Tax inflation adjustments for 2022

Tax inflation adjustments for 2022

At the end of last year, the IRS announced its latest set of tax inflation adjustments for 2022. It is very important that both individual taxpayers and businesses familiarize themselves with these changes so that they can make the necessary provisions for their tax filing and payments in the coming year. Here is a brief look at the most important adjustments.

Adjusted tax rates for 2022

Among the most important new provisions for the new tax year are the following:

  • The standard deduction for married couples filing jointly has risen by $800 from $25,100 to $25,900.
  • The standard deduction for individual taxpayers has risen to $12,950 (up $400)
  • The maximum Earned Income Credit has also risen. It now stands at $6,935—a $207 rise from the previous year.
  • As of 2022, the dollar limitation for employee salary reductions for health flexible spending arrangements increases to $2,850.
  • The foreign earned income exclusion is $112,000, as opposed to $108,700 in 2021.
  • Deceased estates (for people who pass away during 2022) have a basic exclusion amount of $12,060,000, up from a total of $11,700,000 for estates of decedents who died in 2021.
  • The annual exclusion for gifts increases to $16,000 for 2022, up from $15,000 for 2021.

It is advisable to get the assistance of an experienced certified public accountant (CPA) to help you manage your taxes in 2022. CPAs always have a complete grasp of the new tax limits, rates and regulations, and will know exactly how to apply them to your income and tax requirements. Georgen Scarborough is a firm of CPAs based in Vienna, Virginia. Contact us if you need help managing the tax inflation adjustments for 2022.

Best Practices for Tax Preparation for Small Business

Small business tax

It is not easy to run a small business! You have to ensure that you follow all regulations as well as satisfy all small business tax requirements. This can be particularly stressing during tax season and at the end of the financial year. Good business practice is important to manage and grow your business. Good practices can lead to more income if you want to sell your business in the long term or if you need to secure financial assistance. We have a checklist to ensure your tax preparation for your small business goes smoothly.  

Ensure your financial records are up-to-date 

It’s important to ensure all of your financial  records are kept up-to-date so that you reduce stress on yourself and your staff at the end of the financial year. Ask for regular reports and statements of all activity that occurs in your business. These include all tasks and their due dates, financial statements which include profit and loss statements and balance sheets. These financial statements will also help the quality of your business by helping you evaluate where your business needs improvement so that you implement the necessary changes. 

Monitor your payroll

It doesn’t matter what system you use for payroll, as long as it is done correctly and timely, preferably by a professional. You need to ensure that your payroll is up-to-date as the IRS requires filings every quarter. It also gives your business a good credit record which is advantageous to you in the long term with potential investors or banks. 

Properly classify your business 

Is your small business a Limited Liability Company (LLC), Corporation or Sole Proprietorship? Each classification has different regulations and tax requirements. Ensuring that your business falls under the correct category, and is classified by this, can save your business from paying extra on taxes. A good accountant can help you out with classifying your business and saving you the money you deserve. 

Sort out any personal affairs 

This is where the importance of adequate record keeping matters the most! Make sure any personal affairs are taken care of and that you are not leaving out deductions before filing for taxes. This will help you to avoid putting yourself at risk for an audit at the end of the financial year. It may be difficult for you or your staff to keep track of deductions throughout the year, especially if you have falling behind. This stresses the importance of an accountant to help you track your finances and to make your business life so much simpler. 

Hire the best accountant 

When it comes down to your small business tax preparation, you need to be sure that your forms are accurately filled. An expert accountant can help you to track your income and expenditure throughout the year so that your small business is prepared when tax season arrives. This reduces stress and time on you and your staff, as well as fulfilling your business’s statutory requirements. A good accountant should be one that specifically listens to you and your business needs, makes use of the best accounting software and has expert knowledge on the latest regulatory tax requirements. 

Georgen Scarborough Associates makes your small business tax preparation easier 

Good business practice ensures that your small business is a success and that everything runs smoothly when it comes to tax season, without legal implications. You are going to need a professional accountant to guarantee your business is a success and that your tax preparation is promptly taken care of. 

Our expert accountants at Georgen Scarborough Associates give each client the personal attention they deserve by providing quality service. We provide tax preparation for small businesses, help with your financial statements and audits, payroll services and analysis for your business. There is nothing we can’t handle! 

Using the latest technology and best accounting software for your small business tax, we can keep track of your financial position, properly classify your business and balance your accounts. This will help your small business to save money, prevent any legal issues from arising, and evaluate any weak points in your small business that needs improving. We do not just help you with your accounts, we help you to grow a legacy! 

For more information on tax preparation and practices for small business, contact us today!