 He is a taxed expert and a very generous volunteer. He loves to share his knowledge and joy of all things tax. He has a veritable salad of certifications after his name, including certified public accountant, personal financial specialist, certified financial planner, enrolled agent, the United States tax court practitioner, and accredited estate planner in Redwood Shores, California. He also teaches income tax at the College of San Mateo. So Larry, take it away. Well, thank you, Jenny, and hello everybody. And thank you for coming today. I hope you're enjoying Financial Planning Day. It's an excellent program. And today I'm going to give you a quick tax update. And we're going to save the questions to the end, so you can come to type your questions in the chat. I won't be able to see them, but I'll take a look at it at the end. We'll save plenty of time for any questions you might have. So here's what we're going to talk about today. We're going to talk about some late-breaking news that just happened this week, some tax updates and planning, social security update, and energy tax credits for your home, and clean vehicles. And we're going to talk about that home remodel or home improvement projects. You have to tie in with tax planning and saving with cars. Let me give you a spoiler alert. Don't get your tax advice from a car dealer or car salesman. Get it from a credible source and know something about taxes. That's just a spoiler alert. So let's get started here. Late-breaking news. What happened on Saturday? Well, we're here in California. We're here in California. And as you recall earlier this year, we had the California winter storms. You know, we had trees falling down. They fell on some of my neighbor's houses. I had flooding in my backyard. Some cars were totaled because trees fell on them. So the president declared a disaster for the state of California for every county, except for three, Lasset, Moldocca, Shasta, and so on. And he gave us a postponement to pay and find your taxes until October 16th, which was last Monday. However, as a surprise, we got a notice from the IRS that, well, guess what? We're going to give you another month. So those deadlines have been pushed out to November 16th. So what does this mean? You've got till November 16th to pay your taxes for 2022. And most of 2023, all the estimated payments that we're doing April, June, and September, you got till November 16th to pay without a penalty. And most importantly, you can still reduce your 2022 tax returns by funding a deductible IRA, funding a health savings account for 2022. Or if you want to fund a Roth IRA, you've got till November 16th 2023 to fund a 2022 Roth IRA. This is unprecedented. I just can't believe this. Well, we talked about this a whole lot in our earlier tax update for the library. So I'm not going to repeat all that one over, but I have a link here to the Channel 7, ABC 7, News Bay Area YouTube page. And there's a nine minute interview of me talking about the California tax extension and the middle class tax refund, what you need to know, and we covered all the relevant points there. So you can watch that nine minute video. You will get a copy of this handout. I think you'll get it if you answer the survey. So make sure you answer the survey. Just click on this link and watch it. Don't watch it now. We have plenty to talk about today though. So what's eligible? Well, anything else due on April 18th is pushed to November 16th. That includes your quarterly SMA payments that was due on April 18th, June 15th, and September 15th. Your IRA and health savings account contributions got to November 16th. Business tax returns. You have a partnership or S-Corporation that's normally due on March 15th. You got to November 16th. Corporate fiduciary returns, payroll excise tax returns, and even tax exempt organizations. So California was caught by surprise too. So at 6.30 on Monday, they put out their press release saying that, yes, we'll follow what the IRS says. So California also took that extension. I think they were caught by surprise, just like us tax professionals. Now, most of us tax professionals, we're on vacation. We have vacation plans for after October 16th. So, you know, we didn't ask for it. But not sure who did, but we'll see. However, there's been a whole number of disasters that's been declared by the president. So you go to iris.gov in the search box, type disaster relief, and you can see if there's what kind of relief has been offered and what you might cover for it. We'll talk a little bit more about that. But that just happened this Monday. So I had to give you this late breaking news. Well, let's get ready for tax season. We're not even done with this tax season yet, but we got another one coming up in less than 70 days. The new tax season starting in 2024. Well, a couple of things I just want to point out. The first is there's a lower threshold for foreign 1099K. That's the payment card and third party network transactions. So those are for people who get 1099Ks because you're a gig worker. You know, you get it from Uber, Lyft, DoorDash, all those type of gig type entities, Airbnb, or you have a credit card machine at your salon or any business like that. So this was supposed to change last year. But the iris decided to delay it one year. Well, here we are. So for 2023, you're going to get 1099K. If the gross amount of the receipts are more than $600, just $600, no minimum number of transactions. The old rules were you have to have at least $20,000 of gross receipts and more than 200 transactions. So it's $600, but it's only for business transactions. I mean, if it's personal, you know, such as we use Venmo to split our dinner bills or which is Venmoing money between each other personally, well, you got to let Venmo know that it's a personal transaction or PayPal or any of these third party organizations. Online marketplaces, such as Etsy, eBay, so you'll be getting 1099s. So don't forget to report those on your tax returns. If not, it will generate a CP-2000 notice and that can cause further headaches. So stay tuned for that. Stay updated to that. Now, one concern is that you might not get into mail. You might have to download it off their website. So check on those if you're getting paid. It's easy. How do you know about this? Well, who are you getting paid by? You're getting paid by PayPal, eBay, Etsy, Amazon, whoever, make sure you get the 1099 from them. Okay. So that's the 1099K. How about standard deduction amounts? Well, what happened in 2022? 