Income Tax | Essential Solutions LLC

If you’re in business and use QuickBooks to keep track of income and expenses for the year, you should do the following:

For the year, you must maintain accurate accounting records, and this includes saving your bank records and maintaining all your income receipts and expense receipts. You must maintain your records under the CASH method of accounting and furnish year-end statements to your accountant. This includes year end:

Detailed General Ledger
Profit & Loss Statement
Balance Sheet Statement
Working Trial Balance
Year End Payroll Reports
Year End Payroll Summary
Bank Statement Reconciliation
Statement of Cash Flow
List of all new assets and furnish a description of purchased, date and cost.
Furnish information on all assets sold, date and amount received.
Do you maintain a mileage log for all your business vehicles.
Do NOT include personal expenses in with your business expenses.
Personal expenses paid by your business should be shown in a draw or distribution account.

If you’re a General Partnership, you must have a partnership agreement or if you’re a Partnership LLC, you must a have an operating agreement along with your partnership agreement. If you wish your LLC to be an S Corporation, you will need to file Form 2553 and if you want to be taxed as a C Corporation, a copy of Form 8832 needs to be filed.

If you’re an “S” Corporation, or a “C” Corporation, you must have a Corporate Minute Book and keep it current each year and stock certificates must be issued to each shareholder.

Every business should have an “Accountable Reimbursement Plan” for all their employees. By having this, it is a business expense and not income to the employee.

Provide copies of each.

You should not attempt to form any of these entities without consulting with legal counsel.

You should have regular meetings with your accountant/tax professional, bookkeeper, legal counsel, and insurance representative. To be successful, you need good people and good records.

The October 16, 2023, extension filing deadline is coming up, and many taxpayers who requested an extension are now choosing a tax return preparer. Most tax return preparers provide honest, quality service, but there are some bad apples out there – from unethical preparers to outright scammers. When hiring an individual or firm to prepare a tax return, taxpayers need to understand how to choose a tax preparer wisely and what questions to ask.

Things to consider when choosing a tax return preparer

Ensure the preparer signs and includes their PTIN. By law, anyone who is paid to prepare or help prepare federal tax returns must have a valid Preparer Tax Identification Number. Paid preparers must sign and include their PTIN on any tax return they prepare. Not signing a return is a red flag that the paid preparer may be looking to make a quick profit by promising a big refund or charging fees based on the size of the refund. Taxpayers should avoid these unethical tax return preparers.
Make sure the preparer is available year-round. If questions come up about a tax return, taxpayers may need to contact the preparer after the filing season is over.
Review the preparer’s history. Taxpayers can check with the Better Business Bureau for information about the preparer, any disciplinary actions, and the license status for credentialed preparers. Other resources include: the State Board of Accountancy’s website for CPAs; the State Bar Association for attorneys; and the IRS Directory of Federal Tax Return Preparers for enrolled agents, or verify an enrolled agent’s status online.
Ask about service fees. Taxpayers should avoid tax return preparers who base their fees on a percentage of the refund or who offer to deposit all or part of the refund into their own financial accounts. Be wary of tax return preparers who claim they can get larger refunds than their competitors.
Ensure their preparer offers IRS e-file. The IRS issues most refunds in fewer than 21 days for taxpayers who file electronically and choose direct deposit.
Understand the preparer’s credentials and qualifications. Attorneys, CPAs and enrolled agents can represent any client before the IRS in any situation. The IRS Directory of Federal Tax Return Preparers with Credentials and Select Qualifications can help identify many preparers by type of credential or qualification. Tax return preparers who participate in the Annual Filing Season Program may represent taxpayers in limited situations if they prepared and signed the tax return.

Once a taxpayer has selected a tax preparer, they should stay vigilant

Good preparers ask to see records and receipts. They’ll also ask questions to determine the client’s total income, deductions, tax credits and other items. Taxpayers should avoid a tax return preparer who e-files using pay stubs instead of W-2s. This is against IRS rules.
Taxpayers should review the tax return before signing it and ask questions if something is unclear or inaccurate.
Any refund should go directly to the taxpayer – not into the preparer’s bank account. Taxpayers should check the routing and bank account number on the completed return and make sure they’re accurate.
Taxpayers are responsible for filing a complete and correct tax return. They should never sign a blank or incomplete return and never hire a tax return preparer who asks them to do so.

Tax Tip 2023-109

Starting a new business can seem overwhelming for new entrepreneurs or even seasoned professionals. The IRS has resources to help new business owners understand the tax responsibilities of running a business.

