What to Know About Tax Prep

The IRS is offering some help to taxpayers in getting organized so the filing season can be as easy as possible for everyone. “Having all needed documents on hand before taxpayers prepare their return helps them file it completely and accurately,” says the IRS. This includes: Forms W-2. Each employer you worked for must send…

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What’s the Tax Deal on IRAs?

IRAs—individual retirement arrangements—are among the most popular retirement savings vehicles. They can be used to reduce taxes on retirement savings, but how do they work? If you create a traditional IRA, you may be able to deduct some or all of your contributions to the account from your income taxes. You also may be eligible…

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IRS Announces 2022 Limits for Retirement Plans

The IRS has announced the new retirement plan numbers for 2022. Retirement limits for 401(k) and similar plans are up. The contribution limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan is increased to $20,500, up from $19,500. IRA limits have changed for certain savers. If…

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SSA Updates Key Numbers for 2022

The Social Security Administration reviews key numbers each year and usually makes adjustments, and this year, the changes are significant. In a recent release, the SSA announced what is and is not changing for 2022. Here are the key changes: The maximum taxable earnings for the Social Security portion rises from $142,800 to $147,000. (There is…

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Proposed Tax Changes – Build Back Better

In our October newsletter we ran an article that outlined the proposed tax law changes related to the Build Back Better Act (BBB) released by House Ways and Means in mid-September. On October 28, 2021, the House Rules Committee released a revised version of the BBB. These changes still need to be voted on by the…

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Planning Ahead for Tax Credits and Deductions

Most people use software or hire an accountant to help them find all the deductions they can subtract from their taxable income and all the credits they can subtract from their final tax bill. But most tax breaks require you, the taxpayer, to plan ahead. Even the most skilled accountant can’t deduct a charity donation…

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Nonresident Individuals and Tax Returns

Form 1040-NR is a version of the IRS income tax return for nonresident individuals to file if they earned income from US sources throughout the year. As with regular Form 1040, those who fill out Form 1040-NR may either owe more money or be entitled to a refund. Before considering whether you need to fill out…

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Tax Treatment for Kids Working in the Family Business

What kind of business is a mom-and-pop operation? It’s probably not a question you pondered when you dreamed of going into business. Suppose you employ your child. How is this handled so that you are in compliance with IRS rules and regulations? Payments for a child under age 18 aren’t subject to Social Security or Medicare taxes if the…

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Relief Bill Offers Provisions for Families with Children

Beginning in July, those with children may get deposits into their bank account or paper checks for advance payment of the 2021 Child Tax Credit (CTC). The second stimulus package (Consolidated Appropriations Act, 2021) includes updates to the child tax credit, making it more accessible to people whose incomes fell during the pandemic. The expanded…

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Pros and Cons of Tax Extensions

In general, individual and trust income tax returns are due on April 15th of each year, while partnerships and corporations must file by March 15th. If your accountant thinks there is a reasonable chance that you will not be able to file your tax return on time, they will file an automatic request for extension with…

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