2022, we had high, high inflation. So because of that, we had significant increases in the standard deduction. The IRS increases the standard deduction based upon inflation. Well, for 2023, if you're meritfully joining, that's $27,700. What does that mean? Well, the first almost $28,000 in income is tax-free. You don't pay taxes unless your income is over $27,700. If you're head of household funding status, that's $20,800. If you're single or meritfully separate, $13,850. So that means the first $13,850 of income that you earned is tax-free. Now, if you have dependents, dependents don't get these big standard deduction amounts, but it can't be more than $1,250, or the amount of their earned income, plus $400. So for example, my son is my dependent. Well, he had a part-time job. And so he made some money. So let's say he made $10,000. And so his standard deduction is $10,000, plus $400, so it's $10,400, which means his taxes will still be zero. Now, there's what's called an extra standard deduction. That's if you're over $65,000, or if you're legally blind. And if you're verifying jointly or verifying separately, that's an extra $1,500. Now, if you're blind and over $65,000, that's $3,000. If you're single or head of household, that's an extra $18,50, if you're either over $65,000 or blind. So for example, if you're verifying jointly, and you're both over age 65, your standard deduction is over $30,000. That's the $27,700 plus $3,000. So the first $30,700 is tax-free. We haven't got the announcement for the 2024 standard deduction yet. So stay tuned. It's probably not going to be as great of an increase. It's going to be a bit smaller. So tax planning. What would you do to lower your taxes, right? What kind of tax planning things you can still do right now? Well, for those of you who are working, contribute to your retirement plans. Because very few of us have pensions anymore. Well, some of you might have pensions, but most of us don't have pensions. So the onus for retirement readiness is on you. Well, start or maximize your deductible contributions to retirement. What's the advantage of that? You get a tax deduction for putting money into your retirement plan. It reduces your taxable income, especially if you have a 401k, a 403b, a 457 at work. Why is that important? A lot of employers match. If you don't make a contribution, they're matching nothing. That's the closest thing to free money we have, right? So let's take advantage of the free money. The employers are offering. So at minimum, put the match amount into the retirement plans. Otherwise, you're going to be missing out. Individual retirement accounts or if you're self-employed, various choices of self-employed retirement plans. Okay. I'm going to talk about a very important tax planning topic because it's open enrollment for many of you right now. And this has been with us since 2003. Health savings accounts. Health savings accounts. And what's the advantage of health savings accounts? It provides a triple tax advantage. Triple tax advantage. What that means is you get a tax deduction for putting money into an HSA. It grows tax-free. And if you take money out of the HSA account for your out-of-pocket medical expenses, it's tax-free. That's a triple tax advantage. So take a look at your open enrollment right now. Because most people, they just check the box to stick with the same health plan they've been using. But I think it's a good idea to take a look at your options. So this would be what's called an HSA-qualified health plan or a high-deductible health plan. So take a look at your employer about that and take advantage of it. Now HSA, the S stands for savings. So the recommendation we have is that save the money. Save the money. Keep your receipts. Take the distribution later. So that gives the money a chance to grow. You can invest it and let it grow. Because when you know that in retirement, we are going to have medical expenses, right? Even though you have Medicare, not everything's covered by Medicare. A vision, dental, hearing aids. Have you seen how much hearing aids cost? They're not covered by Medicare. So certainly take advantage of that. But I certainly recommend it. I know in California it's not deductible, but that's okay. That doesn't bother me. That's pretty insignificant. Pressure your California legislators for conformity. There's a bill in the state legislator but keeps dying every year. So pressure them to conform in California. So California is going to take advantage of it also. That's okay though. The federal benefits are very powerful. And this is a whole lot more meaningful. Because by the time you're retired, your California taxes are going to be pretty low. So if there's any California tax, it'll be pretty darn insignificant. So something worth talking about. Okay. So let's talk about the contribution limits. So look at these numbers here. For 2022 is 3,650. 23 is 3,850. Look at 24. 4,150 for single coverage. For families, for 22 is 7,300. 23 is 7,750. And 24, look at this, 8,300. Again, inflation, inflation. Now if you're 55 or better, the catch up for the HSAs is $1,000. So if you have husband and wife who are both in the HSA, each of them get the $1,000 increase. $1,000 increase. So for example, for a family, you can put over $10,000 in there. We can do a whole seminar on HSAs. There's so many more details, but I think it's something worth looking at. And if you're an employer or officer, take a look at it. So here's the strategy with HSAs. We want you to save. We want you to use, if you're working, you've got cash flow. You're making money. Use your cash flow to pay the bills. And hold on to your receipts because you want to invest it. That's going to grow tax-free. I mean, this is even better than a Roth IRA. So because of a Roth IRA, you don't get a deduction for putting money in a Roth IRA. For an HSA, you do. So this is better than a Roth IRA. But when you take it out, it's tax-free. It's tax-free. So you use it for medical expenses. All of your out-of-pocket medical expenses, right? Your prescriptions, your copays, your deductibles, your vision, dental, hearing expenses. In the earlier session, we talked about elder care, right? Long-term care, not cheap. No, it's not cheap, right? This is a big deal. You can use your HSA money to pay for long-term care. So I think it's a great opportunity to take full advantage of that. Medicare Part B premiums. Part B premium. That's going to happen, right? When you start taking Medicare. So it's got nothing to do with your employer's sponsor plans. So if you max out on your 401k, kudos to you, 403B457, you max out on that. You max out on this. You put yourself in a much better position for retirement. And no, you cannot take advantage of the HSA if you're in an FSA, a flexible spending account. What's the S in flexible spending account? Spending. It's a user-alusive plan. If you don't use it, you'll lose it. I've had so many clients who signed up for the FSA, had money taken out of their paycheck. They never got around to getting reimbursed. Or they just didn't have any medical expenses for whatever reason. So it's a user-alusive proposition. You can roll over a limited amount to next year, but not that much. With an HSA, there's no time limits. You put the money in, let it grow. With the FSA, certainly a time limit. Also, with an HSA, if you leave the employer, if you leave your employer, take the money with you. You still keep it. It's your money. It's in the HSA account. FSAs, that's a different story. And also, you saw the limits here on the HSAs. It's certainly much higher than an FSA. So