Did You Know?

High inflation, better tax outcomes? One silver-lining from today’s extraordinary inflation is that tax brackets, deductions, and various phaseout levels also receive an annual inflation adjustment, which may result in tax savings. The rates themselves did not change, but the income ranges did in many instances. The William Blair 2022 and 2023 Tax Reference Guides reflect these and other current tax rates and eligibility criteria.

No child left behind? Certain child and dependent tax and earned income tax credits that were in effect for 2021 may be significantly reduced or no longer eligible for certain taxpayers in 2022, depending on several factors such as income and the age of the child/children.

Are you turning age 72? Congratulations! Under the SECURE Act, however, many Americans nearing or at age 72 will need to pay close attention to their Required Minimum Distribution (RMD). Some taxpayers who elected to delay their first RMD under the rule may have to take two distributions in one year. For instance, a taxpayer who turns 72 in March 2022 has until March 31, 2023, to take his/her first RMD. However, the taxpayer will have to take a second RMD by December 31, 2023.

Recently, the widely anticipated SECURE ACT 2.0 legislation was passed and will further change the age at which taxpayers need to treat their RMD for the tax year 2023 and beyond. Please consult with your tax professional if you have any questions.

Did you make any clean energy enhancements in 2022? Under the Residential Clean Energy Credit, certain clean energy projects may qualify for a credit of up to 30% of the cost.

Purchase an EV vehicle? The Inflation Reduction Act may also entitle you to a credit of up to $7,500 depending on the type of vehicle purchased and the date of purchase. Certain income limit restrictions ($150,000 single/$300,000 married) apply.

Healthy mind. Healthy finances? Considering a gym membership or planning to order that Peloton? What about your financial well-being? Do you have a living will in place? Do you have a beneficiary assigned to your core assets? We encourage everyone to take time to review their financial health. Our Financial Health Checklist may help with this process.