Here are a few things any entrepreneur needs to do when starting their business.

Choose a business structure

The form of business determines which income tax return a business needs to file. The most common business structures are:

Sole proprietorship: An unincorporated business owned by an individual. There’s no distinction between the taxpayer and their business.
Partnership: An unincorporated business with ownership shared between two or more members.
Corporation: Also known as a C corporation. It’s a separate entity owned by shareholders.
S Corporation: A corporation that elects to pass corporate income, losses, deductions and credits through to the shareholders.
Limited Liability Company: A business structure allowed by state statute. If a single-member LLC does not elect to be treated as a corporation, the LLC is a “disregarded entity,” and the LLC’s activities should be reflected on its owner’s federal tax return as a sole proprietorship.

Choose a tax year
A tax year is an annual accounting period for keeping records and reporting income and expenses. A new business owner must choose either:

Calendar year: 12 consecutive months beginning January 1 and ending December 31.
Fiscal year: 12 consecutive months ending on the last day of any month except December.

If an individual files their first tax return using the calendar tax year and later begins business as a sole proprietor, becomes a partner in a partnership, or becomes a shareholder in an S corporation, they must continue to use a calendar tax year unless they get IRS approval to change it or meet one of the except

ions listed in the instructions to Form 1128, Application To Adopt, Change, or Retain a Tax Year.

Apply for an Employer Identification Number
An EIN is also called a Federal Tax Identification Number. It’s used to identify a business. Most businesses need one of these numbers, but some don’t. For example, a sole proprietor without employees who doesn’t file any excise or pension plan tax returns doesn’t need an EIN. The EIN checklist on IRS.gov can help business owners know if they need an EIN.

It’s important for a business with an EIN to keep the business mailing address, location and responsible party up to date. EIN holders should report changes in the responsible party to the IRS within 60 days.

Pay business taxes
The form of business determines what taxes should be paid and how to pay them.

Issue Number: Tax Tip 2023-108

Have questions???? Give us a call!

Natural disasters can strike without warning. Sometimes even the most diligent taxpayers are left without the important personal and financial records they need. People may need documentation for tax purposes, federal or state assistance programs or insurance claims.

Here are some steps that can help them reconstruct their important records.

Tax records

Taxpayers can get free federal tax return transcripts immediately using Get Transcript on IRS.gov.
They can also order transcripts by calling 800-908-9946 and following the prompts.
People who use a tax professional to file taxes should keep their contact information in a safe place.

Financial statements
Financial statements from credit card companies or banks are usually available online. People can also contact their bank to get paper copies of statements.

Property records

Homeowners may be able to contact the title company, escrow company or bank that handled the purchase of their home or other property to get documents related to their home.
Many property records are available online from tax assessors or other government agencies. Check local government websites for information.
Taxpayers who made home improvements can get in touch with the contractors who did the work and ask for statements to verify the work and cost. They can also get written descriptions from friends and relatives who saw the house before and after any improvements.
For inherited property, taxpayers can check court records for probate values. If a trust or estate existed, taxpayers can contact the attorney who handled the trust.
Insurance companies often keep records related to property maintained in a home. Taxpayers should keep their property insurance contacts handy.
Car owners can research the current fair-market value of most vehicles via resources available online and at most libraries. These include Kelley’s Blue Book, the National Automobile Dealers Association and Edmunds.

Using a Durable Power of Attorney rather than a Form 2848 in Tax Matters

Normally, a taxpayer must sign an IRS Form 2848, Power of Attorney and Declaration of Representative, to allow someone to represent them in a tax matter with the IRS — the representative must also have certain professional credentials. In some cases, however, a taxpayer is unable to complete and sign a Form 2848 because they become physically or mentally incompetent. What can you do to prepare for the day when you or someone you know may be in that situation? Plan ahead! In many cases, you may be able to use a “durable power of attorney” — often used for estate planning or other purposes — to overcome a legally incompetent taxpayer’s inability to complete a Form 2848.

Durable powers of attorney created for estate planning or other purposes give your designated agent or “attorney-in-fact” authority to make healthcare and financial decisions. The word “durable” means the power of attorney has staying power and will remain in effect if you later become incompetent. Needless to say, the durable power of attorney must be created before you become physically or mentally incompetent. For a durable power of attorney to work for federal tax matters, however, specific information required under the Internal Revenue Code and regulations needs to be included. The requirements related to use of durable power of attorneys in federal tax matters are stated in Reg. 601.503(b), which can be found in Publication 216, click below.