definitely, definitely worth the concern. You just think about it as an investment for your retirement. Also, compare the insurance premiums. You'll notice they're going to be lower. They're lower than the PPO or the HMO. So just compare, take a look at it. I mean, I wasn't so excited back in 2003 when it came up, because I thought, wow, high deductible health plans. Well, guess what? Those deductibles aren't so high anymore. In many cases, the PPO and HMOs, they have higher deductibles than these kinds of plans. So definitely worth looking at. If you're a small business employer, take a look at it for your business. And also, it's another way of helping your employees. You can put money to their HSA accounts. They get the money tax-free. What a deal, right? So certainly worth considering. OK. So that's my little spiel and HSAs. Let's talk about the line deductions you can claim. Our friends who are here a year who are K-12 educators. If you're a K-12 educator or you're an instructor, a counselor, a principal, an aide, you don't have to be a teacher, but you work for a school district, a K-12 school district. It could be private, it could be public. Not home school. It's got to be a traditional school. You got to work at least 900 hours a year. You can deduct above the line up to $300 of un-reimbursed quality expenses. You don't need to itemize. Like we talked about the standard deduction. It's above and beyond the standard deduction. And this covers books, supplies, computer equipment. Now we also include PPE, personal protection equipment, sanitizer, face masks, masks, those sorts of things. Professional development. You take classes over the summer. Now if you have two spouses who are both educators, both of you can get claim to $300 deduction for a total of $600. So don't forget about that. So these are for our K-12 educators. All right. Before I talk about social security, let's talk about what kind of tax chain, tax legislation are we looking at this year? Well, guess what? We don't have a speaker of the house. So the tax laws are written by Congress. And they either come from the House Ways and Means Committee on the House side or the Senate Finance Committee on the Senate side. Well, no laws are going to get passed if there's no speaker of the house. There is no pending tax legislation right now anyway. So there's no pending legislation. President Biden did put out his tax plan, but it's unlikely it's going to happen. It's unlikely it's going to happen. So in terms of legislation, we're probably not going to see that. However, the IRS is constantly giving us guidance about any tax updates or tax changes. So the IRS is the government agency that administers the tax law. They don't write the tax law. They administer it. They interpret it to give us guidance. That's what the IRS does. Our third branch of government are the courts. We have the tax court. So there's always a lot of tax court cases are coming up with certain questions about disputes people have with the government or the Supreme Court. There are two tax cases in the Supreme Court this year. The Supreme Court just started their session. And there's two cases we're staying tuned to see if the Supreme Court will hear them. If they do, we'll have to give you an update next year because we probably won't hear until June how the Supreme Court is going to rule. So there's one case about can the government tax you on income you haven't realized yet? That's a good question, right? And the other one is, can I just give my tax return to an IRS employee with that count as if I filed the tax return? So there's a dispute that went all the way Supreme Court about that because there's a case of someone who somehow the IRS lost their tax return. So they gave it to an IRS employee and that employee lost it too. So they got hit with some significant penalties and they're trying to get the Supreme Court to rule on that. We'll talk about that next year. It'll be after June. So we'll see what happens. Okay, let's talk about Social Security. So last year, we all saw a pretty significant increase in Social Security for 2023 because of the very high inflation. So the 2022 to 2023 increase in Social Security was 8.9%. So for those of you who are collecting Social Security, you probably got a pretty good bump in Social Security, right? That was the largest we have since 1981. If we recall back in 1981, we have some high inflation then too. Well, for 2024, so starting in January of next year, your Social Security will be going up 3.2%. 3.2% for 2024. So if we use average numbers, the average check is about 18 $1,827. So the average check will go up by $59. So the average Social Security check would be 1907. So for couples, that's about 29, 39, they'll go up to $3,033, a $94 a month increase. Now, if you are high income, your whole career for the last 35 years, if the last 35 years, you were high income, high income meaning you hit the cap on paying into Social Security. So the maximum Social Security for 2024 is $3,822 a month. That's if you claim Social Security at full retirement age, that's FRA. So if you're born in 1960, that's age 67. If you're born in 1956, between 1956 and 1960, that's around 66 years old plus a certain number of months. So this is an FRA. Now, your Social Security benefit can actually be higher than this. If you delay your Social Security, it goes up 8% a year for every year you delay your Social Security past the full retirement age. So the maximum benefits $3,822 a month, that's a 5.4% increase from last year's amount. So that kind of gives you a reference point on where you stand on Social Security. Medicare announced the premiums. So the base premium for 2024, it's going to be $174.70 a month. So that's a 5.9% increase from last year for 2023. In 2023, we saw a decrease in the Medicare premium. That was $164.90 a month. And so Medicare Part B covers doctor services, outpatient hospital services, durable medical equipment, other items. Now, if you're a higher income, and this is a two-year look back. So you'll be subject to a higher Medicare premium if on your 2021 tax return, showed income of greater than $103,000 a year single, $206,000 a year couple. So if you do have high income, you're not going to notice your Medicare premium popping up immediately. It'll be two years later. So Medicare premiums are based on a two-year look back. So just be aware of that for your planning. Now, if you're working, you're paying your Social Security payroll taxes. So the maximum net earnings subject to Social Security payroll taxes for 2024, it's going to be $168,600. That means you keep paying to Social Security until you hit that amount. For 2023, that was $160,200. For 2022, that's $147,000. And it's interesting. I used to work for a downtown San Francisco County firm. We had the Oakland A's and the Giants' clients. We did some of the baseball players' tax returns, and we always mused that these athletes, they max out their Social Security on their first paycheck of the year. And we never came close. So that was kind of interesting. So the