Few Changes for tax year 2022

• Some tax credits return to 2019 levels. This means that affected taxpayers will likely receive a significantly smaller refund compared with the previous tax year.
  • Those who got $3,600 per dependent in 2021 for the CTC will, if eligible, get $2,000 for the 2022 tax year.
  • For the EITC, eligible taxpayers with no children who received roughly $1,500 in 2021 will now get $500 in 2022
  • The Child and Dependent Care Credit returns to a maximum of $2,100 in 2022 instead of $8,000 in 2021.
• No above-the-line charitable deductions. During COVID, taxpayers could take up to a $600 charitable donation tax deduction on their tax returns. However, in 2022, those who take a standard deduction may not take an above-the-line deduction for charitable donations.
• More people may be eligible for the Premium Tax Credit

Some people are intimidated by certain tax terms. One example would be “tax bracket.” What is a tax bracket, anyway? A tax bracket simply states what you will owe in taxes according to your income. Every bracket covers a specific range of income amounts and applies a base percentage for taxes. Let’s say, for instance, that you are in the 10% tax bracket. If you earned $4000 that year, you owe $400. If you earned $7600, you are liable for $760. What about the expression “moving into a higher tax bracket?” This means that if you earn more money and exceed your bracket’s cutoff point, you will automatically move into the next bracket. Hence, you will owe a higher percentage in taxes. Would this sort of defeat the purpose of increasing your income? Not at all. If you move into a higher tax bracket, this means that you are now in two or more tax brackets. In 2016, if you earned $9275 or less, you were in the 10% bracket. Let’s give an example. Say you earned $9000. Your income taxes would be $900. You got a promotion and a raise at work (which is wonderful news). You received a whopping $3000 annual raise. Thus, your income would be $12K. This means that you would owe 10% of the $9275 (which is $927.50), and you would also owe 15% of the raised income (which calculates to $408.75. This figure comes from 15% of the pay difference between $9275 and $12000. The total owed would be $927.50 + $408.75 = $1336.25). Although taxes can be complicated, you will have zero worries when you call Rozier. We’re here to assist you with your tax challenges. Call today!

There are some tax breaks for vets which you might not be aware of. For example, if you are a disabled vet and you receive disability benefits from the VA, those payments do not count as taxable income. You don’t need to include those payments in your gross income. There are some vets who may not need to file taxes at all. If you are in doubt or if you have any questions, please call Rozier today for clarification. We are here to help!

If you are currently enlisted in the military, you pay no taxes on your combat pay. This applies to all military members as well as warrant officers and commissioned warrant officers. If you are a commissioned officer, however, your tax exclusion is restricted to the highest rate of enlisted pay.

If you have had to move due to relocation, unreimbursed moving costs can be deducted partially on Form 3903 (Moving Expenses). Beginning in 2018, the moving expense deduction is strictly limited to military members. In order to qualify for it, you must have moved within one year from the time when your active duty ended. The moving expense deduction is what is known as an “above the line” deduction, not an itemized one.

Once more, if you have any questions about your taxes, please call us today. If you have ever served in the military, we thank you for your service! On behalf of all of us here at Rozier, we wish you a happy and prosperous 2019!

Financial management tips:

Discussing money can be stressful, but it doesn’t have to be. Money is a mere tool that enables us to thrive. It is commonly said that money is the root of all evil, but this is false. Money is a good thing. Let’s explore some financial management tips and ideas to help you handle your finances better.

We could all do well with handling our finances better. To manage your finances, you first need to understand how much your income is, how much you spend, how to prepare your taxes, and be aware of your credit score. Financial awareness will help you reach your goals with greater efficiency.

The first thing to examine is your income and your spending. There are some credit card companies and banks that will help you remain aware of your income, expenses, habits, etc. However, if you don’t have the luxury of such easily accessible records, you can keep track by simply writing everything down.

Start out by writing down your income from last month. Then review how your money was spent. How much did all your bills cost? Were you able to save or invest? What are all the essential expenses you have each month, like rent, gas, groceries, and the light bill? How much did you spend for all the luxuries like dining out, entertainment, movies, and so forth? You will want to be thorough in this list, but you might have to estimate certain things. It’s vital to keep track of specific dollar amounts, because accuracy is paramount. Prepare yourself mentally for these activities, especially if you aren’t used to them. It might be a little bit perturbing at first to see how much you’re spending, but this will forge a path to better living for you and/or your family. If you want to save more, adjustments may be in order. The applicable term here is hedonistic adaptation. It refers to changes one makes in lifestyle according to income, spending, and so on.

