Every year, it’s a sure bet that there will be changes to current tax law, and this year is no different. From standard deductions to health savings accounts and tax rate schedules, here’s a checklist of tax changes to help you plan the year ahead.
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Many people assume tax planning is the same as tax preparation, but the two are quite different. Let’s take a closer look:
What is Tax Preparation?
Tax preparation is the process of preparing and filing a tax return. Generally, it is a one-time event that culminates in signing your return and finding out whether you owe the IRS money or will be receiving a refund.
Filing your tax return promises to be just as complicated as always–especially if you received stimulus payments or advance child tax credit payments. But there are steps that taxpayers can take right now to make sure their tax filing experience goes smoothly in 2022. Let’s take a look at four things taxpayers can do now to get ready for tax season.
Several end-of-year tax planning strategies are available to business owners to reduce their tax liability. Let’s take a look:
Deferring Income
Businesses using the cash method of accounting can defer income into 2022 by delaying end-of-year invoices so that payment is not received until 2023. Businesses using the accrual method can defer income by postponing the delivery of goods or services until January 2022.
Understanding marginal and effective tax rates is important for tax planning purposes; however, many taxpayers don’t fully understand the differences.
Let’s take a closer look:
Employees and small business owners often have questions about what to do with an employee’s home–and what the tax consequences might be–when they move to a new job location. Here are some answers: Continue reading
The Internal Revenue Service has started sending letters to more than 36 million American families who, based on tax returns filed with the agency, may be eligible to receive monthly Child Tax Credit payments starting July 15, 2021. Here’s what families need to know: Continue reading
Estimated tax is the method used to pay tax on income that is not subject to withholding. This includes income from self-employment, interest, dividends, alimony, and rent and gains from the sale of assets, prizes, and awards. You also may have to pay an estimated tax if the amount of income tax being withheld from your salary, pension, or other income is not enough. Here’s what you should know about estimated tax payments: Continue reading
Taxpayers who relinquish citizenship without complying with their U.S. tax obligations are subject to the significant tax consequences of the U.S. expatriation tax regime. If you’re an expat who has relinquished–or intends to relinquish–your U.S. citizenship but still has U.S. tax filing obligations (including owing back taxes), you’ll be relieved to know there are IRS procedures in place that allow you to come into compliance and receive relief for any back taxes owed. Let’s take a look: Continue reading
If you’ve given money or property to someone as a gift, you may owe federal gift tax, but in many cases, you will not. For example, there is usually no tax if you make a gift to your spouse or a charity. If you make a gift to someone else, the gift tax usually does not apply until the value of the gifts you give that person exceeds the annual exclusion for the year. Continue reading
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