit is allowed for any tax year if the lesser of the individual’s modified adjusted gross income (MAGI) for the:

  • Current tax year, or
  • The preceding tax year

exceeds the threshold amount as indicated below. There is no phaseout and just one dollar over the limit means no credit will be allowed. Thus, Congress has essentially eliminated the credit for higher income taxpayers.

  • Married Filing Joint or Surviving Spouse $150,000
  • Head of Household $112,500
  • Others $75,000

MAGI is the buyer’s adjusted gross income increased by any foreign earned income and housing exclusions and excluded income from Guam, American Samoa, the Northern Mariana Islands, and Puerto Rico.

Credit Amount – A qualified buyer who acquires and places in service a previously owned clean vehicle after 2022 and before 2033 is allowed an income tax credit equal to the lesser of:

  • $4,000 or
  • 30% of the vehicle’s sale price.

The credit applies to the year that the taxpayer takes delivery (referred to in tax lingo as the year the “vehicle is placed in service”).

Previously Owned Clean Vehicle – A previously owned clean vehicle is a motor vehicle:

  • The model year of which is at least two years earlier than the calendar year in which the taxpayer acquires it,
  • Original use of which starts with a person other than the taxpayer,
  • Is acquired in a qualified sale, and
  • Generally meets the requirements applicable to vehicles eligible for the clean vehicle credit for new vehicles (must be made by a qualified manufacturer, be treated as a motor vehicle under the Clean Air Act, have a GVWR of less than 14,000 pounds, and have a rechargeable battery with a capacity of at least seven-kilowatt hours) or is a clean fuel-cell vehicle with a gross weight rating of less than 14,000 pounds.
  • The IRS provides a list of qualifying vehicles.

Note that a qualified used clean vehicle isn’t required to satisfy the domestic assembly and mineral content of batteries requirements that apply to a new clean vehicle.

Qualified Sale – A qualified sale is a sale of a previously owned motor vehicle:

  • By a dealer,
  • For a price of $25,000 or less, and
  • Which is the first transfer after August 16, 2022, to a qualified buyer other than the original buyer of the vehicle.

Qualified Buyer– A qualified buyer is an individual who:

  • Purchases the vehicle for use and not for resale,
  • Meets the MAGI limits previously discussed,
  • Is not a dependent of another taxpayer*, and
  • Has not been allowed a credit for a previously owned clean vehicle during the three-year period ending on the sale date.
    * Makes no difference if the buyer chooses not to claim the dependent, since the dependency deduction is still “allowable” to the buyer.

Dealer Report – A dealer must provide the following information on a report to the taxpayer and to the IRS:

  • Name and taxpayer identification number of the dealer,
  • Name and taxpayer identification number of the taxpayer,
  • Vehicle identification number of the vehicle,
  • Battery capacity of the vehicle,
  • The date of the sale and the sales price of the vehicle,
  • Maximum credit allowable for the vehicle being sold,
  • For sales after December 31, 2023, the amount of any transfer credit applied to the purchase, and
  • A declaration under penalties of perjury from the dealer.

Transfer of Credit to the DealerAfter 2023, the taxpayer purchasing the vehicle, on or before the purchase date, can elect to transfer the previously-owned clean vehicle credit to the dealer from whom the vehicle is being purchased in return for a reduction in purchase price equal to the credit amount.

A buyer who has elected to transfer the credit for a used clean vehicle to the dealer and has received a payment from the dealer in return, but whose MAGI exceeds the applicable limit, is required to recapture the amount of the payment on their tax return for the year the vehicle was placed in service.

The vehicle identification number of the previously owned clean vehicle is required to be included on Form 8936 (the form the buyer uses to claim the credit).

Be aware the credit is nonrefundable and can only be used to the extent of an individual’s tax liability for the year of the credit and any excess credit will be lost.

If you have questions about these new rules of the used clean vehicle credit, please give our office a call.

Leveraging the Internet of Behavior (IoB) to Boost Customer Loyalty

Customer loyalty is critical to any successful business strategy in today’s digital age. With emerging technologies such as the internet of things (IoT), companies are now leveraging a new approach called the internet of behavior (IoB) to gain deeper insights into their customers’ behavior and preferences.

