Multi-task time on the tax planning front!! While you are busy making sure you gather all your tax forms and other prep info for filing your 2021 taxes - it is also important to have your eye on the ball for 2022 tax planning.
Remember that there is still time to make traditional IRA, Roth IRA, and Health Savings account contributions for 2021 (if you are eligible to do so)
There is a lot to keep up with. Aside from the various special programs we have seen in the last couple of years (stimulus checks, child-tax credit changes for 2021 are two examples), there are often changes to 'limits and amounts' pertaining to several tax-related items. A summary of some of these items below - #'s referenced pertains to tax year 2022!!
Note whenever an age is referenced below, the calculated age is the age as the end of the tax year, so in this case 12/31/2022.
- Employee 401k contributions: $20,500 is the maximum annual contribution and for those 50 and older an additional contribution of $6,500 for a total of $27,000 max. Be sure to adjust your 2022 contributions as needed.
- Health Savings Accounts (HSA's): annual contribution limit. Note these contribution limits include employer contributions. Be sure to adjust your 2022 contributions as needed
- Self-only coverage, $3,650
- Family coverage $7,300
- Annual catch-up contribution limit for individuals 55 and older (by end of the tax year), $1,000
- Max taxable earnings for social security: (OASDI, 6.2% rate), $147,000
- Annual gift tax exclusion$16,000: (the amount of money that an individual can gift to another without having to file a gift tax return and impacting one's 'unified credit'. If you're considering gifting greater than $16,000 to an individual, please give us a call. There are often ways to do so in a very simple and tax-efficient manner.
- Kiddie Tax: child's unearned income over $2,300 generally taxed at parents rates (good example, investment income from child's 'custodial' investment account)
- Maximum IRA / Roth IRA contribution remains: at $6,000 ($7,000 for those that will be 50 years or older). Please note the following:
- The maximum contribution amount is a 'combined limit' should you choose to make a contribution to both a Traditional IRA and Roth IRA.
- A spouse that does not have earned income may be eligible to make a 'spousal IRA contribution'. Please call us for details regarding eligibility.
Rules around eligibility to make a traditional deductible IRA contribution are as follows.
If neither you nor your spouse (if you are married) are eligible for an employer retirement plan, then you are eligible to make a traditional deductible IRA contribution.
If you or your spouse is covered by an employer-sponsored retirement plan, then the following income phaseout ranges may limit or eliminate your ability to make a traditional deductible IRA contribution.
Note that the income phaseout is based on Modified Adjusted Gross Income (MAGI). There is of course a special calculation to calculate MAGI for IRA deduction eligibility. See your CPA for details or call us to discuss.
Your ability to make a full Roth IRA contribution, a partial one or none at all is governed by the following compensation limits.
Note that there is no income limit for determining the ability to convert traditional IRA $ to Roth IRA $
If you find this type of detail informative, please check out the following:
- Key Numbers 2022 / Tax Reference Numbers at a Glance. Download this document by clicking the link below. The following items are included:
- 2022 Tax Brackets
- Standard Deduction amounts by filing status
- Long Term Capital Gain & Qualified Dividend tax brackets
- Net Investment Income Tax details
- Income phaseout info for various tax-related items (IRA and Roth IRA contributions, Education Credits and Deductions, Annual Gift Tax Exclusion)
- Retirement Plan contribution limit details
Want more info? You can access our 'Comprehensive Key Numbers', a 19-page document that provides not only key tax numbers and information for 2022 but for 2021 as well. Need to check on 2021 tax brackets, standard deduction, retirement plan contribution limits for 2021 - access this document by clicking the link below.
We hope access to these two reference guides will serve as a handy reference and save you time as you research tax-related specifics.
As always, please do call or email our office if you have questions or if we can be of assistance in any way.
LPL TN: 1-05247521