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TaxMama’s® TaxQuips Goodbye 2021

Posted on by TaxMama
27
Dec

 

It’s TaxQuips time from TaxMama.com® –
Today TaxMama® wants talk to you about some year-end tips and ideas to get ready for next year.

 

 

 

 

 

 

 

 

 

 

 

Dear Family,

This year is coming to a close remarkably fast. It seems it was just January one blink ago – and now, it’s nearly over.

This year has been filled with lots of small and major successes for my students, family and friends. Tinged with a great deal of sadness, illness, and death. The Yin/Yang of life.

We still have a few days to take some steps to minimize taxes this year. So let’s look at some of those ideas first. Then I will give you some ways to make next tax season easier.

Year-end Tips

  • Taxpayers who do not itemize can deduct up to $300 worth of cash donations per person ($600 on a married filing jointly return).
  • If you are using itemized deductions be sure to get receipts dated in 2021.
    • Make your charitable contributions before year-end.
    • Go through the house and closets to clear out anything you haven’t used for a year or more. If the clothing, appliances, furniture, pictures, etc., are in good condition – take pictures or video to prove it. Then donate them to your favorite charity.
    • If you want to make a really big donation, but don’t have time to make the arrangements, consider having your brokerage or financial institution open a donor-advised fund.  You can fund it before year-end and distribute the donations to your charities in 2022.
    • Pre-pay your 2022 installment of property taxes (unless you have already reached the $10,000 State and Local Tax (SALT) deduction limit.
      • Will the Build Back Better Act ever pass, raising the limit?
        Not in time. But when it does, those who pay much more than $10,000 in the first place will get the benefit of the higher deduction.
    • Everyone aged 72 and over must take their Required Minimum Distributions (RMDs) from their IRAs and retirement accounts. (In 2020, we didn’t have to do it – we do now.)
      • There is a 50% penalty (excise tax) for failing to draw the funds.
      • If you don’t really need to use that money, and don’t want to add it to your adjusted gross income for the year, consider sending the amount of your RMD directly to your favorite charity.
    • Divorced parents dealing with an aggressive ex who doesn’t support your children, but claims them anyway. Get an IP PIN for each child, so that only you can claim the child on an electronically-filed tax return. Do it as soon as the portal opens in January – gather all the information now – http://iTaxMama.com/IRS_IP_PIN
    • Business assets – buy things you are going to need for next year. But start to put them to use this year, or you won’t be able to get the deduction until next year.

Tips for the next filing season

The IRS finally published the mileage rates for 2022  https://www.irs.gov/newsroom/irs-issues-standard-mileage-rates-for-2022
When they update their website, you will find 2022 – 2011 here: https://www.irs.gov/tax-professionals/standard-mileage-rates

To survive all the information, transcript and taxpayer account-related needs during 2022, do this:

For Tax Pros – What’s in it for you? This will make it possible to quickly activate a Power of Attorney (Form 2848) or Information Authorization Request (Form 8821), instead of waiting weeks for the Central Authorization Filed (CAF) unit to record your authority.

For Taxpayers – This will give you access to your transcripts, payments and so much more without having to sit on hold with the IRS for hours.

Expect Letters from the IRS in January:

Tell your clients to save these letters – very important.

It’s going to be bumpy this coming tax season as we try to reconcile all the payments received – and that were not received.

And remember, you can find answers to all kinds of questions about taxes and business issues, and EA Education, free. Where? Where else? At http://iTaxMama.com/AskQuestion

To make comments please drop into the TaxQuips Forum.

TaxMama

Your personal TaxMama is alive and well, answering your questions, and dreaming up ways to help you enjoy dealing with taxes – and paying less.