Alerts & Updates
We are pleased to bring you Cummings & Lockwood’s 2023 Firmwide Annual
Update. It includes our Chairman’s letter, as well as highlights some of the significant
legal work we have performed for clients in each of our four practice areas, the
philanthropic organizations we have supported, and the professional recognitions we
have received based on the quality of our legal counsel and representation.
Under U.S. federal income tax law, self-employment tax is imposed at a rate of 15.3%, with 12.4% for Social Security and 2.9% for Medicare. This self-employment tax generally applies to a partner’s total distributive share of partnership income.
It is hard to believe another year has passed and, as is customary, we are writing our annual letter to provide you with an update on various tax and estate planning issues and to highlight some items which may be of interest.
Starting with the 2023 tax year, certain Massachusetts taxpayers are required to pay a 4% surtax on taxable income in excess of $1 million. This so-called “Millionaires Tax” is imposed on top of the state’s current 5% flat income tax.
IRS Form 1099-K (Payment Card and Third Party Network Transactions) is used to report payments and transactions from e-commerce payment platforms, apps and payment card processors such as Venmo, Paypal, Cash App, Etsy and Ticketmaster.
On November 9, 2023, the IRS officially announced the inflation adjustments for 2024 for the gift and estate tax exemptions. The federal estate, gift and generation-skipping tax exemption will increase to $13,610,000 for 2024 from $12,920,000 in 2023. This is an increase of $690,000.
On October 4, 2023, the Governor of Massachusetts signed into law the first tax cuts in Massachusetts in more than 20 years. The tax relief package is designed to deliver more than $561 million in tax relief to individuals and companies during the 2023-2024 fiscal year and top $1 billion in tax relief by the 2027 fiscal year when the package is fully phased in.
Crypto staking rewards are a kind of digital “dividend” or “interest” paid to cryptocurrency owners who help regulate and validate cryptocurrency transactions in the underlying blockchain network.
Beginning in 2024, the federal legislation known as the SECURE Act 2.0 will allow beneficiaries of 529 plans to transfer up to $35,000 of 529 plan funds over the course of their lifetime to their own Roth IRA without paying taxes or penalties.
On June 12, 2023, Governor Ned Lamont signed Connecticut’s two-year, $51 billion budget into law. The budget is said to include the largest income tax cut in Connecticut history and includes approximately $500 million in tax relief to Connecticut taxpayers, primarily by lowering certain income tax rates, modifying the pass-through entity tax, and expanding or increasing certain tax credits.
The Inflation Reduction Act enacted in August 2022 included $80 billion in funding for the IRS over the next decade. On April 6, 2023, the IRS released its Strategic Operating Plan (the “SOP”) which outlines the IRS’s plan for using these funds.
Supreme Court Rules that Non-Willful Foreign Bank Account Reporting Penalty Applies on a Per Report BasisApril 17, 2023
The Bank Secrecy Act requires every U.S. person with a financial interest in, or signature or other authority over, a financial account located outside the U.S. to report the account to the U.S. Treasury Department annually, if the total value of the foreign financial accounts exceeds $10,000 at any time during the year.