New Tax Laws - Linkenheimer LLP CPAs & Advisors

Numerous Tax Limits Affecting Businesses Have Increased For 2022

Many tax limits that affect businesses are annually indexed for inflation, and a number of them have increased for 2022. Here’s a rundown of those that may be important to you and your business.

Social Security tax

The amount of an employee’s earnings that is subject to Social Security tax is capped for 2022 at $147,000 (up from $142,800 in 2021).

Deductions

Standard business mileage rate, per mile: 58.5 cents (up from 56 cents in 2021)
Section 179 expensing:
- Limit: $1.08 million (up from $1.05 million in 2021)
- Phaseout: $2.7 million (up from $2.62 million)
Income-based phase-out for certain limits on the Sec. 199A qualified business income deduction begins at:
- Married filing jointly: $340,100 (up from $329,800 in 2021)
- Single filers: $170,050 (up from $164,900)

Business meals

In 2022 and 2021, the deduction for eligible business-related food and beverage expenses provided by a restaurant is 100% (up from 50% in 2020).

Retirement plans

Employee contributions to 401(k) plans: $20,500 (up from $19,500 in 2021)
Catch-up contributions to 401(k) plans: $6,500 (unchanged)
Employee contributions to SIMPLEs: $14,000 (up from $13,500)
Catch-up contributions to SIMPLEs: $3,000 (unchanged)
Combined employer/employee contributions to defined contribution plans: $61,000 (up from $58,000)
Maximum compensation […]

By Linkenheimer LLP|2022-01-19T23:55:14+00:00January 19th, 2022|deduction, deductions, New Tax Laws, retirement, tax planning|0 Comments

How Will Revised Tax Limits Affect Your 2022 Taxes?

While Congress didn’t pass the Build Back Better Act in 2021, there are still tax changes that may affect your tax situation for this year. That’s because some tax figures are adjusted annually for inflation.

If you’re like most people, you’re probably more concerned about your 2021 tax bill right now than you are about your 2022 tax situation. That’s understandable because your 2021 individual tax return is generally due to be filed by April 18 (unless you file an extension).

However, it’s a good idea to acquaint yourself with tax amounts that may have changed for 2022. Below are some Q&As about tax amounts for this year.

I have a 401(k) plan through my job. How much can I contribute to it?

For 2022, you can contribute up to $20,500 (up from $19,500 in 2021) to a 401(k) or 403(b) plan. You can make an additional $6,500 catch-up contribution if you’re age 50 or older.

By Linkenheimer LLP|2022-01-13T21:59:48+00:00January 13th, 2022|New Tax Laws, tax implications, tax planning|0 Comments

Defer Tax with a Like-Kind Exchange

Do you want to sell commercial or investment real estate that has appreciated significantly? One way to defer a tax bill on the gain is with a Section 1031 “like-kind” exchange where you exchange the property rather than sell it. With real estate prices up in some markets (and higher resulting tax bills), the like-kind exchange strategy may be attractive.

A like-kind exchange is any exchange of real property held for investment or for productive use in your trade or business (relinquished property) for like-kind investment, trade or business real property (replacement property).

For these purposes, like-kind is broadly defined, and most real property is considered to be like-kind with other real property. However, neither the relinquished property nor the replacement property can be real property held primarily for sale.

Important change

Under the Tax Cuts and Jobs Act, tax-deferred Section 1031 treatment is no longer allowed for exchanges of personal property — such as equipment […]

By Linkenheimer LLP|2022-01-07T22:02:30+00:00January 7th, 2022|1031, investment, New Tax Laws, tcja|0 Comments

There’s a Deduction For Student Loan Interest … But Do You Qualify For It?

If you’re paying back college loans for yourself or your children, you may wonder if you can deduct the interest you pay on the loans. The answer is yes, subject to certain limits. The maximum amount of student loan interest you can deduct each year is $2,500. Unfortunately, the deduction is phased out if your adjusted gross income (AGI) exceeds certain levels, and as explained below, the levels aren’t very high.

The interest must be for a “qualified education loan,” which means a debt incurred to pay tuition, room and board, and related expenses to attend a post-high school educational institution, including certain vocational schools. Certain postgraduate programs also qualify. Therefore, an internship or residency program leading to a degree or certificate awarded by an institution of higher education, hospital or health care facility offering postgraduate training can qualify.

It doesn’t matter when the loan was taken out or whether interest payments made in earlier years on the loan were deductible or not.

By Linkenheimer LLP|2022-01-03T22:58:51+00:00January 3rd, 2022|deduction, deductions, New Tax Laws|0 Comments

California Tax Updates for 9/16

Update 1:

Moving out of California? The CA Franchise Tax Board (FTB) acknowledges that a variety of factors have led to many individuals and businesses leaving CA. If you do, be sure to update your address. It’s common, said the FTB, for taxpayers to move after filing a tax return. Without an updated address on file, taxpayers may be unreachable if the FTB needs more information to resolve an issue with a return or payment. Each year, says the FTB, thousands of refunds are returned to them because of a bad address, leaving issues unresolved. Failing to respond to a notice could bring additional penalties, fees and collection action. Contact your Linkenheimer CPA with questions.

Update 2:

Coming soon to California businesses, the Homeless Hiring Tax Credit. The CA Franchise Tax Board (FTB) has announced details of this newly enacted credit. It will be available to qualifying taxpayers who hire new employees deemed to be eligible homeless individuals. Employers may receive $2,500 to […]

By Linkenheimer LLP|2021-09-16T21:18:04+00:00September 16th, 2021|ca, CA tax, california, ftb, New Tax Laws|0 Comments