If care isn’t taken in preparing the durable power of attorney, it may not be sufficient to authorize your agent to act for you in tax matters for the IRS. In that case, your agent may also have to be designated a guardian or similar fiduciary, which is typically done by a state court and can be a lengthy process. Once your agent is designated a guardian or similar fiduciary, they would then have to file an additional form (Form 56) with the IRS that informs the IRS of the fiduciary relationship.

For more information about using durable powers of attorney as a substitute Form 2848 and about Form 56, give me a call.

Taxpayers who make home energy improvements in 2023 may be able to take advantage of tax credits for a portion of the qualifying expenses. The credit amounts were increased, and types of qualifying expenses were expanded, by the Inflation Reduction Act of 2022.

Who can claim energy credits. There are two energy-related credits available to taxpayers making qualifying improvements to their home: the Energy Efficient Home Improvement Credit or the Residential Energy Clean Property Credit. A taxpayer may claim these credits in the year the taxpayer makes a qualifying improvement to their primary home. Usually, a taxpayer’s primary home is where the taxpayer spends most of their time. In addition, to qualify for an EEHIC, the improved home must an existing home located in the United States.

Note. Generally, a taxpayer may claim these credits only for qualified improvements to their primary residence; however, a taxpayer may be able to claim energy-related credits for certain improvements to a second home if the taxpayer does not use the second home as a rental property. In addition, renters who purchase energy efficient appliances and other products for their rental home may be able to claim these tax credits.

Taxpayers can claim an Energy Efficient Home Improvement Credit for many home improvements that meet certain energy efficiency requirements. This includes:

Exterior doors,
Windows, skylights,
Insulation materials,
Central air conditioners,
Heat pumps and heat pump water heaters,
Biomass stoves and boilers, and
Home energy audits

Generally, the maximum credit a taxpayer may claim each year is:

$1,200 for energy property costs and certain energy efficient home improvements, with limits on doors ($250 per door and $500 total), windows ($600) and home energy audits ($150)
$2,000 per year for qualified heat pumps, biomass stoves or biomass boilers.

The actual amount of the taxpayer’s credit is a percentage of the total cost of the improvements in the year of installation. In certain circumstances, the credit may be capped.

The EEHIC has no lifetime dollar limit. A taxpayer can claim the maximum annual credit every year they make eligible improvements until 2033.

The EEHIC is not refundable and cannot be carried over to another tax year. So, it might make sense to take a large project, like replacing windows, and do some of it over several years.

Taxpayers who invest in renewable energy for their primary home may be able to claim the Residential Clean Energy Credit. Qualified RCE credit improvements include:

Solar, wind and geothermal power generation,
Solar water heaters,
Fuel cells, and
Battery storage

Generally, the credit amount is a percentage of the total cost of the improvement in the year of installation. For tax years 2022-2032 that percentage is 30%. Generally, there is no annual maximum or lifetime limit.

The Residential Clean Energy Credit can be claimed for qualified improvements to a taxpayer’s new or existing home located in the United States.

An informed taxpayer and their tax professional can use these benefits to assist in paying the lowest legal amount of tax.

If it sounds too good to be true, it probably is.

The IRS has sounded the alarm repeatedly regarding a scam involving the Employee Retention Credit (ERC). Third parties have been aggressively promoting that businesses may be eligible for the ERC when they are not.

The ERC is a refundable tax credit that was introduced during the COVID-19 pandemic to provide an incentive to employers to keep employees on the payroll during a government shutdown or significant decline in gross receipts. The ERC was available to eligible employers for qualified wages paid after March 12, 2020, and before October 1, 2021 (with an exception for recovery start-up businesses through December 31, 2021).

The eligibility requirements, applicable time periods, and dollar limitations changed several times due to the passage of various federal legislation thereby claiming the ERC is far more complex than these ERC schemes make out.

Perhaps you have heard advertisements, phone calls or text messages claiming your business is eligible for the ERC and claim the application process is “easy.” These third parties will then charge large upfront fees or charge a fee based on a percentage of the refund amount the ERC generated. However, these ERC scams lie about eligibility requirements and your business will not only need to return the refund and amend employment tax returns but may be subject to penalties and interest.

There is no statute of limitations on IRS review of ERC claim.

If you would like to discuss the ERC, please reach out and we can work together to determine if you truly qualify for the credit. If you have claimed the ERC through a third party, please contact us so that we can help you resolve any possible underpayment or erroneous refund that occurred.