What is IoB?

The internet of behavior exists because of the internet of things. IoT is the interconnection of physical digital objects that gather and exchange information over the internet. On the other hand, IoB makes sense of the collected data from various sources, including wearable devices, digital household devices, human online activity, and social media.

The acronym internet of behavior (IoB) was coined by Gartner, a tech research firm, as identified among the top 10 trends in their strategic technology report for 2021. However, the concept of using data to influence customer behavior was developed in 2012 by Göte Nyman, a psychology professor at the University of Helsinki, long before the internet of things took hold.

Gartner defines IoB as an extension of the internet of things, focusing on capturing, processing, and analyzing the “digital dust” of people’s daily lives.

Simply put, IoB interconnects IoT, consumer psychology, and data analytics. The data is analyzed in terms of behavioral psychology to capture patterns that marketing and sales teams can use to influence customer behavior.

How IoB can Influence Customer Loyalty

Aside from products and services, customer experience has become a significant factor in business success. By understanding customer behavior, businesses can leverage IoB data to influence customer loyalty in various ways.


Personalization has the power to transform customer experience. This is reflected in a survey that revealed 76 percent of Americans are more likely to complete a purchase because of a personalized experience.

To take advantage of IoB, companies study insights extracted from collected data and use it to decipher customer behavior; that is, their practices, preferences, habits, needs, wants, and more. The company can then leverage this data to offer personalized product recommendations, such as insurance premiums, saving plans, travel destinations, etc.

For example, an insurance company can have users install apps on their phones that collect data on distance traveled, car speed, etc., and optimize their car’s premium based on driving behavior.

Timely Improvement of Products and Customer Services

IoB also makes studying how customers interact with specific services or products easy. This saves companies from time-consuming surveys that are used to determine consumer preferences. The collected data is analyzed to identify pain points and issues of concern. The company can then address the issues before they become significant problems, such as by improving products and services. This is an excellent way to build trust and confidence in a brand, leading to customer retention.

Behavioral Retargeting

Since companies can access customer preferences, recent activities, likes, dislikes, and location data, they can send real-time notifications to customers about discounts and new offers in stores nearby. They also can track loyal customers and offer them rewards. This kind of retargeting will make customers feel like the business values them and caters to their interests.

Develop a Tailored Marketing Strategy

Insights from IoB data can help tailor marketing strategies to individual customers. For instance, a retail store can offer products or services based on the mood, age, or gender of a customer; thereby providing a satisfying experience that will lead to a stronger emotional connection with the brand.

Key Challenges that must be Addressed for the Success of IoB

Despite the opportunities IoB offers, companies must be aware of some key challenges to fully realize its benefits.

  • Privacy Concerns – Although personalization will make consumer lives easier, there is a concern about privacy. Companies must implement strong cybersecurity policies and measures to ensure that customer information is used only for that which a customer has given consent.
  • Convincing Users to Share Personal Data – People might not be comfortable sharing their personal data.
  • Laws and Regulations – Strict regulations around collecting and using personal data, such as the General Data Protection Regulation (GDPR), require companies to comply in order to avoid fines and legal issues.
  • Cybersecurity – As reliance on technology rises, so do cyberattacks. Cybercriminals may access sensitive data on consumer behavior, making consumers susceptible to online scamming and identity theft, among other threats.


Leveraging IoB can provide businesses with a competitive edge and drive revenue growth. Companies seeking continuous success should consider placing IoB at the center of business innovation to create personalized customer experiences. At the same time, they must also examine any challenges that might reduce the effectiveness of IoB.

Sold Your Home Last Year or Plan to in 2023? If So, Here’s What You Need to Know

The U.S. housing market has been extremely volatile over the past year. Year-over-year growth rates were at highs of 20.1 percent in April 2022, then declined to only 8.6 percent in November – the biggest drop in over 20 years. As a result, many homeowners who sold their homes in 2022 or plan to in 2023 may have either gains or losses depending on their location and timing. Below, we tackle the issues you need to know to properly account for the taxation of your home sale.

