This has obviously been anything but an ordinary year and it appears the Build Back Better Act will not be signed by December 31st. Any proposed legislation will most likely be effective beginning January 1, 2022. In 2021, Congress did pass the Infrastructure Investment and Jobs Act to spur the economy and help with our federal highways, highway safety programs, transit and other purposes. However, this bill had minimal income tax consequences.
We are so excited to introduce you to Steve, one of our newest team members! He is a Senior Manager in our Tax Services group making things happen in Cincinnati on the daily!
The IRS has announced that the amount individuals can contribute to their 401(k) plans in 2022 has increased to $20,500, up from $19,500 for 2021 and 2020. The IRS also issued technical guidance regarding all of the cost‑of‑living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2022.
We are so excited to introduce you to Rami, one of our newest team members! He is a Staff Accountant in our Tax Services group making things happen in Columbus on the daily!
Tax Rate Update
Ohio individuals will experience a tax rate decrease that is retroactive to January 1, 2021.
The Biden Administration’s American Families Plan and other tax proposals may complicate the tax landscape for high-income earners. Many of the proposals target taxpayers earning more than $400,000 per year.
This has obviously been anything but an ordinary year and tax guidance has been issued to provide some relief. In 2020, Congress passed the CARES Acts, in response to the pandemic, and many of these provisions will help mitigate the financial impact of the disease, which should be considered as part of your yearend planning to take advantage of them and the effects of the Secure Act to decrease 2020 income tax liabilities for individuals and businesses. Many of these provisions are quite complicated and probably require the expertise of our tax professionals, but there are steps which can be taken prior to yearend to minimize your tax liability.
IRS Notice 2020-75 (‘the Notice”) was issued on November 9, 2020 and announced that the Department of the Treasury and the Internal Revenue Service intend to issue Proposed Regulations to clarify that State and local income taxes imposed on and paid by a partnership or an S corporation on its income are allowed as a deduction by the partnership or S corporation in computing its non-separately stated taxable income or loss for the taxable year of payment. Furthermore, the Proposed Regulations will provide certainty to individual owners of partnerships and S corporations in calculating their state and local tax deduction payments.
The 2020 Q2 estimated tax payment date for businesses and individuals is extended from June 15th to July 15th under IRS Notice 2020-23. The relief applies to all taxpayers that have a filing or payment deadline falling on or after April 1, 2020 and before July 15, 2020, including individuals, trusts, estates, corporations and other noncorporate filers.