As always, you and your business are in our best interest.

The base Medicare Part B monthly premium for 2022 increases to $170.10/month (from $148.50/month for 2021).

The higher premiums some taxpayers have to pay for 2022 vary depending on the taxpayers’ modified AGI (MAGI) as shown on their 2020 income tax returns. The various MAGI levels increased a small amount with the exception of the maximum MAGI levels which stayed the same (except for MFS where the maximum MAGI level actually went down). The exact costs and modified AGI levels can be found at medicare.gov by clicking on the “Your Medicare Costs” tab and then on “Part B Costs”. The top of the page shows the premiums for 2021 and the bottom of the page shows the premiums for 2022.

The highest Medicare Part B premium for 2022 is $578.30/month (up from $504.90/month for 2021) and applies to:

– Individuals with modified AGI of $500,000 or more.

– Married Filing Jointly taxpayers with modified AGI of $750,000 or more.

– Married Filing Separately taxpayers with modified AGI of $409,000 or more ($412,000 for 2021).

The Infrastructure Investment and Jobs Act of 2021 (IIJA) was signed into law on Nov. 15, 2021. The IIJA includes IRS information reporting requirements that will require cryptocurrency exchanges to perform intermediary Form 1099 reporting for cryptocurrency transactions. Generally, these rules will apply to digital asset transactions starting in 2023.

As you are aware, if you have a stock brokerage account, then whenever you sell stock or other securities you receive a Form 1099-B at the end of the year. Your broker uses that form to report details of transactions such as sale proceeds, relevant dates, your tax basis for the sale, and the character of gains or losses. Furthermore, if you transfer stock from one broker to another broker, then the old broker is required to furnish a statement with relevant information, such as tax basis, to the new broker.

The IIJA expands the definition of brokers who must furnish Forms 1099-B to include businesses that are responsible for regularly providing any service accomplishing transfers of digital assets on behalf of another person (“Crypto Exchanges”). Any platform on which you can buy and sell cryptocurrency will be required to report digital asset transactions to you and the IRS at the end of each year.

Occasionally you may have a transfer transaction that is not a sale or exchange. For example, if you transfer cryptocurrency from your wallet at one Crypto Exchange to your wallet at another Crypto Exchange, the transaction is not a sale or exchange. For that type of transfer, as with stock, the old Crypto Exchange will be required to furnish relevant digital asset information to the new Crypto Exchange. Additionally, if the transfer is to an account maintained by a party that is not a Crypto Exchange (or broker), the IIJA requires the old Crypto Exchange to file a return with the IRS. It is anticipated that such return will include generally the same information that is furnished in a broker-to-broker transfer.

For the reporting requirements, a “digital asset” is any digital representation of value which is recorded on a cryptographically secured distributed ledger or any similar technology. Furthermore, the IRS can modify this definition. As it stands, the definition will capture most cryptocurrencies as well as potentially include some non-fungible tokens (NFTs) that are using blockchain technology for one-of-a-kind assets like digital artwork.

You may be aware that when a business receives $10,000 or more in cash in a transaction, that business is required to report the transaction, including the identity of the person from whom the cash was received, to the IRS on Form 8300. The IIJA will require businesses to treat digital assets like cash for purposes of this reporting requirement.

These digital asset reporting rules will apply to information reporting that is due after December 31, 2023. For Form 1099-B reporting, this means that applicable transactions occurring after January 1, 2023 will be reported. Whether the IRS will refine the Form 1099-B for digital asset nuances, or come up with an entirely new form, is yet to be seen. Form 8300 reporting of cash transactions will presumably follow the same effective dates.

If you use a Crypto Exchange, and it has not already collected a Form W-9 from you (seeking your taxpayer identification number), expect it to do so. The transactions subject to the reporting will include not only selling cryptocurrencies for fiat currencies (like U.S. dollars), but also exchanging cryptocurrencies for other cryptocurrencies. A reporting intermediary does not always have perfect information, especially when it comes to an entirely new type of reporting. Thus, the first information reporting cycle for digital assets may be a bit unsettling.

I am here to help you and can provide solutions for any challenges that may develop.

If you have questions or concerns about the digital asset reporting rules, please do not hesitate to contact me.

With the year-end approaching, it is time to start thinking about strategies that may help lower your tax bill for not only 2021 but 2022 as well.

