Taxes

The Inflation Reduction Act: what’s in it for you?

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inflation reduction act

You may have heard that the Inflation Reduction Act (IRA) was signed into law recently. While experts have varying opinions about whether it will reduce inflation in the near future, it contains, extends and modifies many climate and energy-related tax credits that may be of interest to individuals.

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Home sweet home: Do you qualify for office deductions?

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home office deduction

If you’re a business owner working from home or an entrepreneur with a home-based side gig, you may qualify for valuable home office deductions.

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An “innocent spouse” may be able to escape tax liability

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innocent spouse tax relief

When a married couple files a joint tax return, each spouse is “jointly and severally” liable for the full amount of tax on the couple’s combined income. Therefore, the IRS can come after either spouse to collect the entire tax — not just the part that’s attributed to one spouse or the other. This includes any tax deficiency that the IRS assesses after an audit, as well as any penalties and interest. (However, the civil fraud penalty can be imposed only on spouses who’ve actually committed fraud.)

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Estimated tax payments: Who owes them and when is the next one due?

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estimated tax

If you don’t have enough federal tax withheld from your paychecks and other payments, you may have to make estimated tax payments. This is the case if you receive interest, dividends, self-employment income, capital gains or other income. Here are the applicable rules for paying estimated tax without triggering the penalty for underpayment.

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Is your withholding adequate? Here’s how to check

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paycheck withholding

When you filed your federal tax return this year, were you surprised to find you owed money? You might want to change your withholding so that this doesn’t happen again next year. You might even want to adjust your withholding if you got a big refund. Receiving a tax refund essentially means you’re giving the government an interest-free loan.

Adjust if necessary

Taxpayers should periodically review their tax situations and adjust withholding, if appropriate.

The IRS has a withholding calculator to assist you in conducting a paycheck checkup. The calculator reflects tax law changes in areas such as available itemized deductions, the child credit, the dependent credit and the repeal of dependent exemptions. You can access the IRS calculator here.

Life changes

There are some situations when you should check your withholding. In addition to tax law changes, the IRS recommends that you perform a checkup if you:

  • Adjusted your withholding last year, especially in the middle or later part of the year,
  • Owed additional tax when you filed your 2021 return,
  • Received a refund that was smaller or larger than expected,
  • Got married or divorced,
  • Had a child or adopted one,
  • Purchased a home, or
  • Had changes in income.

 
You can modify your withholding at any time during the year, or even multiple times within a year. To do so, you simply submit a new Form W-4 to your employer. Changes typically go into effect several weeks after a new Form W-4 is submitted. (For estimated tax payments, you can make adjustments each time quarterly estimated payments are due. The next payments for 2022 are due on September 15, 2022, and January 16, 2023.)

Plan ahead now

There’s still time to remedy any shortfalls to minimize taxes due for 2022, as well as any penalties and interest. Contact us if you have any questions or need assistance. We can help you determine if you need to adjust your withholding.

How to avoid the early withdrawal tax penalty on IRA distributions

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IRA distribution

When you take withdrawals from your traditional IRA, you probably know that they’re taxable. But there may be a penalty tax on early withdrawals depending on how old you are when you take them and what you do with the money.

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The kiddie tax: Does it affect your family?

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kiddie tax

Many people wonder how they can save taxes by transferring assets into their children’s names. This tax strategy is called income shifting. It seeks to take income out of your higher tax bracket and place it in the lower tax brackets of your children.

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Interested in an EV? How to qualify for a powerful tax credit

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EV tax credit

Sales and registrations of electric vehicles (EVs) have increased dramatically in the U.S. in 2022, according to several sources. However, while they’re still a small percentage of the cars on the road today, they’re increasing in popularity all the time.

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How disability income benefits are taxed

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disability income tax

If you’ve recently begun receiving disability income, you may wonder how it’s taxed. The answer is: It depends.

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Vehicle expenses: Can individual taxpayers deduct them?

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vehicle expenses

It’s not just businesses that can deduct vehicle-related expenses on their tax returns. Individuals also can deduct them in certain circumstances. Unfortunately, under current law, you may not be able to deduct as much as you could years ago.

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