Look into your tax situation. If you’re like many folks, your papers may be scattered here and there. Hence, finding those documents may take some time. Be cognizant of any current tax reform laws. Look up your credit score. There are some companies who offer this service for free.

Create some realistic goals for yourself. You should now have a better overview of your income as well as your spending tendencies. If you are overspending, create a monthly budget. Dave Ramsey recommends using the “envelope system.” For each expense, you have an envelope containing the cash for the entire month. This may help preserve more of your money. Is your credit score unsatisfactory? Create a plan to pay off the credit card balances step by step. Finally, when you’re ready to file your taxes, let us at Rozier help you to get the maximum refund you possibly can. Keep reading our blog posts for further financial management tips!

TAX SCAMS AND IDENTITY THEFT- Ways to protect yourself:

Tax scams and identity theft are on the rise. It is quite unfortunate that identity theft and other financial scams are such a concern for everyone these days. However, there are ways to protect yourself. Don’t be duped by criminals who want to steal your funds or steal your identity. Let’s talk about some ways to remain safe and protect yourself. Every year, the IRS lists a compilation of the twelve most prevalent tax scams (called the “Dirty Dozen”). There are programs like Entegra Bank’s CardValet service that help protect consumers from fraud and theft. Keep your hard earned money out of the pockets of scam artists and black hat hackers. Beware of online phishing. Phishing can be done through phony E-mails or fake websites. Be careful to never reveal any personal information to someone you don’t know. It is sometimes challenging to identify which websites are legit and which aren’t. But remember this- the IRS never contacts taxpayers via E-mail. If you ever receive an E-mail which says that it is from the IRS, don’t click on it. Just delete it. In addition, the IRS never makes first contact over the phone. They send taxpayers an official correspondence through the mail. If you think that the call may actually be legitimate, hang up and call the IRS back at (800)829-1040. If there really is a tax related matter that needs to be addressed, the IRS employees will be able to help you. ID theft is on the rise. Always be alert and protect your family’s PII (personally identifiable info), like your Social Security number, where you are employed, tax ID numbers, etc. If you are concerned, there is software available on the market specifically for identity protection. Whether you prepare your taxes yourself or if you hire someone, do your research first and make certain that you are giving your personal information to a reputable, responsible person or organization (like Rozier). These are but a few examples of ways that you can protect yourself and your loved ones. If you employ a professional CPA like Rozier, you can avoid tax scams and other tax related problems. Call Rozier today for all your tax needs!

IRS website: https://www.irs.gov/

What exactly is cryptocurrency? Dictionary.com defines cryptocurrency as follows: “a digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank.”

A few examples of cryptocurrency are Bitcoin, Ethereum, and Lightcoin. The IRS needs to know about any digital currencies that you own. If you have chosen to invest in or utilize digital currencies, you should report them on your taxes. However, it isn’t what you think.

With cryptocurrency, there are no banks involved in transactions. Instead, there is an enormous database known as a Blockchain. The Blockchain functions as a secure means for peer to peer transactions.

The Internal Revenue Service sees cryptocurrency as property. Hence, there may be implications regarding any capital gains. Thus far, the IRS has yet to provide a whole lot of guidance about crypto and tax laws, but they are indeed checking on all digital currency. The IRS has already requested that Coinbase show data on all its 13,000+ users. If you are selling, buying, or trading crypto currently, all these activities have capital gains implications. In the event you are paid in crypto, you must report that as income.

The following are several things to be mindful of. Trading crypto produces capital gains and losses. Exchanging it is to be treated as though it is being sold and is subject to capital gains. If crypto is used to pay for goods or services, it is to be reported as income. Spending crypto is a taxable affair and is treated as a capital loss or gain. In conversions of crypto to paper capital, it counts as capital gains. The mining of coins is seen as income equivalent to the fair market value of the crypto coins. Cryptocurrency is quickly gaining popularity, and its values continue to increase. Once again, there are no banks involved in crypto, but don’t try to conceal it from the IRS. Be cognizant that cryptocurrency is considered as income, so always treat it accordingly.

Not filing for one’s income taxes is a serious matter. Ignorance of the law is not an excuse, and it is up to everyone to file back taxes. The IRS looks with suspicion upon anyone who fails to file back taxes, because some people don’t want to report their income. Rozier can assist you with back taxes. Let’s take a proactive approach to this issue.