Social Security payroll taxes, 6.2% of your wages. If you're self-employed, you pay both. That's 12.4%. So it's gone up. Not as great though. Look at the jump from 2022 to 2023. Again, that was because of high inflation. So inflation has cooled off. So we're going to see smaller adjustments. And later in the year, we're going to get more announcements from the IRS when they make more announcements. So we don't have the 24 adjustments yet. All right. We talked about the California tax relief. This is some recent tax relief we got from the IRS. Now, on October 7th, we had some terrorist attacks in the state of Israel. So there's relief for individuals and businesses affected by the terrorist attacks in Israel. And then IRS announces on October 13th. So if you're affected by that, your taxes and tax returns that are due between October 7th of 2023 and October 7th of 2024, do that have to be filed or paid until 2024? That's for filing federal tax returns, making payments and other time-sensitive related items, such as your IRA contribution or HSA contribution. So you're delayed until then. So here's a list of what's covered tax returns. So the 2022 tax return. If you had an extension on your 2022 tax return, you don't have to file until October 7th of 24. But you have to have an extension first. Same thing on business returns. Estimate payments for 2024 are delayed until October 7th. Payroll returns and excise returns and the taxes doing that. So those are all pushed out to October 7th of 24. People who qualify are those who reside there or they have a business there in Israel, the West Bank or Gaza, or if your books or records or tax preparers are located in the area. And I know many people here in the Bay Area have their tax and accounting professionals located in these areas because with the internet and with Zoom, it doesn't matter where you are. So this is why I'm bringing this up here because I know a lot of colleagues are working in those areas. This also includes people who are killed, injured or taken hostage due to terrorist attacks or if you're a relief worker, anybody affiliated with a recognized government or philanthropic organization who's assisting in the covered area. So if you're an employee or a volunteer providing relief to these areas, you get the tax relief. You don't have to do anything for it. The IRS automatically identifies it based on your tax return address. If not, there's these two phone numbers you can call to get relief from the IRS. The IRS computers are not perfect. So if you do get penalty letters and this happened for the California relief that if you get a penalty letter, call the IRS to ask for relief saying, hey, I qualify for this relief. So just because you get a letter from the IRS doesn't mean it's always right. Now there's other relief too. There's other relief too. And these are some relief that pushes up taxes and payments to February 15th of 2024. So for people who have seawater intrusion in Louisiana, you saw that in the news, or those affected by Hurricane Lee in Maine and Massachusetts, or those are affected by Hurricane Adalia and our friends in Hawaii. In Maui and Hawaii counties, starting on August the 8th of 23, they've got filing and payment relief until February 15th, 2024. So you can go to the IRS website, type in disaster relief. They'll give you a list of all the various reliefs available and you'll see if you qualify for any of them or your friends do. I know many of you are not affected by these personally, but I'm sure you have friends, relatives, and colleagues who are. So that's why I'm bringing this up. Okay, let's go over our next topic here. Our next topic is going to be energy efficient home improvement credits. So now, if you want to make improvements to your home, you got to factor in your tax planning too. And you got to be careful about that. So let's talk about how these work. So the IRS has a nice FAQ page. And it's pretty extensive. You type in 2022-40 in the search box and just type in energy efficient home improvement credits. I'll give you very specific details about this. And now this is an improvement to the old rules. The old rules was only $500 lifetime limit. Now it's $1,200 a year. Now, if you make a qualifying improvement to your home and now the rules have been expanded to include a second home. If you have a second home or a vacation home that would apply, but not a rental property. I'm only talking about specifically the personal residents. Rental properties have their own rules, separate set of rules. So we're not going to talk about that. You can go to energy.gov. It's got a very extensive list of what to qualify improvements and energy efficiency requirements. Those are very, very detailed. But I think when you go to your vendors, oh, they'll certainly point this out, right? And they'll certainly be pointing this out. You might see it when you walk around the store and they have stickers on it. So what counts as the home energy improvement credits? So you got exterior doors, exterior doors that includes garage doors, windows and skylights, insulation materials or ceiling, you know, steal your house, seal your house, central air conditioners, heat pumps, heat pump, water heaters, biomass, stoves and boilers and also home energy audits. But I think we get that free here. I think we get a home energy audit from PG&E at no cost, I think. So, you know, it's not as big of a deal for us around here. In other parts of the country, you have to pay for those. So the credit is equal to $1,200 per year, per year, every year, no limit. So this is a substantial improvement. Now for specific items, for doors, the limit's $250 a door, for a maximum of two doors, that's $500 in total, for windows, that's $600. And the credit's $150 for home energy audits. Now there's a $2,000 credit for qualified heat pumps, biomass stoves or biomass boilers. So what's significantly changes, no lifetime limit. You can keep doing this every year. So if you, I don't know if it's practical or not, if you want to plan, okay, we'll do these windows this year, maybe at the end of this year, and then in January next year, let's finish the windows and we'll get the $600 next year. So you might consider that, or the doors, right? Maybe I'll do a garage door this year and I'll do the front door next year or something like that. So take some consideration in that. Now one word of warning though, this credit is what's called a not refundable credit as not subject to carryover. So what does that mean? Well, first of all, let's talk about credits. What's the advantage of a credit? A credit is a dollar for dollar reduction in your income tax, which is a whole lot better than a deduction, right? Because if you have a deduction, the benefit of the deduction is only equal to the deduction times your tax bracket. So if you're a low tax bracket, it's not going to make that big of a difference. But for a credit, it's a dollar for dollar. Now this credit is a non-refundable credit. So what that means is let's say your tax liability, your tax bill is $1,000. Well, you