Page 20 - BusinessWest December 12, 2022

INDIVIDUAL TAX PLANNING Itemized Deductions
Due to several related provisions in the TCJA, gen- erally effective for 2018 through 2025, more individu- als are claiming the standard deduction in lieu of itemizing deductions.
Make a quick analysis of your situation. Depend- ing on the results, you may decide to accelerate cer- tain expenses into 2022 or postpone them to 2023.
For instance, you may want to ‘bunch’ charitable donations in a year you expect to itemize deductions. (There is more on charitable deductions below.) Simi- larly, you might reschedule physician or dentist visits to provide the maximum medical deduction. The deduction for those expenses is limited to the excess above 7.5% of your adjusted gross income (AGI). If you do not have a reasonable shot at deducting medi- cal and dental expenses in 2022, you might as well postpone non-emergency expenses to 2023.
Note that the TCJA made other significant changes to itemized deductions. This includes a $10,000 annu- al cap on deductions for state and local tax (SALT) payments and suspension of the deduction for casu- alty and theft losses (except for qualified disaster-area losses). Since a repeal or modification of this cap is unlikely for 2022, wait to pay state estimates or real- estate taxes until January 2023 if they are not due in December.
The standard deduction for 2022 is generally $12,950 for single filers and $25,900 for joint filers.
Charitable Donations
If you still expect to itemize deductions in 2022, you may benefit from contributions to qualified char- itable organizations made within generous tax-law
limits.
Consider stepping up your charitable gift giving at
year-end. As long as you make a donation in 2022, it is deductible on your 2022 return, even if you charge the donation by credit card as late as Dec. 31.
Note that the deduction limit for monetary con- tributions was increased to 100% of AGI for 2021, but the limit reverted to 60% of AGI for 2022. Neverthe- less, this still provides plenty of flexibility for most taxpayers. Any excess may be carried over for up to five years.
Furthermore, if you donate appreciated property held longer than one year (i.e., it would qualify for long-term capital-gain treatment if sold), you can generally deduct an amount equal to the property’s fair market value (FMV). But the deduction for short- term capital-gain property is limited to your initial cost. Your annual deduction for property donations generally cannot exceed 30% of your AGI. As with monetary contributions, any excess may be carried over for up to five years.
The CARES Act established a maximum deduction of $300 for charitable donations by non-itemizers in 2020. The special deduction was then extended to 2021 and doubled to $600 for joint filers. As of this writing, this tax break is not available in 2022.
Electric Vehicle Credits
The IRA greenlights tax credits for purchasing electric vehicles and plug-in hybrids over the next few years. But certain taxpayers will not qualify. Map out your plans accordingly.
Notably, the IRA includes the following changes:
The credit cannot be claimed by a single filer with a modified adjusted gross income (MAGI) above $150,000 or an MAGI of $300,000 for joint filers.
The credit is not available for most passenger vehi-
cles that cost more than $55,000, or $80,000 for vans, sports utility vehicles, and pickup trucks.
The vehicle must be powered by batteries whose materials are sourced from the U.S. or its free-trade partners and must be assembled in North America.
The current threshold of 200,000 vehicles sold by a manufacturer is eliminated.
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situation. Depending on the results, you may decide to accelerate certain expenses into 2022 or postpone them to 2023.”
In addition, the IRA authorizes a credit of up to $4,000 for used vehicles if you are a single filer with an MAGI of no more than $75,000, or $150,000 for joint filers.
Residential Energy Credits
The IRA generally enhances the residential energy credits that are currently available to homeowners. Under the new law, you may benefit from two types of residential energy credits:
1. The 30% ‘residential clean-energy credit’ can generally be claimed for installing solar panels or other equipment to harness renewable energy like wind, geothermal energy, and biomass fuel. This credit,
Make a quick analysis of your
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Richard F. Burkhart, CPA and Salvatore J. Pizzanelli, CPA, JD, PFS
The talented team at Burkhart Pizzanelli
Accounting
Julie M. Quink, CPA and Deborah J. Penzias, CPA
The talented team at Burkhart Pizzanelli provides
provides expertise in a full range of accounting
and financial services. Feel free to call on us at Consulting 413.734.9040.Feel free to call on us at 413.734.9040.
expertise in a full range of accounting and financial services.
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