As Christmas approaches, Klatzkin is putting a twist on a holiday classic. But rather than filling your head with drummers drumming and golden rings, we’re focused on providing tips through “The Twelve Days of Taxmas” blog series that could help minimize your tax liability. On the eighth day of Taxmas, my accountant reminded me to […]
On the seventh day of Taxmas, my accountant gave to me an annual reminder to review beneficiary designations for retirement accounts, annuities, and life insurance contracts.
On the sixth day of Taxmas, my accountant gave to me information for the Child Tax Credit (CTC). The CTC is fully refundable in 2021 and is $3,000 for children over six years old and $3,600 for children under six years old. However, these amounts are reduced for any advances received from July 2021 through December 2021.
On the fifth day of Taxmas, my accountant gave to me a tip to donate stock and repurchase it. Charitable giving has intrinsic rewards and immediate (and future) tax benefits. You can maximize your charitable giving deduction by donating appreciated securities instead of cash.
On the fourth day of Taxmas, my accountant gave to me a reminder that Required Minimum Distributions (RMDs) are required in 2021 for anyone who has reached age 72 during the year or reached 70 ½ before 2020. In 2020, RMDs were not required due to the COVID-19 pandemic.
On the third day of Taxmas, my accountant gave to me a backdoor Roth IRA conversion before they are disallowed in the Biden Administration’s proposed legislation, the Build Back Better Act. Under current law, if you contribute to non-deductible traditional IRA accounts, you can wait a few days then convert that contribution to a Roth IRA account. Therefore, the only taxable income would be any income earned when the funds were in the Traditional IRA.
For the period January 1, 2021, through December 31, 2022, businesses may claim 100% of food and beverage expenses paid to restaurants (if certain conditions are met). This is an increase from the historical 50% allowable deduction. This temporary deduction was introduced in the Consolidated Appropriations Act 2021 to increase economic recovery in the food and beverage industry.
Taxpayers who do not itemize can take advantage of the charitable donation deduction – those filing single or married filing separately can claim a deduction of up to $300 for cash contributions. Married individuals filing joint returns can deduct up to $600 of cash contributions on their 2021 tax returns.
When the Infrastructure Investment and Jobs Act was signed into law on November 15, 2021, it opened the door for necessary repair and upgrades to the nation’s crumbling infrastructure. The massive spending bill calls for a $1.2T investment in roads and bridges, power grids, rail services, broadband access, water infrastructure, airport development, and environmental remediation. When Congress was negotiating the legislation, there was significant concern about how it would be funded without inflating the national debt. This need for funding resulted in the early termination of the Employee Retention Credit (ERC). It has been estimated that the move will save the federal government $8B, redirected to offset expenses.
As auditors prepare for the upcoming year-end of December 31, 2021, they should be aware of the changes coming to auditor’s reports as a result of the implementation of Statement on Auditing Standards (SAS) No. 134, Auditor Reporting and Amendments, Including Amendments Addressing Disclosures in the Audit of Financial Statements, and other related SASs.