have this $1,200 credit. Well, we can only use $1,000 minus $1,000. The $200 is lost. So let's take a look at what your tax liability is before you get crazy and just watch out for what the salespeople say. And so that $200 is lost if that's the excess and there's no carryover. So take a look at what tax situation you're in. So this is why I'm saying home improvements and tax planning go together. Okay. So I'll share my personal experience with this because a couple of weeks ago, my water heater blew up. Yeah, I opened my garage. There was like an inch of water in my garage. So I find out what my water heater was installed back in 1998. So I think I got a good, long life for that water heater. It came to the house when I moved in here in 2000. So, you know, I thought about this, right? Boy, I get a tax credit if I did this, if I got a heat pump water heater. Well, have you looked at how much they cost? They cost over $1,000 more than a traditional water heater. And also that would have meant getting electrician in here to redo the electrical, to do all that. And there's some probably more infrastructure stuff to do by my water heater location. And, you know, when your water heater's gone, you kind of want some hot water, right? I took a cold shower that morning. But so I went with a traditional water heater. I got a smaller one. The previous owner had a very large one. I got a smaller one because I didn't need a big water heater. And the new ones are much more energy efficient. So hopefully my energy bill will be lower in the future. So that was quicker. It was easier. And so that's what you need to consider. So don't get blinded by tax credits. A lot of people make that mistake. They buy this appliance because you get a tax credit. Yeah, but it costs $1,000 more. Is that going to make it up? No, it's not. You know, it's a, you got to consider that. Let's talk about the residential clean energy credit. It used to be known as the solar credit. So now it's called the clean energy credit. That's if you invest in renewable entry, but solar panels on top of your house, solar, wind, geothermal power generation. You can have a window in your background. I don't know if your city allows it or not, but they kind of look like wind, like those ornaments in your backyard. Not sure how much electricity it generates, but you can do that. But you're, you're not going to get those big windmills like they have up in Altamont Pass. And I did have a client do a geothermal heating system for his house. He had to dig very deep. It was, I forgot how deep, deep he had to go. He had to go very, very deep. It kind of reminds me of the science fiction movie, where he was going to the center of the earth. So he didn't do it, but it was incredibly expensive. And I'm not sure if he told the city about it too. So I'm not sure what he did was legal. So that's another consideration. Solar water heaters, fuel cells and battery storage, battery storage is new under the old law. Last year and before, if you wanted to get a tax credit for the battery, it had to be part of the solar energy system. Now you can have a separate battery storage system. You don't even have to have solar panels. You get a tax credit, 30% tax credit for a battery. A lot of people I know have gotten the battery because of our electrical issues. You know, PGD might shut your power off or we have our blackouts. So many people I know have done that and you get a 30% tax credit for battery storage. It has nothing to do with solar energy anymore. So the law has been updated. It's a 30% credit. 30% starting 2022 or 2032. Yes, it was earlier reduced to 26%, but they raised it back to 30%. And the tax form to get these credits is 456.95. And that's also the same for the home improvement credits. So stay tuned for the update instructions and the form. So it's only the component part of property to actually generate electricity for the dwelling units eligible. So be very, very careful of these salespeople, right? So what also has been updated, the law that includes labor costs. So it gets a cost. You have to pay for labor to put it on. So watch out for these salespeople who say, we'll give you a free roof. Well, that could be a problem, right? The roof is not part of the solar system. Yeah, if you have to do some, some upgrades to your roof, you know, installing seals. So there's a leak or those things to punch into your roof order. That's okay. But a whole new roof, that's not going to qualify. So be very careful of some very unethical salespeople out there. But just like everything else, you're not going to do this for the tax, right? You're seeing clients overspend, way overspend. And because they just saw the tax credit. Well, for example, my neighbor across the street from me paid twice as much as I did. He paid twice as much as I did with the same number of panels. Why? Well, I'm a CPA, so I know how to shop. And I know how to price things. Well, he doesn't. He got convinced by a salesperson, the one that advertises a lot. You hear on the radio all the time or on TV. Don't go there. He paid twice as much. He paid twice as much. So be careful of the ones you hear advertising all the time. They charge too much. So get a referral for some new trust. Get a referral from someone who's done it before and they're happy with the vendor and everything works. Because with the not very good vendors out there, the systems fall apart. Or I drive around. I see people have solar panels underneath trees. And that's a problem too, right? It's like, I didn't understand that. I see roofs completely cover solar panels. And I know that houses only has one person living there. Does he really use that much electricity? So a lot of people get sold by enough panels. That's appropriate. Also, the California PUC has changed the rules on that now in terms of how much you're being reimbursed. So you got to watch out for that. Make sure you don't get sold. There's no water heating. It's okay to have us heat the water. But for some reason, the rules say, not as way for hot tub. Don't understand that, but that's not included. Not a solar air heaters. That that's a, that's like a heating systems where it just heats the air, just heats the air. That doesn't count. Field cells. Here in Silicon Valley, they sell us a field cell systems. Some commercial buildings that are office buildings are being powered by them. Some, some, some vendors selling that. There's a dollar limit though. It's only $500 for each half kilowatt of capacity. I've had half capacity. And, and for the battery storage, it's got to be at least three kilowatt hours capacity. Why did they put that rule in there? They put that rule in there because it's not your backup power supply, like I have here from my computer. You see some of those, right? Those, those, those little systems that you can plug your refrigerator in. So your, your medicine to stay cool or your oxygen machine or whatever. So it's going to be at least three kilowatts. So we're talking very significant things here. I see a question for Maria. Does California offer