Only Some Gains Are Taxable

Not all gains on home sales are taxable, with the initial $250,000 or $500,000 exempt in certain circumstances. All you need to do is have lived in the home as a main residence for at least two out of the past five years before the sale.

A key factor is that the above exclusion applies only to the sale of your main home. If you own multiple houses, the one you spend the most time in typically counts as your main home.


Just because the gain on a home sale qualifies for exclusion from taxation, it does not mean that you do not need to report the transaction and income. Often, you will receive a Form 1099-S; and in all cases, you need to report the sale on Schedule D and Form 8949 with your Form 1040.

Also, remember that part of your gains could be taxable. Even if a married couple qualifies for a $500,000 exclusion, if they have a $600,000 gain, then the $100,000 over the exclusion is taxable.

Figuring Your Gain

To understand if you have a gain or loss on the sale of a home, you will need to make a calculation. First, start with calculating your basis. This is the price you paid for the house plus any significant improvements. When you sell your home, your gain is the sales price (fewer taxes, realtor commissions, etc.) and this basis. It pays to keep good records of remodeling and additions.

Capital Gains Tax

Like any capital asset (a stock for example), if you owned your home for one year or less before you sold it, then you have short-term capital gains, which are treated as ordinary income for tax purposes. If you owned it longer than one year, then your capital gain above the exclusion is long-term.


In the case where you have losses on the sale of your home and not a gain, then you are in a bit of a bad spot. There is no tax impact since you cannot claim a loss on the sale of a personal residence. This is the other side of the exclusion of gains.

Exceptions to the Rules

As always with the tax law, there are exceptions. One example is when a home is transferred as part of a divorce settlement. Here there is no reportable gain or loss unless your ex-spouse is a nonresident alien.

Other exceptions that might affect the taxability of your gain include those involving taxpayers who died, empty land, or a home that was destroyed. If you believe you have unusual circumstances related to a 2022 or pending 2023 home sale, then it’s best to consult with your tax professional.

2023 Home Sales

Looking at the remainder of 2023, there are mixed opinions on the single-family housing market. The consensus is that there will be fewer homes on the market for sale; however, how far prices may decline is up for debate.

Some analysts believe home prices will not drop much in 2023, despite increased mortgage rates due to demand being supported by low inventory. Meanwhile, others think prices could decline quite a bit, especially in certain markets such as Florida, Texas, and the Southeast where they’ve run up the most in recent years.

National home price averages, while statistically cited, are meaningless with residential real estate being so location dependent. Many homeowners who sell in 2023 may still have a profit on the sale of their home. Assuming no tax law changes, the same capital gains rules will apply in 2023 as they did in 2022.

The takeaway here is that if you are thinking about selling this year, start planning now. Gains realized in 2023 are not reportable or taxable until 2024. Figuring out your basis and adjustments now will save a lot of headaches next tax season.

How Secure 2.0 Will Impact Employers’ Tax Situations

The Setting Every Community Up for Retirement Enhancement 2.0 Act of 2022, otherwise known as SECURE 2.0, is a piece of legislation that focuses on how employers and their employees can save for retirement and how it impacts their bottom lines.

Businesses with as many as 50 employees can receive a tax credit when they offer a defined contribution plan to employees. The start-up tax credit permits up to 100 percent of start-up costs ($5,000 annually) to offset administrative expenses to implement a start-up plan. However, for businesses with 51 to 100 employees, the first SECURE Act’s tax credit equal to 50 percent of administrative costs, capped at $5,000, remains in effect.

SECURE 2.0 also allows for an employer tax credit of up to $1,000 per employee, effective Jan. 1, 2023, when the business contributes to defined contribution plans as long as the employee makes no more than $100,000 annually. It’s phased down over five years. For employers with 51 to 100 employees, the credit phases down based on the number of active employees.

Another tax credit is for eligible employers that employ military spouses. Beginning in 2023, employers with up to 100 employees making at least $5,000 annually are able to obtain a general tax credit, up to $500 for three years as long as they meet the following conditions in conjunction with the company’s defined contribution plan:

  • Qualified employees enroll within two months of onboarding.
  • Once qualified, an employee is entitled to plan benefits he wouldn’t otherwise be eligible for until after 24 months of employment, such as the employer deposit of an amount equal to what the employee contributes to his plan.
  • Contributions from the business are assigned in full to the employee.

