As we near the end of 2021, I would like to thank you for your business, as well as your patience and understanding during what has been one of the most difficult tax seasons in recent history.
Due to the many changes in the tax code as well as ongoing Covid relief, 2022 is shaping up to be another complicated year, both for preparation of 2021 tax returns and planning for 2022 taxes. We want to take the opportunity to review items that will hopefully make things move more smoothly.
REMINDERS FOR YOUR 2021 TAX RETURN
There are many life changes that have happened throughout 2021, so we also recommend you make a list now that includes any changes and documentation you may need for our preparation of your tax return. These include any new children or dependents added to your family, or dependents no longer living with your support, the sale and/or purchase of your home, and changes in employment.
Stimulus and Advanced Child Tax Payment Credits
In 2020, the IRS sent out stimulus payments to qualifying families and individuals. While two of the payments were calculated into your 2020 taxes, the third did not begin distribution until March and will need to be calculated into your 2021 taxes. The money is not taxable, but if you did not receive the payment or did not receive the correct amount, we can recapture it in your return and apply it to your owed taxes and/or refund.
Unfortunately, many people did not report receiving their 2020 amounts and received letters of taxes owed because they told us they had not received them when we prepared their taxes.
We ask that you not only report the amount of stimulus payment you received but also the amount you received in Advanced Child Tax Credit. If you are unsure, you may log into or create an account on the IRS website (irs.gov) and view the payments you should have received. The tax organizer we will send out at the beginning of the year will have a place for you to write the amounts you received. Failure to report the correct amounts will result in our assumption that you received all tax credits and preparing your return to reflect that. If you need our office to communicate with the IRS on your behalf regarding incorrect reporting of these payments, there will be an additional charge.
Covid unemployment tax relief expired and has not been renewed by the IRS for the 2021 tax filings. All unemployment you received for 2021 is taxable. You will receive a Form 1099-G from the Employment Security Department with the amount you received in 2021 and will need to include that in with the tax paperwork you turn in to our office.
Other Information for your 2021 Return
Due to IRS delays in getting refunds out, many people received not only their refunds, but also interest. While the interest may not be much, it is taxable and needs to be reported on your return. You should receive a 1099-INT from the IRS reflecting any interest that was paid to you due to the delay.
If you are expecting to owe on your 2021 Return, you may be able to offset your taxes in a couple of ways before the end of the year:
- The Taxpayer Certainty and Disaster Tax Relief Act of 2020 extended two charitable giving changes enacted by the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The law allows you to deduct up to 100% of your adjusted gross income (AGI), which is your total income minus other deductions you have already taken, in qualified charitable donations if you plan to itemize your deductions.
- Non-itemizers may claim an above-the-line deduction up to $300 ($600 for married filing jointly) for charitable contributions made in cash.
- If you itemize, you can also deduct any medical expenses above 5%of your adjusted gross income. For example, if your AGI was $100,000, you can deduct out-of-pocket medical expenses beyond $7,500 in 2021
2022 TAX PLANNING
As of this letter, there are a few things we know for your 2022 taxes:
- The standard deduction raises to $12,550 for single filers ($25,100 for joint filers).
- Income tax brackets were adjusted for inflation
There are a few changes that may be coming for the 2022 Tax Year depending on how much of the pending House bill is passed. These changes may include an additional increase in taxes for married couples earning over $450,000 ($425,000 for Head of Household, $400,000 for separate individuals, and $12,500 for trusts & estates). The upper end of the tax brackets may also be adjusted to higher percentages. Other possible increases are to the maximum capital gains and corporate tax rates.
Most of the proposed changes will only take effect after December 31, 2021, so if you are potentially affected by them, need any help navigating these changes, or understanding how they pertain to your situation, please feel free to call and schedule a tax planning appointment before the end of the year.
Tax Due Dates
- Partnership & Sub S Corporation Tax//Extension due date – March 15, 2022
- Individual, Trust & Estate, and Corporation Tax/Extension due date – April 18, 2022
- Not-for-Profit Tax/Extension due date – May 16, 2022
- Final Partnership & Sub S Corporation Due Date – September 15, 2022
- Final Trust & Estate Due Date – September 30, 2022
- Final Individual & Corporation Due Date – October 17, 2022
- Final Not-for-Profit Due Date – November 15, 2022
Please note that any returns filed after the initial due date without an extension or filed after the final due date with an extension are subject to a late-filing penalty and interest.
OFFICE UPDATES AND REMINDERS
Tax Organizers are set to go out just after New Year’s Day, so if you have moved or intend to move prior to that time, please be sure to let us know so we can mail it to the correct address. Any organizers that are returned to our office will not be sent back out unless requested.
We ask that you make every effort to fill out what you can in your organizer as it is meant to align with our input on your tax forms. For your convenience, additional blank Tax Organizers as well as individual sections for business or rental information is available on our website.
With the budget cuts in both the IRS and the postal service, as well as IRS delays, it has become more and more unreliable to mail paper returns in. Going forward, unless you specifically request to mail in a paper return, or a paper return is required to be filed, we will automatically set your return up for eFile. We hope that this will help alleviate any delayed filings.
For tax season, our office hours will remain 8:00AM – 5:00PM Monday – Friday, however if that time does not work for you, we are flexible. Tax Appointments are available, however certain days and times may be blocked out around due dates. We are available not only in-person, but also via phone or Zoom meetings.
As you are aware, costs have gone up. Not only have we had increases in our operating costs, but the reporting required to the IRS and State for certain transactions have changed, which requires more time to input information. In order to continue to serve you with the same quality, care, and service you are accustomed to, we will be adjusting our fees to reflect these increases.
Our Office Online
With our website newly redesigned, this is a great time to remind you that we are online and to encourage you to not only follow us on social media (Facebook, Instagram & Pinterest) for timely and helpful information, but to also take a look around on our website (toyercpa.com). We have posted news articles, have a calendar of important due dates, and are building a library of resources for you to use in our Customer Help Center. We would also love feedback! Your ideas on what you would like to see are so helpful when it comes to website design.
These last 2 years have not been easy years but, as always, I appreciate your business and look forward to continuing to work with you. I wish you a wonderful holiday season and a joyous New Year.
Bruce N. Dietrich CPA, CGMA