With year-end approaching, the following ideas may help lower your tax bill for 2021 and 2022. This year’s planning is more challenging due to the uncertainty surrounding pending legislation.
Whether or not tax increases become effective next year, the standard year-end approach of deferring income and accelerating deductions to minimize taxes will continue to produce the best results for all but the highest-income taxpayers. Bunching deductible expenses into this year or next to avoid restrictions and maximize deductions may also help to lower overall taxes.
If tax rates increase for 2022, the highest-income taxpayers may find an opposite strategy to produce better results: Pulling income into 2021 to be taxed at currently lower rates and deferring deductible expenses until 2022 to offset income taxed at a higher rate. Deciding to take this approach will require careful evaluation of all relevant factors. At the distribution of this letter, the Reconciliation Bill has not passed the Senate; however, the current legislation does not include income tax increases for individuals, except for those over $10 Million in income.
Based on current tax laws, we have compiled a list of ideas for individuals and businesses, which may help you save tax dollars if you act before year-end. Not all of them will apply to you, so please get in touch with us to tailor a plan for which tax-saving moves might be beneficial.
Individuals Businesses and Self-Employed