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IRS Announces Adjustments to Key Retirement Plan Limits

2021 – 11/24 In Notice 2021-61, the IRS recently announced 2022 cost-of-living adjustments to dollar limits and thresholds for qualified retirement plans. Here are some highlights: Elective deferrals. The annual limit on elective deferrals (employee contributions) will increase from $19,500 to $20,500 for 401(k), 403(b) and 457 plans, as well as for Salary Reduction Simplified Employee…

Amended Tax Return Processing

2021 – 11/23 The National Taxpayer Advocate (NTA) is reporting that as of late October, the IRS had a backlog of more than 2.7 million unprocessed amended tax returns. The IRS claims the processing time for these returns is about 20 weeks. The NTA, however, says that Taxpayer Advocate Service (TAS) cases indicate that it’s…

PPP Loan Foregiveness

2021 – 11/19 The IRS has issued guidance on the timing of tax-exempt income arising from forgiven PPP loans. Three Revenue Procedures advise that taxpayers may treat amounts as excluded from gross income in connection with PPP loan forgiveness: when eligible expenses are paid or incurred; when a PPP loan forgiveness application is filed; or…

4 red flags of an unreliable budget

2021 – 11/17 Every business should prepare an annual budget. Creating a comprehensive, realistic spending plan allows you to identify potential shortages of cash, possible constraints on your capacity to fulfill strategic objectives, and other threats. Whether you’ve already put together a 2022 budget or still need to get on that before year end, here…

Employee Retention Credit Terminated

2021 – 11/16 On Nov. 15, President Biden signed the Infrastructure Investment and Jobs Act. The $1.2 trillion law provides money for improvements in bridges, mass transit, rail, airports, ports and waterways. The bipartisan legislation also contains a provision that terminated the Employee Retention Credit (ERC) on Oct. 1, 2021. It was scheduled to end…

Gift & Estate Tax Exemption

2021- 11/11 The federal gift and estate tax exemption will be increasing to $12,060,000 for an individual dying in 2022 (from $11,700,000 in 2021). The Tax Cuts and Jobs Act doubled the exemption base amount from $5 million to $10 million, with the amount indexed for inflation. Be aware that the doubled amount will continue…

2022 Capital Gains Rate

2021 – 11/11 The IRS has issued the 2022 long-term capital gains rate bracket numbers. The maximum income required to qualify for the 0% bracket will be $41,675 for single taxpayers, $83,350 for married taxpayers filing jointly and $55,800 for heads of households. For the 15% bracket, the maximum income for 2022 will be $459,750…

Homeowners Assistance Fund

2021 – 11/09 Tax guidance is available for those who received federal mortgage payment assistance from the Homeowners Assistance Fund (HAF). The HAF, part of the 2021 American Rescue Plan Act, is intended to mitigate housing-related financial hardships caused by the pandemic. The program provides funds to entities to assist homeowners in danger of mortgage…

Many factors are involved when choosing a business entity

2021 – 11/08 Are you planning to launch a business or thinking about changing your business entity? If so, you need to determine which entity will work best for you — a C corporation or a pass-through entity such as a sole-proprietorship, partnership, limited liability company (LLC) or S corporation. There are many factors to…

Infrastructure Investment and Jobs Act

2021 – 11/08 On Nov. 5, the U.S. House of Representatives passed the Infrastructure Investment and Jobs Act, which includes a handful of tax provisions. President Biden is expected to sign the bill into law soon. It will end the Employee Retention Credit earlier than scheduled. The credit will now be applicable to wages paid…

Cost of Living Adjustment

2021 – 11/05 The IRS has announced the 2022 cost-of-living adjustment amounts for 401(k) plans and other retirement-plan-related limits. For 2022, individuals can contribute up to $20,500 to their 401(k) plans (as well as 403(b) and most 457 plans), up from $19,500 for 2021. The catch-up contribution limit for employees age 50 and over who…

Charitable Contribution Deduction

2021 – 11/04 As we approach the end of the year, be aware that taxpayers are allowed a special charitable contribution deduction for 2021 even if they don’t itemize. Ordinarily, people who claim the standard deduction on their tax returns can’t claim a deduction for their charitable donations. But a temporary law change permits them…

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