free or low cost solar panels for residents? I think those are some of those clickbait ads I see. So be careful of those. Okay. All right. So there's also the qualified refueling property credit. So that's for putting in a alternate few dispenser at your home. So, so to restore to dispensing alternative few of a motor vehicle, alternative views. What's that? That's electricity, natural gas, liquefied natural gas, liquefied petroleum gas, natural gas, hydrogen, ethanol, or a qualifying mixture of biodiesel, diesel, fuel or kerosene for electrical. It's got to be bi-directional, bi-directional charging and certain charging stations. So for homes, it's a 30% credits, 30% credit. If it's a business, it's 6%. So I've talked to some clients who own shopping centers. I said, Hey, why don't you consider putting a charging station? You know, just one of those charging stations has two plugs on it. So just one space. And I did some math and calculate how much money he could make on that. I was assuming it was half, half, half being used or apartment complex, right? Apartment complex. So you get a 6% credit, you have 6% credit. There's some update to the rules here. Some update to the rules for 2023. You have to meet certain prevailing wage and apprenticeship requirements. The original version of law says it has to be installed by union labor, but, but instead of union labor, it's prevailing wage and apprenticeship requirements. So for individuals, for you and me, the maximum credits are $1,000. And they're not that expensive, I think. I've seen some of those chargers you can put in your house. It's not that expensive. But for business, that's up to $100,000 tax credits. So for an apartment complex, for a shopping center, or if you own a movie theater or something like that, a movie theater is perfect, right? Plug your car in. Why do you watch the movie? And you can charge whatever rate you can charge for electricity. There's some complicated rules for dual use property. So we're not going to go there. But starting in 23, there's some more requirements. It's a, some qualifying property must be within low income communities or non-urban census tracks. So we should be in some guidance on where that is and all that. I think the city of San Francisco is not going to qualify for that. This is reported on form 8911. All right. Now we also have home energy rebates. So these are administered by the state, the state department of energy. So we're in California. So it's from the state of California. You get more details at energy.gov. $8.8 billion of an allocated. The state has to apply for it. So I don't have a whole lot to report here because I haven't seen anything from the state of California yet. So stay tuned on that. Is the office of state and community energy programs, the state has to apply for it. You can get some more details from white house.gov slash clean energy. So it's the rebates for, you know, switching out your, your refrigerator eats a lot of electricity to when it doesn't, dishwashers, stoves, water heaters. The big one are water heaters. So instead of a natural gas water where, you know, the hot topic in home construction now is electrification. So a lot of new homes, new apartment complexes, don't have natural gas because of the greenhouse gases. And yeah, I don't know how to cook on those, those, those induction stuff. I'm old fashioned. I don't know. So that's something I'll try to learn, but hopefully I can still buy a gas stove. But anyway, the rebates are based on your income level and you have to apply for it. And it's applying based and you get it at the store, either Home Depot, Lowe's, airport appliance or even Costco. So, so it's going to be administered by the stores, but there's some paperwork you're going to have to deal with. So stay tuned on the home energy rebate. You're going to see TV commercials probably. So you'll hear about it. Or you'll get stuff that you get advertising. I've been getting a lot of advertising from plumbers for the heat pump water heaters, but it's very complicated and very expensive. So, you know, I'm going to give it some time. Maybe my next water heater will be a heat pump water heater. Maybe by then the manufacturers are making more of them. So maybe they'll be less expensive. One of the $1,000 price difference, hopefully the price difference for shrink. And maybe I'll plan ahead. And instead of waiting for my water heater to explode, maybe do it before that. So have some time to get the electrical system updated in the house and all those kind of things. So there's planning to be done. Here's some examples. Here's some examples here. So here's example number one. So let's see, you get two doors. They're $1,000 each and I know doors are expensive. Doors are expensive. So the credit is 30%. So 30% of a thousand dollars is $300. However, the maximum credit you get on a door is $250. So from those two doors, you get $500. Windows and skylights. Let's say they cost you $2,200 from the windows and skylights. 30% of that is $660. So there's a $600 living on windows. Maybe $600 right there. You get an air conditioner, a central air conditioner. It's $5,000, let's say. So 30%, that's $1,500. For an air conditioner, that's a $600 maximum. So in this example here, we got $500 plus $600 plus $600 and $1,700. However, your limit is $1,200. So you get a $1,200 efficient home improvement credit. So that's example number one. Let's look at example number two. Same as one. Well, except of purchasing a central air conditioner, a traditional air conditioner, you go and get a heat pump. Well, this example is not real, right? Don't they cost a lot more? So let's say you're lucky enough to find a heat pump for $5,000. 30% of $5,000 is $1,500. So that's exempt from the $600 limit and the $1,200 aggregate limit. So you can claim $1,500 for the cost of the heat pump. So in example two here, it's $500 for the doors, $600 for the windows, $1,500 for the heat pump. That's $2,600. What's the maximum heat pump? It's $2,000. And I think if you do a heat pump, it's going to cost you a lot more than this. I have a traditional natural gas furnace in my house, which came from my house. So it's old. Yeah, I have a veteran to find out how much it's going to cost if I want to convert to a heat pump. Or how complicated is it going to be? Because I guess heat pumps have to sit outside their house instead of in your garage. So I bet you that's going to be a whole lot more than $5,000. OK, example number three. Example number three. Same as example number one. Let's see. Instead of purchasing a central air conditioner, you purchase an electric heat pump for $8,000. $8,000. So 30% of $8,000 is $2,400. That has a $2,000 limit. You spend $800 a home energy audit performed by a properly certified home energy auditor. 