August 2022 Tax Update

With President Biden signing the Inflation Reduction Act into law and extended tax deadlines around the corner, here's a summary of some important tax information you need to know.

Tax Deadlines Approaching

If you haven't filed your 2021 taxes yet, there's still time! Below are the extended due dates you need to know about. Please keep in mind that it takes us about three weeks to complete your return, so try to get us your tax documents as soon as possible.

• September 15: Partnership & S Corporation

• September 30: Trust & Estate

• October 17: Individual & C Corporation

Biden Expected to Sign Inflation Reduction Act This Week

The Inflation Reduction Act has a number of important tax changes:

• Starting in 2023, electric vehicles will have to source a certain amount of their battery and other materials from the US to qualify for a $7,500 tax credit (or $4,000 for a used vehicle). There's also a cap on the price of the vehicle to qualify. The new requirements will make 70% of electric vehicle models ineligible for the credit. Taxpayers are not eligible for the credit if they have taxable income over $150,000 (or $300,000 for joint filers).

• Tax credit for 30% of the cost of installing solar panels on your house (up from 26% currently).

• 15% minimum tax for corporations making $1 billion or more in income.

• 1% tax on corporations who buy back their stock.

Sole Proprietors & 401(k) Plans

Solo 401(k) plans are a retirement account where the business owner is the only participant in the plan. They offer a number of tax benefits, but it's important to talk to your financial advisor before starting a plan.

As a business owner and participant in the plan, you can contribute up to $20,500 (or $27,000 if you're 50 or older) and an additional employer match so that total contributions can be up to 25% of compensation or $61,000 (whichever is less) to the plan and have that money grow tax-deferred until you withdraw it.

You can also set up a Roth 401(k), where you contribute after-tax savings to your account, but the account can grow tax-free and any qualified withdrawals are also not taxed.

Having Trouble Finding Tax Documents? Let us Help!

We offer an additional service as power of attorney with the IRS to help you track down the relevant tax information needed to file your taxes each year.

If you are having trouble finding the tax documents you need, please let us know. Now is the time to submit power of attorney forms so we can get all the documents you need in a timely manner.