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The Social Security wage base is expected to be $146,700 for 2022

This wage base is up $3,900 from the 2021 cap. This is $1,200 higher than the president’s budget forecast, released earlier this year. The final number, based on national average-wage-index growth, comes in mid-October.

 

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How to repay deferred taxes for self-employeds and employers

The CARES Act enacted last year allowed employers to defer payment of their 6.2% share of Social Security tax, otherwise required to be made from Mar 27, 2020, through Dec 31, 2020. Self-employed individuals could defer payment of a portion of their SECA tax owed for the same period.

Half of the deferred amount is due Dec 31, the other 50% on Dec 31, 2022.

You can make payments through the Electronic Federal Tax Payment System (EFTPS) or by check or credit card. Don’t send these payments in with other tax remittances.

  • If using EFTPS, there will be an option for employers to select deferral payments and for self-employeds to choose deferred Social Security tax.
  • If paying by check, be sure to make a notation on the check so that the payments are properly applied to your deferred payroll tax balance or to your deferred SECA tax balance.

Use this link to the IRS website for more information or to make a payment.

 

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Looking ahead to 2022: The annual ceilings on maximum contributions to HSAs will go up in 2022

Maximum allowable contributions to your Health Savings Account will go up to $3,650 for account owners with self-only coverage and to $7,300 for those with family coverage. People born before 1968 can put an extra $1,000 next year.  Read full post...


Advance child tax credit payments

From July 15 through December 2021, Treasury and the IRS will advance one half of the estimated 2021 child tax credit in monthly payments to eligible taxpayers.  Read full post...


Expanded Child Tax Credit for 2021. Advance Payments Begin in July.

The American Rescue Plan (ARP) made several notable but temporary changes to the child tax credit, including:
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Changes to the R&D tax benefit beginning in 2022

  • Starting in 2022, companies must amortize their R&D costs over five years. Currently, R&D expenses can be deducted in the year incurred or paid, based on your accounting method.
  • For research conducted outside of the US, the amortization period will be 15 years.
  • Business groups are urging Congress and the White House to delay this change.
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100% Deduction for Restaurant Meals in 2021 and 2022

Recent tax law changes provide temporary relief from the 50% haircut that normally applies to the business meal deductions. The taxpayer or an employee must be at the meal. The easing applies only to:  Read full post...


Is your 72nd Birthday this year?

People who turn 72 in 2021 can postpone taking their first Required Minimum Distribution (RMD) from IRA accounts until April 1, 2022. Read full post...


What is in Biden's initial tax changes proposal?

  • The top individual federal income tax rate would rise from 37% to the pre-Trump rate of 39.6%.
  • The corporate rate would rise from 21% to 28%; a 15% alternative minimum tax would apply to corporate book income of $100 million and higher.
  • Individuals earning $400,000 or more would pay additional payroll taxes.
  • The maximum Child and Dependent Tax Credit would rise from $3,000 to $8,000 ($16,000 for more than one dependent).
  • Tax relief would be offered for student debt forgiveness and the first-time homebuyer’s credit would be restored.
  • The estate tax exemption would drop by about 50%.
  • Stepped-up basis provisions for inherited assets would be eliminated.
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Unemployment benefits are non-taxable up to $10,200.

  • American Rescue Plan excluded up to $10,200 unemployment income, $20,400 if filing jointly and both had at least that much in unemployment income. IRS will send a refund if you have already filed and included that in your taxable income. 
  • Only available if your modified adjusted gross income is less than $150,000.
  • IRS will adjust returns and issue refunds if you have already filed.
  • Colorado does not allow this income exclusion!
    • The excluded amount must be added back to your CO taxable income if you deducted it for federal taxable income.
  •  Read full post...


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