30% of $800 is $180. The limit is $150. So $500 for the doors, $600 for the windows, $2,000 for the heat pump, $150 for the energy audits, $3,250. However, the limit for the doors, windows, and energy credit is $1,200. So the total credit we get here is $1,200 plus $2,000. So this example here, we're getting $3,200 home efficient home improvement credit. So I hope these examples are helpful to understand how these rules are. All right, let's close out. I think this is our last talk, clean vehicle credit. We had some significant changes in electric cars. Or as they call it, clean vehicles. So what's new is that starting in 2024, starting in January, auto dealerships can offer on-the-spot reductions in the sales price to purchasers of electric clean vehicles. So it applies to new cars and previously owned cars. So dealerships need to get registered and all that. So here's the requirements to get this up front tax credit when you buy a car. So you can't buy a car for resale. You're buying for your own personal use. It must be manufactured by a qualified manufacturer. We'll talk about that. It must be the definition of a clean vehicle. It has to have a gross vehicle ring of less than 14,000 pounds. And it must be powered by electric motor with a battery capacity of seven kilowatt hours or more. And it must be capable of being recharged from external source electricity. And most importantly here, it has to meet the critical mineral and battery component requirements. And this is where a lot of manufacturers are up in arms. Must have final assembly in North America. So it's got to be assembled in North America. What's North America? North America, Canada, United States and Mexico, where a lot of cars are made. So what's not North America? China, Vietnam, Germany, Japan. So there's some concerns about that. So to get this credit has to be through a licensed dealership. So it can't be your buddy across the street you're buying the car from. So dealers must provide the following information. The seller's name and their ID numbers, the buyer's name and ID number. Yes, you're going to have to give your car dealer your social security number. And one thing I'll quiz your dealer is, hey, how good is your security? You know, I don't want my social security number floating out there. I don't want you to hack or so breaks into your dealership and steals all this information. Ask about that, right? The slip is going to include maximum credit available. And these are the code sections for the electric vehicles, 30D, 25E or 45W. The vehicle identification number, that's a long number, battery capacity, data sale, the sales price. And for new vehicles verification, that the buyer is the original user. Now to be eligible for the credit, there is an MSRP limit. So for vans, sport utility vehicles and pickup trucks, that's $80,000. And for other vehicles, that's mostly sedans and other vehicles is $55,000. That's the MSRP. So, you know, if you're getting a car, it's pretty close to these numbers. Make sure you don't add all that extra stuff in, you know, you can get them added on after you buy the car, you know, dealership installed extras or whatever. So just kind of watch out for that. And there's a big debate about what cars are which, like the new Mustang. The new Mustang is considered to be a sport utility vehicle. Why? Because it's got a hatchback. I think it's got a hatchback, but whatever. People are up in arms saying, why isn't it, well, it's because of this credit. That's why a Mustang is in the SUV category. Does it look like an SUV? Probably not. So you can't really tell if I'm looking at the car. There's a list. I think that's an upcoming slide here. I have a website. It's an upcoming slide. That's one requirement is the MSRP of the car. The second requirement is the purchasers modified just-to-gross income. It's either the current year income or last year's income. So it can't be more than $300,000 for married couples, filing jointly, 225,000 for head of household, 150,000 for singles and everybody else. So if you qualified with last year's income, don't worry about this year. But if you don't qualify under last year's income, well, take a look at your income this year to see if you're going to be below these amounts or not. Maybe you need to do some planning if you're really, really close. So there is an AGI limitation here. So this is totally changed in 22. It was a bit confusing in 22 because the law changed the part of the year, but for 22 and before, there was a 200,000 vehicle limit. Once your car, once the manufacturer sold more than 200,000 cars, you got no credit. That's why for Teslas, there was no credit because they sold more than 200,000. That applied to quite a few other manufacturers and quite a few didn't. But that 200,000 vehicle limit is gone. Now we have these critical mineral requirements. So the maximum credit is two parts to it. For meeting the battery component requirement or the critical minerals requirement. If you meet one of them, you get 3,750. If you meet both of them, that's the $7,500 maximum, $7,500 maximum. Now, do you need to be experts about car batteries and minerals? No, no. There's going to be a list. There's going to be a list. I made that determination. What this is all about is that, where are you getting the components for the battery? Are they coming from within the United States or a friendly country? Or a country is not friendly with us? And unfortunately right now, a lot of the mineral, the battery components are coming from China and China is officially not a friendly country to the United States. So hopefully this is why every so often, you hear the news of a lithium mine opening up in the United States or a lithium factory opening up in the United States or those are some big deals. Or a lot of foreign manufacturers are building the cars here in the United States or they're building billion-dollar factories here in the United States. So you see that. BMW is in Greenville, South Carolina. And so there's quite a few manufacturers making the cars here, Canada or in Mexico. Now, this credit is non-refundable. And this happened to one of my clients. Her income's not that high. She got a Nissan LEAP, the Nissan LEAP qualified for a 75-dollar credit. That was great. And the salesman says, look, you're going to get a 7,500-dollar refund from the IRS. That was completely wrong. Never take tax advice from a car dealer, right? Or a car salesman. Don't ever do that. Don't ever do that. So she thought she was going to get a 75-dollar refund. So no, you're not. No, you're not. And her income was really low. Her taxes were close to zero. So that would have been totally wasted. So for her, I told her, let's bump up your taxable income. Let's bump up your tax liability. So for her, I said, hey, let's take a look at what you got here. So she's got an IRA account. I said, let's do a Roth conversion. We converted her Roth IRA to generate taxable income. And the net cost was zero because we generated 7,500 hours of tax, used a 7,500-dollar credit. That was zero. So she got sold by a salesman. So be careful about that. So the unused credit cannot be carried forward. You lose it. So if her taxes were, let's say, $2,000, she's got a 7,500-dollar credit. She only got to use 2,000. The $5,500 remater is gone. So tax planning. So tax planning of buying a car, tax