Page 35 - BusinessWest June 27, 2022

can minimize your tax liability and keep more money in your pocket. Here are nine strategies you should consider:
Review your tax liability for the current year
EventTake a look at your tax situation for the current year and estimate how much tax you will owe. This will help you determine if you need to make any changes to your withholdings or esti- mated tax payments.Event
Consider a tax status changeEventYour entity
(R&E) expenditures
Due to law changes, companies are no lon- ger allowed to fully deduct their R&E expenses. Instead, these expenses are amortized over a period, based on where their services are pro- vided. Classification of expenses as R&E should be renewed.Event
Review expired provisions
Some of the tax relief provisions in 2021 the American Rescue Plan Act (ARPA) were carried
you would adjust your tax planning if the SALT deduction is restored or remains limited. Addi- tionally, there are a number of other proposed changes to the tax code that could impact indi- viduals, so it’s important to stay up-to-date on the latest developments and plan accordingly. Event
Consider the Qualified Business Income (QBI) Deduction
The qualified business income (QBI) deduc- tion, which provides pass-through business own- ers a deduction worth up to 20% of their share
of the business’s qualified income. However,
this deduction is subject to a number of rules and limitations. For example, owners of speci- fied service trades or businesses (SSTBs) are not eligible for the deduction if their income is too high. SSTBs generally include any service-based business, such as a law firm or medical practice, where the business depends on its employees’ or owners’ reputation or skill. If a business is eligible for a QBI deduction, owners should carefully weigh salary vs. flow through income.Event
Budget for larger charitable donations
Finally, if you’re thinking of making a chari- table donation, recently you may not have ben- efited as much from the deduction for your donation as you have in the past. Since the TCJA nearly doubled the standard deduction started effective 2018 and capped the SALT deduction, fewer people itemize their deductions on their tax return.
Tax Planning
Continued on page 47
“Starting early is important but plans should consider that tax rules might change at the end of the year and businesses and individuals simply can’t
over into 2022 by the Build Back Bet- ter Act. Principal among them are ARPA’s increases and expansion of the child tax credit, including its monthly advance payments, which have now ended as of the December 2021 payment. The Build Back Bet- ter Act was signed into law this past March 11 and included a renewal of that provision for 2022. Beyond those expiring provisions, a number of pre- ARPA “extender” items lapsed at the end of 2021, such as the treatment of premiums for certain qualified mort- gage insurance as qualified residence interest and multiple energy and fuel
afford to not prepare for those changes.” type not only impacts how you are protected
under the law but it also affects how you are taxed. If you’ve outgrown your current business structure, or if you previously set up a structure that wasn’t the best fit for your business, you can elect to change your structure. Each entity type has its own benefits and drawbacks, so it is important to make sure you have a full picture before committing to your decision.
Amortization of research and experimental
credits.Event
Review the new limit on state and local tax deductions
For individual taxpayers, one of the biggest potential changes being lobbied is the pos- sible restoration of the deduction for state and local taxes (SALT). If this proposal becomes law, it could have a major impact on your tax bill. As such, it’s important to think about how
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