Hello everyone. I hope you're having a good week. Thought I'd spend some time
on taxes before the end of the year. I know there's not much time to go but I
thought it might be a good place to give you a little bit of information
now is the time to take that last look at your income taxes for 2021 which for
most people is due On April 15, 2022 and Congress I know is looking at the
tax code, there may be some change And just for some people, although most
people I don't think will be affected now. If you feel that 2022 might bring
lower taxes for you for example, than deferring income to the next year is
perhaps a good option. If you use the cash basis method of accounting and own
a business, you might be able to delay a bonus. For example, If the reverse is
too, you might take that number in 2022 or 2021. Right? It depends on where you
would have the best tax effect. You can do the same planning with your
deductions by choosing the payments in one year versus another. You have some
control over these. The key is to review two years at a time. One area to
review our deductible charitable contributions deductions for Channel
contributions is limited to a certain percentage of your adjusted gross
income. Your deduction also depends on the type of property you are giving and
the organization you are giving to for 2021. Even taxpayers that don't itemize,
can deduct $300 or $600 on a joint return for direct cash gifts. The
charity. The reason for funding those deductions is it might get you over the
standard deduction where you actually do get a benefit for doing charity.
Another place to do charitable contributions is with your required
minimum distributions. You don't get to pay taxes on it. Now, last year in 2020
you did not have to take your required minimum distributions. But you do this
year from traditional Iras and most employer sponsored retirement class.
This has to be done by the end of the year december 31st. There's a
substantial penalty if you don't take it to 50% of the amount you were
supposed to take. These rules also apply to inherited retirement accounts
As the penalties are steep. It's worth checking the status of your required
minimum distributions. It is also a good time to review your retirement
savings. This includes deductible contributions to traditional iras and
pre tax contributions to employer sponsored retirement plans. I've had
people in the last month of the year raised their contributions to 100% of
their pay so they could get to the maximum we're close to it. So take a
look at it. You also need to remember that the ira you don't have to do by
the end of the year. A deductible ira if you qualify, can be done up to april
15th of next year for this year. Another potential area to review is
your portfolio. That's taxable brokerage account, you may have some
capital gains and losses. You may want to offset Those games with the losses
so that you don't pay gains. If that works out in your favor, if you take
excess losses, you can deduct up to $3,000 against your ordinary income and
carry the rest forward for future years. If you feel capital gains rates will be
higher in the future. You might want to save the capital losses for later years
or take some games this year. Part of the requirement for mutual funds is the
distribution of any gains they have for the sale of stock and bonds during the
year to their shareholders. So if you have mutual funds in your taxable
account, you're going to want to check with the mutual fund company to
determine what they're expected distributions. Are they usually post
these in december time frame and november december. So we're about there
and that can be a good idea to take a look at to make sure your tax picture
will be under control. Now, the quick tax projection is another thing you can
do to be helpful if it seems like you're going to owe money, consider
increasing your withholdings for the last month or so of the year. You can
do this by submitting a form W4 to your employer, increasing your withholding
could make sense to help you avoid penalties. That withholding is
considered that evenly throughout the year, instead of on the day you paid it.