Planning is more challenging than usual this year due to the uncertainty surrounding pending legislation that could, among other things, increase top rates on both ordinary income and capital gain starting in 2022.

Whether or not tax increases become effective next year, the standard year-end approach of deferring income and accelerating deductions to minimize taxes will continue to produce the best results for all but the highest income taxpayers, as will the bunching of deductible expenses into this year or next to avoid restrictions and maximize deductions.

If proposed tax increases do pass, however, the highest income taxpayers may find that the opposite strategies produce better results. Pulling income into 2021 to be taxed at currently lower rates, and deferring deductible expenses until 2022, when they can be taken to offset what would be higher-taxed income. This will require careful evaluation of all relevant factors.

Our firm has compiled a list of actions based on current tax rules that may help you save tax dollars if you act before year-end. Not all of them will apply to you, but you, or a family member, may benefit from many of them. We can narrow down specific actions when we meet to review your particular tax situation.

Please review the following list and contact us at your earliest convenience so that we can advise you on which tax-saving moves might be beneficial:

Higher-income individuals must be wary of the 3.8% surtax on certain unearned income. The surtax is 3.8% of the lesser of: (1) net investment income (NII), or (2) the excess of MAGI over a threshold amount, $250,000 for joint filers or surviving spouses, $125,000 for a married individual filing a separate return, and $200,000 in any other case. • As year-end nears, the approach taken to minimize or eliminate the 3.8% surtax will depend on the taxpayer’s estimated MAGI and NII for the year. Some taxpayers should consider ways to minimize additional NII for the balance of the year, others should try to reduce MAGI other than NII, and some individuals will need to consider ways to minimize both NII and other types of MAGI. An important exception is that NII does not include distributions from IRAs or most other retirement plans.
Pending legislative changes to the 3.8% net investment income tax NIIT proposed to be effective after this tax year would subject high income, phased-in starting at $500,000 on a joint return; $400,000 for most others, S shareholders, limited partners, and LLC members to NIIT on their pass-through income and gain that is not subject to payroll tax. Accelerating some of this type of income into 2021 could help avoid NIIT on it under the potential 2022 rules, but would also increase 2021 MAGI, potentially exposing other 2021 investment income to the tax.
The 0.9% additional Medicare tax also may require higher-income earners to take year-end action. It applies to individuals whose employment wages and self-employment income total more than an amount equal to the NIIT thresholds, above. Employers must withhold the additional Medicare tax from wages in excess of $200,000 regardless of filing status or other income. Self-employed persons must take it into account in figuring estimated tax. There could be situations where an employee may need to have more withheld toward the end of the year to cover the tax. This would be the case, for example, if an employee earns less than $200,000 from multiple employers but more than that amount in total. Such an employee would owe the additional Medicare tax, but nothing would have been withheld by any employer.
Long-term capital gain from sales of assets held for over one year is taxed at 0%, 15% or 20%, depending on the taxpayer’s taxable income. If you hold long-term appreciated-in-value assets, consider selling enough of them to generate long-term capital gains that can be sheltered by the 0% rate. The 0% rate generally applies to net long-term capital gain to the extent that, when added to regular taxable income, it is not more than the maximum zero rate amount, $80,800 for a married couple; estimated to be $83,350 in 2022. An example: If $5,000 of long-term capital gains you took earlier this year qualifies for the zero rate then try not to sell assets yielding a capital loss before year-end, because the first $5,000 of those losses will offset $5,000 of capital gain that is already tax-free.
Postpone income until 2022 and accelerate deductions into 2021 if doing so will enable you to claim larger deductions, credits, and other tax breaks for 2021 that are phased out over varying levels of AGI. These include deductible IRA contributions, child tax credits, higher education tax credits, and deductions for student loan interest. Postponing income also is desirable for taxpayers who anticipate being in a lower tax bracket next year due to changed financial circumstances. In some cases, it may benefit some taxpayers to actually accelerate income into 2021. An example: A person who will have a more favorable filing status this year than next such as head of household versus individual filing status, or who expects to be in a higher tax bracket next year.
If you believe a Roth IRA is better for you than a traditional IRA, consider converting traditional-IRA money invested in stocks and mutual funds that have devalued into a Roth IRA in 2021 if eligible to do so. Keep in mind that the conversion will increase your income for 2021, possibly reducing tax breaks subject to phaseout at higher AGI levels. This may be desirable, however, for those potentially subject to higher tax rates under pending legislation.
It may be advantageous to try to arrange with your employer to defer, until early 2022, a bonus that may be coming your way. This might cut as well as defer your tax. Again, considerations may be different for the highest income individuals.
Many taxpayers will not want to itemize because of the high basic standard deduction amounts that apply for 2021,$25,100 for joint filers, $12,550 for singles and for marrieds filing separately, $18,800 for heads of household, and because many itemized deductions have been reduced or eliminated, including the $10,000 limit on state and local taxes; miscellaneous itemized deductions; and non-disaster related personal casualty losses. You can still itemize medical expenses that exceed 7.5% of your AGI, state and local taxes up to $10,000, your charitable contributions, plus mortgage interest deductions on a restricted amount of debt, but these deductions will not save taxes unless they total more than your standard deduction. In addition to the standard deduction, you can claim a $300 deduction , $600 on a joint return, for cash charitable contributions.

