Article Highlights:
 

• Taking Stock of Tax Strategies
• Education Tax Credits
• Converting a Traditional IRA to a Roth IRA
• Minimum Required Distributions
• Charitable Contributions
• Qualified Charitable Distributions
• Health Savings Accounts
• Prepaying State Taxes
• Paying Medical/Dental Bills
• Gifting
• Avoiding Underpayment Penalties

 
 
It seems hard to believe, but the holiday season is almost upon us, and that means that the 2021 tax preparation season will soon follow. With the end of the tax year just around the corner, tax-savvy individuals need to take some time from their busy schedules to review the tax benefit steps they’ve already taken and see what else they need to do. Now is the time to ensure that you’ve taken advantage of all of the tax-saving strategies available to you.
 

Generally speaking, tax return mistakes are a lot more common than you probably realize. Taxes have grown complicated and COVID tax relief has made many changes; the paperwork required to file proper tax returns is often convoluted. This is especially true if you're filing your taxes yourself.  
The 2020 tax year certainly does not qualify as a "normal year" and 2021 was not any better together with the backlogs from 2020 tax year. 

Congress passed numerous tax laws before, during and after 2020 that apply to 2020 as well as 2021, making it two of the more complicated tax years in recent memory. Even seasoned tax professionals had a hard time digesting all of the changes that they and their clients are now dealing with, requiring hours of continuing education. All of this is to say that if you've just discovered that you've made a significant mistake on your tax return, the first thing you should do is stop and take a deep breath, and then call us. It happens. It's understandable. There are steps that you can take to correct the situation quickly — you just have to keep a few key things in mind, including that the mistake could be in your favor.

December 1 - Employers
During December, ask employees whose withholding allowances will be different in 2022 to fill out a new Form W4 or Form W4(SP).
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December 15 - Social Security, Medicare and Withheld Income Tax
If the monthly deposit rule applies, deposit the tax for payments in November.

December 1 - Time for Year-End Tax Planning
December is the month to take final actions that can affect your tax result for 2021. Taxpayers with substantial increases or decreases in income, changes in marital status or dependent status, and those who sold property during 2021 should call for a tax planning consultation appointment.
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December 10 - Report Tips to Employer
If you are an employee who works for tips and received more than $20 in tips during November, you are required to report them to your employer on IRS Form 4070 no later than December 10. Your employer is required to withhold FICA taxes and income tax withholding for these tips from your regular wages. If your regular wages are insufficient to cover the FICA and tax withholding, the employer will report the amount of the uncollected withholding in box 12 of your W-2 for the year. You will be required to pay the uncollected withholding when your return for the year is filed.

On November 19, 2021, the House of Representatives passed their proposed version of President Biden’s Build Back Better Act, which was substantially pared down from the original version. The Senate will now take up the legislation, and without question there will be changes.
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Then the Senate-altered version will have to go back to the House and a compromised version negotiated before a final bill can go to the President’s Desk for his signature. Reliable sources indicate a final bill will not be available until towards the end of the year.  

If you have purchased, owned, sold, gifted, made purchases with, or used cryptocurrency in business transactions, there are certain tax issues you need to know about. Unfortunately, there are some unanswered questions and little specific guidance offered by the IRS other than in Notice 2014-21 and Revenue Ruling 2019-24. This article includes the guidance from the Notice as well as general tax principles that apply.  
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One of the big issues of cryptocurrency is how it is treated for tax purposes. The IRS says that it is property, so that every time it is traded, sold, or used as money in a transaction, it is treated much the same way as a stock transaction would be, meaning the gain or loss over the amount of its original purchase cost must be determined and reported on the owner’s income tax return. That treatment applies for each transaction every time cryptocurrency is sold or used as money in a transaction, resulting in a major bookkeeping task for those that use cryptocurrency frequently.