Even if late, taxes should be filed. There are a few vital reasons why. By filing, it halts the clock on any further penalties for filing late. You also benefit from getting your tax reporting on record. If you are unable to pay at the time, you may have the option of requesting a payment plan. The IRS desires these payment plans over being constrained to take collective actions. One piece of good news: there is no statute of limitations for unfiled returns. Thus, the IRS has an unlimited amount of time in which to assess taxes and penalties for unfiled returns.

The first order of business when filing back taxes is to collect all pertinent documents. In the event that you don’t have your W2 form, Rozier can request your wage/income transcript directly from the IRS. Let Rozier be your representative and let us do all the heavy lifting for you.

If you are not able to pay the due taxes after filing late, you will want to get approved for an installment agreement. This measure will halt any further penalties and forego any lien notices, provided that your payments are on time. If you do not make the payments as agreed, then the IRS can commence with collections again.

Tax laws are complicated. Rely on Rozier to guide you out of the maze of confusion. Rozier exists to furnish our clients with professional, reliable services. Taxes are our field of expertise. Rozier has a commitment to all the people who entrust us. Every client has a unique set of needs and unique situations. If you have any questions or would like to contact Rozier, give us a call today!

Perhaps you are one of the many folks who have already filed your taxes for 2017. If so, excellent job! Alas, many of us procrastinate and put things off. If you have not yet filed this year, double or even triple check to make sure that you have counted all your deductions. Many taxpayers either forget about certain tax deductions or are simply unaware of them. Here are a few of them.

Donations to charity: you will very likely remember the large contributions that you made last year. Don’t forget the smaller ones, because they count, too. Always hang on to receipts. If you used your car for charity work, you may deduct 14 cents per mile. Remember expenses related to searching for employment. Hopefully, you were successful in attaining a respectable job. Some expenses that you accumulated while searching for a new job can be deducted, but only if the total expenses were more than 2% of your adjusted gross income. So which things would be applicable? Transportation costs, food and lodging, cab fares, printing of resumes and other job-related documents, and employment agency fees. Next, we have state sales taxes. If you don’t reside in a state which has income taxes, this write-off is important. Folks who itemize can deduct state income or sales taxes which have been paid. For the bulk of taxpayers that live in states that charge income taxes, the income tax deduction is usually the better choice. The IRS has resources which show how much residents of different states can deduct. If you bought a plane, boat, or automobile, you may add the sales taxes paid to the figure shown in the IRS tables for your home state. There are also child and dependent care tax credits. Until quite recently, the child care credit applied to qualifying expenses up to $4800. Now, the limit is $5000. This would apply to any work-related tax-favored reimbursement account. If you reach the $5000 maximum through a plan at your place of employment but you still spend more on work related child care, you will be eligible to claim the credit up to an extra $1000. In addition, there are earned income tax credits. With tax credits, your total tax bill is reduced dollar for dollar. This contrasts with a deduction. Missing any number of credits can be disastrous. A vast number of lower income taxpayers miss out on the earned income credit each year. The IRS says that some people don’t take advantage of this tax credit due to it being difficult and complex. This credit exists to supplement wages for low to moderate income workers. However, it doesn’t just help lower income people. The exact income which you qualify for will depend on your income itself, the size of your family, and your marital status. You’re also eligible to claim an EITC refund for up to three previous years if you haven’t already done so. Tax deductions needn’t be a headache for you. Contact Rozier today for any questions which you might have regarding tax deductions!

There are some individuals who are adroit at handling their own finances. Some of us could use assistance, especially when dealing with the complex matter of income taxes. There is a feeling of confidence and ease which accompanies trusting a good accountant with your taxes. We are more than eager to do your “heavy lifting” when it concerns filing for your refund. Tax laws are not only multifaceted, but they are constantly changing. Rozier CPA is here to provide aid to you. We are professionals in this arena, and we want to make sure that you receive every penny you deserve. As for the matter of tax software, it can be useful for some. There is relevant information programmed into the software, but it is a poor substitute for knowledge and expertise. Tax software asks the individual a sequence of questions, the ultimate goal being to prepare a tax return with correct information. Some questions can be skipped, and it is better to have guidance from a professional. This year, there are quite a number of new laws. If you aren’t aware of these changes, if you decide to do your own taxes, you could either overpay or underpay. Also keep in mind that software will not ask about all possible deductions. When dealing with education expenses, taxpayers can be confused with this software. Scholarships, for instance, may not be calculated correctly. Education credits can also be problematic. In any event, your best bet is to have a professional do your taxes for you. Call our office today to set an appointment!