2022 Personal Tax Guide
March 16, 2022
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Introduction: Another Year of Epic Challenges
As we begin 2022, we continue to face many challenges. The pandemic continued throughout 2021 and into 2022. Recent surges due to new variants of the virus have prevented a return to pre-pandemic normalcy that we had hoped would have occurred in 2021. Yet, at the time of this writing, COVID-19 cases, hospitalizations, and deaths are dropping and there is hope that we might be finally turning a corner. The pandemic may be turning into an endemic, where the disease exists but we are able to live with it due to available medical protocols and vaccines.
President Biden’s first year in office has seen a myriad of crises, with addressing the pandemic and uniting the country amongst his top priorities. The rise in inflation has caused much concern for Americans, as the price of nearly all household items has increased over the past year. This has been compounded by supply-chain shortages, which have impacted many industries.
On March 11, 2021, President Biden signed into law the American Rescue Plan Act of 2021 (“ARPA”), a massive $1.9 trillion aid package geared to provide yet more relief to Americans suffering from the pandemic, including additional stimulus checks for eligible Americans, expanded child tax credits, and the extension of the paid leave and family leave credits.
Cryptocurrency has increased in popularity among investors, which has in turn resulted in increased IRS interest. The 2021 Infrastructure Investments and Jobs Act (“the Infrastructure Act”) revised certain Internal Revenue Code provisions to address digital assets. Specifically, individuals and firms acting as digital asset brokers will be required to report transaction information to the IRS. In addition, business owners will be required to report any cryptocurrency payments worth more than $10,000, similar to the current requirements for cash transactions. These changes go into effect for any returns and statements required to be filed or furnished after December 31, 2023. Please see our new chapter on this emerging topic for further discussion.
The Infrastructure Act provides massive funding to improve infrastructure around the country. It also changed the rules relating to the Employee Retention Credit (“ERC”), a refundable tax credit against certain employment taxes equal to 50% of the qualified wages an eligible employer pays to employees. The CARES Act had enacted the ERC. The Consolidated Appropriations Act, 2021 and ARPA amended the ERC, extending the qualified wages paid to December 31, 2021. The Infrastructure Act shortened the qualifying period to September 30, 2021. There was an exception for wages paid by an eligible recovery start-up business. Such businesses retained the credit’s statutory sunset of December 31, 2021.
President Biden’s tax proposal, known as the Build Back Better (“BBB”) Act, would have had a massive impact on much of the Internal Revenue Code. The tax proposal stalled in the Senate. Rather than continuing to attempt passage of one massive tax bill, portions of the BBB may be reintroduced in future legislation. It is unclear how this would look, given the numerous procedural considerations and the impending mid-term elections.
On the state and local tax front, the big story this past year has been the enactment of the pass-through entity tax (“PTET”) to allow individual business owners to take the entity-level state and local tax as a business deduction on their federal income tax returns. This circumvents the $10,000 cap on the state/local tax deduction, enacted by the Tax Cuts and Jobs Act of 2017 (“TCJA”). The rules for taking advantage of this provision are complex and differ depending on the state. The chapter on state tax issues covers these rules in depth.
As many of us have pivoted to working from home, cybersecurity and technology have taken on significant importance. Family offices, who typically manage the personal affairs of the family in addition to providing private wealth management services, are at an increasingly higher risk for cyberattacks. These attacks can leave the family vulnerable to extortion, fraud, and identity theft. It is very important to invest in technology and put safeguards in place to deter these attacks.
International issues have also impacted many. Most recently, the invasion of Ukraine by Russian forces has caused great concern. The global threat of terrorism (both physical and related to cybersecurity), potential trade wars and climate change remain significant issues.
Many families with wealth continue to be very concerned about their children’s and grandchildren’s future and safety, and what can be done to sustain and grow their wealth in these uncertain times. Given the impact of the pandemic, and the current economic and geopolitical landscape, it is extremely important that you pay attention to your financial position so that you can achieve your financial objectives and stay the course. Specific goals such as retirement planning, managing cash flow, and transferring your family’s wealth to the next generation should be top-of-mind in 2022 and beyond.
We have written this guide to help you identify opportunities to minimize tax exposure, accomplish your financial goals and preserve your family’s wealth. This guide includes all major tax law changes through February 15, 2022. The best way to use this guide is to identify areas that may be most pertinent to your unique situation and then discuss the matter with your tax advisor. It is especially important that you check in with your tax advisor before proceeding with any tax planning transactions this year. As always, our tax professionals will be pleased to discuss any opportunities that might apply to your personal situation and help you and your family move forward despite all of the challenges you may encounter.
Marie Arrigo, MBA, CPA
Tax Partner, Leader,
Family Office Tax Services & Leader, Not-for-Profit Tax Services
|2022 Personal Tax Guide|
|Chapter||Table of Contents– download by chapter|
|1||Tax Planning Strategies|
|2||Tax Rate Overview|
|3||Estimated Tax Requirements|
|4||Alternative Minimum Tax|
|5||Business Owner Issues and Depreciation Deductions|
|6||Capital Gains and Dividend Income|
|7||Stock Options, Restricted Stock and Deferred Compensation|
|8||Small Business Stock|
|10||Passive and Real Estate Activities|
|11||Principal Residence Sale and Rental|
|15||Estate and Gift Tax Planning|
|18||International Tax Planning and Reporting Requirements|
|19||State Tax Issues|
|Appendix A||2022 Federal Tax Calendar for Individual Taxpayers|
|Appendix B||2021 Federal Tax Rate Schedule|
|Appendix C||2022 Federal Tax Rate Schedule|
|Appendix D||2021 Maximum Effective Rates|
|Appendix E||2022 Maximum Effective Rates|
|Appendix F||2021 Federal and State Tax Returns Due Dates|
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Editor-in-Chief: Marie Arrigo
Managing Editors: Murray Alter, Daniel Gibson, Tom Hall, Robert Levin, Richard Shapiro
Co-Editors: Gary Bingel, Charles Brezak, Lisa Cappiello, Alexandra Colman, Denise DeLisser, Jean Jiang, Lisa Herzer, Aaron Lerner, Mitchell Novitsky, Gerard O’Beirne, Jennifer Shenise, Jessica Stumacher
Contributors: Peter Alwardt, Benjamin Aspir, Julia Bennetsen, Thomas Cardinale, Lina Chan, Andrew Cohen, Anthony Cuti, Trevor Dulichand, Cindy Feder, William Gentilesco, Andres Hortet, Cindy Huang, Sue Huang, Daniel Krauss, Cindy Lai, Max Markel, Marissa Masi, Vincent Occhino, Timothy Rankins, Vera Rodriguez, Christopher Ryan, Todd Schorb, David Venanzi, Holly Wong
This tax guide highlights tax planning ideas that may help you minimize your tax liability. This guide does not constitute accounting, tax, or legal advice, nor is it intended to convey a thorough treatment of the subject matter. The best way to use this guide is to identify those issues which could impact you, your family, or your business and then discuss them with your tax advisor.
The discussion in this guide is based on the Internal Revenue Code as amended through February 15, 2022. Future legislation, administrative interpretations, and judicial decisions may change the advisability of any course of action. Because of periodic legislation changes, you should always check with your tax advisor before implementing any tax planning ideas.
Any tax advice contained in this publication (including any attachments) is not intended for and cannot be used for the purpose of (i) avoiding penalties imposed by the Internal Revenue Code or (ii) promoting, marketing, or recommending any transaction or matter addressed herein.
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