Tax Law Changes

The following are just a few of the tax law changes that have been announced. By no means should this be considered a comprehensive list.

Given the midterm elections being held next week, there will certainly be more changes in the near future. They may still be passing new tax laws in January of the next year.

But I wanted to share a few of the more relevant changes so that we can begin the process of tax planning for the 2022 filing season. Here we go.

Energy Efficient Home Improvement Credit

The current credit which is a lifetime credit of $500 is being replaced by a credit of up to $1,200 that can be claimed annually. It’s 30% of qualified energy efficient home improvements, residential property expenses, and home energy audits. Given the increase in the credit, you might want to put off those sorts of improvements until next year so that you can take advantage of increased credit on your 1040.

Clean Vehicle Credit

Beginning in 2023 a credit is available on the purchase of new electric vehicles of up to $7,500. The MSRP on the cars cant exceed $55K. To qualify, your Modified Adjusted Gross Income can’t be more than $300K on a MFJ or $150K for a single taxpayer.

A credit of up to $4,000 is also available on the purchase of a used electric vehicle. To qualify your income can’t exceed $150K on a MFJ return or $75K for a single taxpayer.

They’re going to be pushing these credits in order to sell vehicles, but it should be known that most taxpayers won’t be able to claim the credits given their restrictive qualifiers and nature.

Changes To Research & Development Credits

The IRS audited a bunch of companies that claimed this credit, and found a substantial number of abuses. As such, they’ve made the following changes to stop many of the problems that were found. Changes to the credit include the following.

– The research must be designed to acquire knowledge that’s technological in nature
– The research must be focused on creating or improving a business component
– The costs associated with the credit must exceed a base amount

If you don’t qualify, be smart enough not to push a bad position. This is one of the new IRS hot buttons.

Let me leave you with this.

We just finished the 2021 tax filing season, which means that it’s time to prepare for 2022. If you haven’t sent in your work for this year, please do so today.

If I don’t have current numbers, I can’t provide reasonable advice. We generally do our final year end tax planning sessions in December, once we’ve completed the November financial statements.

For those of you who aren’t current Accounting Solutions clients, please understand that tax planning is the process of legally reducing your payroll and income tax liabilities. If you don’t have someone currently doing this, you’re probably paying too much.

Please contact us today to arrange a complimentary tax planning session. I’ve only seen a few instances in the past 32 years where I couldn’t make a positive change.

We’re all going to get through this. Let’s get through it together.

Accounting Solutions Ltd. stands ready to complete our mission and purpose of protecting you, your family, and your business. Whether you need Employee Retention Credits, M&A Due Diligence, Payroll Services, or Accounting and Tax Work, you have but to ask. I’m here and I remain,

Sincerely yours,

Chris Amundson
President
Accounting Solutions Ltd.
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