Accounting firm shares important information for taxpayers closing out 2022
ALBANY, N.Y.– BST & Co. CPAs, LLP, one of the area’s leading accounting and management consulting firms, today announced a series of year-end tax tips designed to help individuals and small businesses prepare for filing season.
Dawn Doherty, a partner at BST & Co., shared the following tax considerations for Capital Region residents. Doherty is a certified public accountant and tax expert with more than 30 years of experience who began her career with the Internal Revenue Service.
1. Get a sense of where you stand
Many families will see smaller refunds when they file their 2022 taxes because pandemic-related tax provisions, such as the expanded child tax credit and the dependent care credit, have expired and these credits revert to pre-pandemic 2019 levels.
Although tax tables and the standard deduction have favorably changed with inflation, taxpayers may still not have enough tax withheld or otherwise paid in throughout the year to avoid a balance due at tax filing time. Check your latest paystub for taxable wages and withholdings. If underpaid, make an estimated tax payment on or before Jan. 15, 2023.
The IRS has a tax withholding estimator on their website that can help with a simple calculation, but it may not be useful for complex situations, pension income, or for nonresident alien status filers.
If using a tax preparer or accountant, get in touch with them to notify them of transactions during the year, or changes in your circumstances.
- If you’re in business and planning to purchase assets such as vehicles or equipment, consider purchasing and placing in service before the end of 2022
For tax year 2022, federal bonus depreciation of 100% of the cost is allowed for eligible tangible property used in a trade or business. That figure will be reduced to 80% in tax year 2023. The property must be both purchased and placed in service by year-end.
- If planning to make charitable contributions, bunch them into one tax year
For those with itemized deductions such as mortgage interest, charitable contributions and taxes (capped at $10,000) amounting to less than the standard deduction for 2022, you may consider bunching up charitable contributions you would otherwise make across a few tax years into one year to maximize the tax benefit. Unlike prior years, there is no $300 ($600 for married filing joint) adjustment to AGI for charitable contributions, regardless of whether itemizing or using the standard deduction.
- Contribute to your retirement account(s)
If you are covered by an employer plan and have not fully maximized your 401(k), depending on your employer’s set up and cycle time you may be able to make a last-minute change and increase your contribution before your last paycheck. For those with an IRA, self-employed plan or other qualified retirement plan, you still have time to contribute and have it count toward your 2022 taxes.
- Get organized and start gathering your records now
Whether receiving your tax documents electronically or in paper form, set up your folders now to collect the documents you’ll need to prepare your tax filing; it will make tax time much smoother. For example:
- Those who received a STAR check for property taxes will likely have the check stub to document the amount received.
- Place a copy of your last paystub for the year in the folder to compare to your W-2.
- Stash your stamped paid property tax bills in the folder as you receive them.
- If you used a Health Savings Account (HSA), it will be helpful to have your receipts for co-pays and medical expenses that were paid from or reimbursed from your HSA account in one place to validate the distributions.
- It is also prudent to have a copy of any qualified education costs in the tax folder; this will help with figuring any tax credits the taxpayers may be eligible for, as well as verifying distributions from a 529 plan.
- Many information documents, such as 1099s, W-2s, and 1098s are issued in January and early February. Save these important documents in your tax folder.
You want to ensure that your tax records are complete before filing. One item that’s new in 2022 is the 1099-K. This form is issued by third-party payment platforms such as MasterCard, Visa, PayPal, Venmo and Square for payments in excess of $600 for goods and services. These forms need to be sent out by payment settlement entities by Jan. 31, 2023.
For more information about BST & Co. CPAs, LLP, visit www.BSTco.com.
About BST & Co., LLP
BST & Co. CPAs, LLP is a multi-disciplinary accounting and business advisory firm headquartered in Albany serving the needs of closely held companies, family-owned businesses, not-for-profit and governmental entities, and high-net worth individuals. BST offers a broad portfolio of accounting and auditing, tax, consulting, outsourced accounting, talent strategy and marketing services; as well as valuations, forensic accounting and litigation support.