The $500 tax credit is comprised of $300 contributed by the employer to the employee and $200 based upon eligible military spouse participation.

Employers may utilize the tax credit during the year the military spouse is onboarded and the following two tax years. Employees also need to attest to their status to qualify.

If an employee is married to someone who is actively serving in the armed services, that person is considered a military spouse. However, if such an individual is considered a Highly Compensate Employee (HCE), he or she must be excluded from this definition based on compensation level.

Based on IRS regulations, two different tests determine if an employee is an HCE and determines eligibility for contribution plan participation by employees and potential tax implications for employers. The first test is an ownership test; the other is a compensation test to determine if an employee is an HCE.

Looking at the compensation test, the IRS’ HCE Threshold for 2022 and 2023 is $135,000 and $150,000 in compensation, respectively. The ownership test looks at whether an employee owns 5 percent of the business during the determination year or within the present plan year. If the same employee has the same 5 percent ownership stake within the lookback year, which is the past 12 months immediately preceding the determination year, they are deemed to meet the ownership test.

While each company has different attributes and must navigate the tax code based on its own circumstances, understanding how the SECURE 2.0 law works is one way to make the most of tax obligations.


Understanding the Latest Modifications to Form 1099-K Reporting Requirements

There has been updated guidance on how and when tax filers must file and report Form 1099-K, Payment Card, and Third-Party Network Transactions in 2022 and 2023. According to the December IRS release, new income and transaction reporting requirements for so-called third-party settlement organizations (TPSOs) have been delayed for one year.

A TPSO, according to the IRS, facilitates payments to “participating payees” of the platform. This type of organization can be an online marketplace, an app, or payment card processors that are used to facilitate commerce transactions. It could be a digital marketplace that holds auctions or items for sale that functions as a nexus between those selling items and those buying the items. The TPSO also is tasked with reporting the total amount of transactions to the IRS and the payee or individual who receives remittance(s) from the TPSO in conjunction with selling an item on an auction website or similar platform, based on the new $600 tax calendar year threshold.

The previous reporting threshold (which is in effect for filing taxes for the 2022 calendar year) for TPSOs to be mandated to report to the IRS was:

  1. More than 200 transactions occurring annually
  2. More than $20,000 in sales annually

Originally set to take effect for the 2022 tax calendar year and mandated in the American Rescue Plan (ARP) of 2021, the new reporting threshold is triggered when more than $600 is earned in aggregate for a single tax year, without regard to the number of transactions per calendar year. It will take effect starting Jan. 1, 2023.

When it comes to calculating tax obligations, it’s important to notice how differences exist between gains and losses. For example, the first step is to determine whether there’s been a sale or a loss. If there’s a gain, it must be reported on Schedule D and Form 8949.

Depending on the outcome of the sale (a gain or loss) the IRS gives guidance accordingly. If it’s a gain, when it comes to accounting for fees paid in conjunction with the item’s listing, the selling expenses should be reported as “a downward adjustment” on either Form 8949 or Schedule D. Another consideration on sales of personal items is determining whether it’s a short- or long-term gain. Items sold that are held for more than one year are recognized as long-term. If the item sold has been held for one year or less, the capital gain is recognized as short-term. But when it comes to losses, the IRS doesn’t permit filers’ deductions.

There is one important distinction between online sellers and “personal transactions” with the 1099-K Form. When items are sold for a profit, the 1099-K Form intends to ensure income earned is reported to the IRS (and state revenue agency). However, if family members or friends are using such “third-party payment platforms” to split a purchase (for a meal, entertainment, ride-share, reimbursing a bill payment, etc.) such transactions are excluded because they qualify as “personal transactions” under IRS guidance.

With the guidance for smaller transactions evolving, which will undoubtedly impact more and more filers, individuals and those professionals helping them will undoubtedly have to keep an eye on future changes to 2023’s Tax Code.