Tax Planning for Businesses and Individuals
The world of tax changes every year. The Tax Team at Corrigan Krause aims to keep you informed and up-to-date to help you file confidently in 2022.
Here are some changes and updates to the current tax landscape. This list is not exhaustive, and not all the information may pertain to your unique situation, but it’s a good place to start:
The Corrigan Krause Westlake office is now located across Crocker Road in the south end of the Crocker Park shopping center at the corner of Main Street and American Blvd.
Our new address is:
191 American Blvd, Suite #201
Westlake, OH 44145
Tax Planning for Businesses
- Employee Retention Tax Credit Ends
- Wages paid after September 30, 2021 are no longer eligible for the ERTC, ending the credit early. To read more about the ERC and how supply chain disruptions may qualify your business, click here.
- ERTC credit is taxable, unlike PPP loan forgiveness and EIDL grants
- Business meals are 100% tax deductible for 2021
- Business entertainment is not deductible at all
- Reduce pass-through income
- Establish a defined benefit plan if it makes sense for your business
- Purchase fixed assets or improve assets you already own
- Award year-end bonuses to staff
- Increase staff wages
- State and Local Tax Planning
- Confirm where your employees are earning their wages
- Allocate the appropriate funds to the correct cities
- Employer-sponsored Retirement Plan Minimum Funding Expanded
- Funding stabilization percentages included in the American Rescue Plan Act (ARPA) in March are now extended until 2034. This averaging interest rates over a longer period of time will reduce the rate used to determine minimum funding of the plans.
- Excise Tax Updates
- New or revived taxes on 42 potentially polluting chemicals, including 10 of the most common petrochemicals: methane, butane, benzene, toluene, xylene, ethylene, propylene, butadiene, butylene, and acetylene.
- Private Activity Bond Expansion
- Public activity bond utilization expanded for broadband and carbon capture projects.
- Simplified Employee Pension Plan Contributions
- Lesser of: 25% of compensation OR $58,000 ($232,000 salary for max benefit)
- Must be done for all eligible owners and employees
Corrigan Krause Uses a Proactive Approach to Help You Reach Your Business Goals
Going beyond what’s on your tax return, Corrigan Krause gets to the heart of your goals and what you want to achieve. From launch to transition, Corrigan Krause has extensive experience working with businesses at all stages. Our seasoned team offers a variety of business services and solutions tailored to your needs and your industry.
Tax Planning for Individuals
- Tax brackets are staying the same from 2020
- Unemployment compensation has no exclusion
- All unemployment income is taxable
- Required Minimum Distributions (RMDs) are back in effect
- Seniors were allowed to skip their RMDs in 2020 without penalty in 2020
- Now, anyone who is 72 years old by the end of the year is required to take their RMD for 2021
- Check eligibility for stimulus credit
- Some individuals may be eligible for a $1,400 stimulus credit ($2,800, if married and filing jointly) + $1,400 per dependent
- Child tax credit increased to $1,000 to $3,000 per child and $3,600 per child under age six
- These $1,000 increase phase out for filers earning $75,000 for single; $112,500 for head of household; $150,000 for married, filing jointly
- Previous phase out rules for original $2,000 credit still applies
- Temporary advance payments have been made totaling 50% of the credit
- Do you qualify for the child tax credit
- More people qualify
- Have you been receiving advanced payments toward the credit?
- Do you need help opting out of the advanced payments?
- Changes to the child tax credit: https://corrigankrause.com/child-tax-credit-what-you-need-to-know/
- Contribution dollar limits on retirement plans and IRAs stay the same in 2021
- Deduction phase outs for traditional IRAs start at higher levels in 2021
- AGIs from $105,000 to $125,000 for couples and $66,000 to $76,000 for single filers
- Earned Income Tax Credit for childless workers is expanded – changes just for 2021
- Minimum age lowered to 19 (except for certain full-time students)
- Eliminates the maximum age limit so older qualifying children can claim the 2021 tax year
- Eligibility rules expanded for former foster youth and homeless youth as well
- Earned Income Tax Credit for childless workers is expanded – permanent
- Workers who weren’t able to claim the credit because their children didn’t qualify can now claim the EITC
- Limit on a worker’s investment income increased from $3,650 to $10,000
- Standard mileage rate for business driving dropped from 57.5 cents to 56 cents per mile
- Mileage allowance for medical travel and military moves dropped from 17 cents to 16 cents a mile.
