Time for Year-End Planning
Dear Clients and Friends:
Thank you for trusting us with your taxes. If you are new to us, we can only promise to treat your taxes and finances as our own. Our goal is to have our clients pay the least amount of taxes.
With the end of the year approaching, it is a good time to review your 2021 income tax situation and take steps to ensure that you are taking full advantage of the many tax planning strategies available.
Before we can get to specific suggestions, keep in mind effective tax planning requires considering both this year and next year, at a minimum. Without a multi-year outlook, you cannot be sure planning strategies intended to save taxes on your 2021 return will not backfire and cost additional money in the future.
Please contact us at (713) 644-1940 to schedule an appointment to develop a year-end tax plan for your unique circumstances. RP Jones CPA, P.C. provides each client with personal service and attention. We look forward to helping you plan for the upcoming tax season.
Ryan Jones, CPA
Estimados Clientes y Amigos:
Gracias por confiar en nosotros para trabajar en sus Impuestos. Si usted es nuestro cliente nuevo, le podemos prometer que trabajaremos en sus impuestos y estado financieros como si fueran nuestros. Nuestra mission es que nuestros clientes paguen la minima cantidad de impuestos.
Con el fin de año acercandose, hoy es el momento para revisar su situacion de impuestos, y tomar medidas para asegurarse de que esta aprovechando al maximo las muchas estragedias de planificacion fiscal disponibles.
Antes de que lleguemos a sugerencias especificas. Tenga en cuanta que la planificacion fiscal se requiere considerar tanto este año como el proximo año. Sin una perspectiva de varios años no se puede estar Seguro de que las estragedias de planificacion destinadas a ahorrar impuestos en su declaracion del 2021 no seran contraproducentes y costaran dinero adicional en el future.
Por favor comuniquese con nosotros al (713) 644-1940 y programe una cita con nosotros para desarrollar un plan de impuestos de fin de año para sus circuntancias unicas. RP Jones CPA P.C. se enfuerza por brindarle una tranbquilidad. Esperamos poder ayudarle a planificar la proxima temporada de impuestos.
Ryan Jones, CPA
If you received unemployment compensation in 2021, it will be taxable in 2021 at your regular tax rate. For example: if your regular tax rate is 20% and you received $20,000 then you will owe an additional $4,000 in taxes.
Economic Impact Payments (Stimulus):
If you received the Economic Impact Payment of $1,400 it is not taxable, but it does borrow against any future refund. If you did not receive the amount, please let us know so we can claim the amount on your 2021 return to increase your refund or decrease your amount due.
Child Tax Credits:
Child tax credit increased from $2000 per child to $3600 to children under 5 years and $3000 to children between 5-17. If you received any of the child tax credit amounts during 2021 ($300 for ages 5 and under or $250 for ages 5-17), these amounts will also reduce any refund you might have received once your tax return is filed.
Your employer/business can make payments against your student loan debt up to $5250 per year. Although the law allows for the employer to make the payment directly to the employee, we STRONGLY advise that your employer make the payment directly to the lender (NAVIENT, US Dept of Ed, Sallie Mae, etc…).
Don’t sell unless you really need the money. If Congress can pass the infrastructure bill, there will be heavy investment in electric vehicles in the US along with the required infrastructure to support it (fast charging stations on the highway and deductions for fast charging at home).
Real Estate Sales in 2021:
Hopefully, you made a big profit on the sale. We will need to figure out what the capital gain is and whether or not we can offset it with any business losses you might have.
Rental Renovations and Passive Losses:
If you had any renovations to your rentals AND title is in your name, you can still deduct up to $25,000 in rental losses. If you have built up passive losses over the years, you may want to look at your rentals and consider selling one. The passive losses can be used to offset any gains when you sell it.
HSA Contribution Limit:
HSA contribution limit increased from $3,550 to $3,600 self only and $7100 to $7200 for family.
Max out your 401(k)/IRA/QDRO/Roth/SEP if you can and consider back-door Roth conversions. If you are at least 72 you are now required to make a distribution from retirement because failing to do so will lead to a penalty.
Premium Tax Credit (Healthcare Credit):
In 2020, if you received health insurance from the marketplace (www.healthcare.gov) and received a discount, the IRS did not require you to pay back the amount. But in 2021, if you received the discount for health insurance you will need to give that money back. What do we mean by the discount? If you estimated your income low so you get a low monthly premium, you are receiving a discount. This discount will need to be paid back if your actual income is higher than what you originally told them.
There is no wash rule for Crypto sales. If you bought dogecoin or some other coin that crashed, you can sell the coin, realize the loss, and buy the coin back the same day. If you bought the squid coin… um…. you realize that in the movie, pretty much everyone dies right?
Home Office Deduction:
If you own a business (not a work at home employee), you can deduct up to 20% of utilities, mortgage interest, HOA fees, insurance, property tax and even repairs to your home.
Section 179 vs Straight Line:
We have begun advising clients to stop using Section 179 for depreciation. Although it allows you write off 100% of the cost of the asset, it ends up hurting you later. Having a such a large deduction does lower your tax bill, but then you have nothing to deduct in subsequent years and it makes it harder to get a loan because it looks like you don’t make any money.
Meals are 100% deductible for 2021 and 2022. Groceries don’t count as meals. Use the deduction within reason.