planning of fixing up your home, tax planning of putting solar panels in your house. A lot of tax planning required here. Trust a trusted tax advisor, not the salespeople. Now, what's also new that we didn't have last year or previously is used cars. You can buy a previously owned clean vehicle. So this is a little different. It doesn't have to be made in North America because these are used cars. It's got to be at least two years, two years older than the current year. It's got to be in 2023, which means it has to be a 21-model or older, 21-model orders of two years. So the credit is the lesser of $4,000 or 30% of the sales price. And the sales price maximum is $25,000. So good luck finding a used electric car for $25,000 or less. They're probably out there like a Nissan Leaf. That'll definitely qualify. This is only for individuals, not for business, only for individuals. So here's the requirements. It's for personal use, not for resale. And the person, the individual cannot be claimed, cannot be claims dependent on another person's tax return. They put this in because people said, hey, my son's going to get the car. My daughter's going to get the car. But if the last, if they were qualified to be your dependent, then no, they won't qualify for it. And also you can't do it every year. You have to wait three years. So you cannot claim the credit in the past three years. So you bought a used car this year, wait three more years to take it again. There's also modified Justin Grozinka limits, $150,000 for married couples, $112,500 for heads of household, $75,000 for singles and other filers. So use cars. And this is Congress's way of getting people to get more electric cars. Now what about business? What if you have a business commercial clean vehicles? Wow. This is pretty lucrative. This is really lucrative. And, you know, if you're, you're a contractor, or, you know, you use vehicles for business purposes, definitely worth looking at because, you know, instead of having those diesel trucks that pump out a lot of smokey air, you might look at a clean vehicle. So first of all, it's got to be by a qualified manufacturer. There's a whole list of those. It's got to be used by the taxpayer, not for reuse. It's got to be a motor vehicle under the clean air app or use on public streets, roads and highways. What does that mean? It can't be the tractor on your farm. It's a road vehicle, not a off road vehicle like a farm, like a tractor, a bulldozer, you know, those big dump trucks, you know, because it's not going to qualify. It's going to be a motor of road vehicle. It's got to have an electric motor. It's got capacity capacity of at least 15 kilowatts. Or if the vehicle weighs less than 14,000 pounds, he could have a battery of seven kilowatts. And that's all on the car spec sheet. I'll tell you that. Here's the credit. It's very lucrative. The credit is lesser of 15% of the vehicle cost basis, or 30% in the case of vehicle not powered by gasoline or diesel internal combustion, or the vehicle's incremental cost. The incremental cost is the excess of a qualified commercial clean vehicles purchase price, or the price of a comparable internal combustion engine. So here's the electric truck. Here's the gasoline truck. It's the incremental cost, you know, electric truck costs more than a gas truck than that's the amount of the credit. I'll go over some resources on how to figure this out. You're not going to have to figure all this stuff out. Now, if the weight of the vehicle, the gross vehicle rating is less than 14,000 pounds, that's a 7,500-hour credit. That's just like your regular personal vehicles. Check this out, though. If the vehicle's more than 14,000 pounds, that's $40,000. $40,000. So, you know, if you want to know what that number is, open the car door, the driver's side car door, look at the sticker, and they'll tell you what the gross vehicle weight of that car is. They'll tell you what that is. So you can, you know, deal with that. It looks like it's $40,000. So here's some resources here. Resources here. Let's see. So new plug-in and fuel cell vehicles purchased in or after 2023. It's the fueleconomy.gov website. And these are four vehicles that get the 75-hour credit. They'll have a whole list of vehicles there. And I think there's a little tool there. Yeah, you'll say, oh, it's a, it's a Fisker or it's a Rivian or whatever, whatever model it is. Or if it's a Cybertruck, I don't know. You can plug in to make a model of the car. It'll tell you your credit is 7,500, 3750, or zero, right? Pre-owned. Oh, this is another one. Pre-owned plug-in, fuel cell electric vehicles purchased on or after 2023. So this is for used vehicles. It gives you a list of cars that qualify. Again, I don't trust the car dealers. Okay. I don't trust the car salesman. I recommend going to fueleconomy.gov to double check, double check. For the before 2023 rules, fueleconomy.gov. Now these are very confusing because there's multiple dates here where the rules changed. So, so there's multiple columns too to look at. It's like, oh, I bought my car in June of 2022. Well, that's going to be different than buying a car in November of 2022 or April of 23 or July of 23. The rules kept changing on us. The rules kept changing. So I don't have any of it memorized. I go to these websites for a tool. And on the IRS website, manufactures a quality commercial clean vehicles. So which cars give me that $40,000 test credit? Whoa, that's huge. And that's the link right there for 89 36. Here's a reference to the form and the instructions. Stay tuned in January. I think in January, we'll probably get the instructions for the 23 forms. Definitely pay attention to that. If you click on that right now, I'll take you to the 22 instructions under the old laws. 456 95 residential energy credits. Okay. All right. Very good. So that's some updates there. And I think that takes us to the end of our presentation here. So I left some time out for questions and answers. And it doesn't have to be what we talked about today. Also, we're going to do a getting ready for the 2024 tax season in January. January 27th. From two to three 30 Pacific time. Check out the library website on the links and signups and all that. And we're going to talk about the, the updates, the forms and things to look up, but there's always things going on. Maybe by then we'll have a, we'll have a speaker of the house. Maybe we'll have a budget. Oh, by the way, the government is funded till November 15th. So if Congress can't get their act together, we're going to have a government shutdown. We're going to have a government shutdown. That's not a lot of fun. I don't, I don't, I never enjoy government shutdown because it doesn't save us any money. It costs us money. So they're going to have to figure that out. Get our, get our budget passed. And it gets ready for the coming year. And there's, there's a lot on the plate for Congress here. So Jenny and Chris, do you guys want to make any comments or closing comments before we go to Q and A? We can stop the recording too, if you want to.