- Long-term care insurance premium deductions increased
- Taxpayers 71 years old and older can write off up to $5,640 per person
- Taxpayers 61 to 70 can deduct up to $4,520
- Taxpayers 51 to 60 can deduct up to $1,690
- Taxpayers 41 to 50 can deduct up to $850
- Taxpayers under the age of 40 can deduct up to $450
- Health Savings Account (HSA) contributions limit increased to $3,600, or $7,200 for married, filing jointly
- Contribution deadline is April 15, 2022
- Medical expense floor of 7.5% is now permanent
- Charitable Contributions with Standard Deduction increased from $300 to $600 for married, filing jointly
- Cryptocurrency Reporting Changes
- Cryptocurrency brokers, defined as anyone who transfers digital assets on behalf of another person, are now required to issue a form similar to a 1099 form disclosing who their customers are. While this definition of broker mainly includes the cryptocurrency exchanges, the definition is broad and more clarification may be needed.
- Additionally, any time a business or exchange receive over $10,000 in cryptocurrency, they must report the activity.
- Disaster Relief Deadlines Extended
- The modifications made to automatic disaster relief deadline extensions to federally declared disasters that go on for an extended period of time or continue to expand in scope
- Charitable Planning
- Donor Advised funds
- Immediate deduction when contributed & Tax Free Growth
- Potentially subject to income limits
- Long-term appreciated assets can give you a tax deduction at the full fair market value while avoiding the gain, up to 30% of your adjusted gross income.
- Qualified Charitable Distributions (QCD)
- Must be 70 ½ to make a QCD
- Maximum amount of $100,000
- Must be done by 12/31/21
- Can be more than your RMD
- Donor Advised funds
- Tax extenders for 2021
- Mortgage insurance premium deduction
- Health coverage tax credit for insurance premiums paid by certain Trade Adjustment Assistance recipients and people whose pension plans were taken over by the Pension Benefit Guaranty Corporation
- Nonbusiness energy property credit for certain energy-saving improvements to your home
- Fuel cell motor vehicle credit
- Alternative fuel vehicle refueling property credit
- Two-wheeled plug-in electric vehicle credit
- Exclusion for forgiven mortgage debt is renewed through 2025 – maximum amount excluded is now $750,000
- Residential energy efficiency property credit rate of 26% extended through 2022
- Self-employed tax updates
- Business meal deduction increased to 100% for 2021 and 2022
- Self-employment taxes can’t be deferred in 2021
- Tax cap on deductible business losses – $250,000 for single filers and $500,000 for joint filers – returns
Individual Tax Services at Corrigan Krause
Your individual tax liability can be complex – We’re here to make tax time less taxing. Our team is here to help you simplify your taxes. Both business and personal tax planning are important for your overall financial success. We bring a proactive approach to taxes and tax savings techniques, identify planning opportunities that minimize taxes and protect your wealth.
Estate Tax Planning
- 2021 Lifetime gift tax exemption of $11.7 million ($23.4 mm for married, filing jointly)
- Will end, barring no change in 2026, to the original $5 mm (adjusted for inflation)
- Current Annual Exclusion of $15,000 ($30,000 Married)
Corrigan Krause Can Help
The Tax team at Corrigan Krause can help you and your business navigate everything from the end of the ERTC to helping make sure you file for every credit that you’re eligible for. If you’re a current client of Corrigan Krause, reach out to your team any time to get started.