Some taxpayers may be able to work around these deduction restrictions by applying a bunching strategy to pull or push discretionary medical expenses and charitable contributions into the year where they will do some tax good. An example: a taxpayer who will be able to itemize deductions this year but not next will benefit by making two years’ worth of charitable contributions this year. The COVID-related increase for 2021 in the income-based charitable deduction limit for cash contributions from 60% to 100% of MAGI assists in this bunching strategy.

Consider using a credit card to pay deductible expenses before the end of the year. Doing so will increase your 2021 deductions even if you do not pay your credit card bill until after the end of the year.
If you expect to owe state and local income taxes when you file your return next year and you will be itemizing in 2021, consider asking your employer to increase withholding of state and local taxes or make estimated tax payments of state and local taxes before year-end to pull the deduction of those taxes into 2021. But this strategy is not good to the extent it causes your 2021 state and local tax payments to exceed $10,000.
Required minimum distributions RMDs from an IRA or 401(k) plan or other employer-sponsored retirement plan have not been waived for 2021, as they were for 2020. If you were 72 or older in 2020 you must take an RMD during 2021. Those who turn 72 this year have until April 1 of 2022 to take their first RMD but may want to take it by the end of 2021 to avoid having to double up on RMDs next year.
If you are age 70½ or older by the end of 2021, and especially if you are unable to itemize your deductions, consider making 2021 charitable donations via qualified charitable distributions from your traditional IRAs. These distributions are made directly to charities from your IRAs, and the amount of the contribution is neither included in your gross income nor deductible on Schedule A, Form 1040. However, if you are still entitled to claim the entire standard deduction. The qualified charitable distribution amount is reduced by any deductible contributions to an IRA made for any year in which you were age 70½ or older, unless it reduced a previous qualified charitable distribution exclusion.
Take an eligible rollover distribution from a qualified retirement plan before the end of 2021 if you are facing a penalty for underpayment of estimated tax and increasing your wage withholding won’t sufficiently address the problem. Income tax will be withheld from the distribution and will be applied toward the taxes owed for 2021. You can then timely roll over the gross amount of the distribution, the net amount you received plus the amount of withheld tax, to a traditional IRA. No part of the distribution will be includible in income for 2021, but the withheld tax will be applied pro rata over the full 2021 tax year to reduce previous underpayments of estimated tax.
Consider increasing the amount you set aside for next year in your employer’s FSA if you set aside too little for this year and anticipate similar medical costs next year.
If you become eligible in December of 2021 to make HSA contributions, you can make a full year’s worth of deductible HSA contributions for 2021.
Make gifts sheltered by the annual gift tax exclusion before the end of the year if doing so may save gift and estate taxes. The exclusion applies to gifts of up to $15,000 made in 2021 to each of an unlimited number of individuals. You cannot carry over unused exclusions to another year. These transfers may save family income taxes where income-earning property is given to family members in lower income tax brackets who are not subject to the kiddie tax.
If you were in federally declared disaster area, and you suffered uninsured or unreimbursed disaster-related losses, keep in mind you can choose to claim them either on the return for the year the loss occurred or on the return for the prior year, generating a quicker refund. If you were in a federally declared disaster area, you may want to settle an insurance or damage claim in 2021 to maximize your casualty loss deduction this year.

These are just some of the year-end steps that can be taken to save taxes.

If you received an Economic Impact Payment in 2021 or received Advanced Child Tax Credit Payments, these amounts will be required to be reconciled on your 2021 Federal Income Tax Return.

With holidays rapidly approaching, we wish each of you safe travels and wonderful times with friends and family.

We are here to serve you and look forward to your call.