2022 Tax Savings Laws

Being aware of tax savings laws passed in 2022 can help you plan for the future and make good financial decisions. Congress passed two laws in 2022 to help create incentives for Americans who are interested in purchasing clean vehicles and making decisions on planning for retirement: The Inflation Reduction Act of 2022 and the SECURE 2.0 Act, respectively. Learn more about your eligibility for tax credits and how you can increase retirement savings here.

The SECURE 2.0 Act

The SECURE 2.0 Act makes notable changes to qualified retirement plans. Here are the key takeaways about the new law from fidelity.com:

  • The age to start taking RMDs increases to age 73 in 2023 and to 75 in 2033.
  • The penalty for failing to take an RMD will decrease to 25% of the RMD amount, from 50% currently, and 10% if corrected in a timely manner for IRAs.
  • Starting in 2024, RMDs will no longer be required from Roth accounts in employer retirement plans.
  • Catch-up contributions will increase in 2025 for 401(k), 403(b), governmental plans, and IRA account holders.
  • Defined contribution retirement plans will be able to add an emergency savings account associated with a Roth account.

Managing your finances responsibly helps you maintain a good state of mind. It is a good idea to consult your financial advisor or tax professional to get the best advice on how to make the most of your financial situation by learning how the most recent changes in tax law can be beneficial for you. To read more about the specifics of the SECURE 2.0 law, visit: https://www.fidelity.com/learning-center/personal-finance/secure-act-2

Tax Credits and Incentives for Energy Efficiency

The Inflation Reduction Act of 2022 offers new federal income tax credits applied retroactively through 12/31/2022. And updates will be applied for 2023 and remain effective through 12/31/2032. Its savings for homeowners can provide up to $3,200 annually to lower the cost of energy-efficient home upgrades by up to 30 percent. It also details savings for home builders and commercial building owners. To see what kinds of green improvements to your home are eligible for tax credits, visit this link: https://www.energystar.gov/about/federal_tax_credits/federal_tax_credit_archives/2022_tax_credit_information

Credits for New Clean Vehicles

You may qualify for a credit of up to $7,500 under Internal Revenue Code Section 30D if you buy a new, qualified plug-in EV or fuel cell electric vehicle (FCV) in 2023 or after. However, there are a number of qualifications that must be met to be eligible. This is in regard to who qualifies and what the criteria of a qualified vehicle are. Visit this link https://www.irs.gov/credits-deductions/credits-for-new-clean-vehicles-purchased-in-2023-or-after to learn more.

To see the list of Qualified Manufacturers of the vehicles currently eligible for a credit, visit this link: https://www.irs.gov/credits-deductions/manufacturers-and-models-for-new-qualified-clean-vehicles-purchased-in-2023-or-after

Georgen Scarborough Associates is committed to staying informed of the most current tax laws to offer its clients the best advice so that they can maximize their tax returns. Please feel free to share this page with anyone you know who can benefit from learning this information.

3 Key Skills to Look for in an Accountant

1-3 Key Skills to Look for in an Accountant

Your accountant is going to know every little detail about your finances – a topic that is considered taboo in polite society! How on earth do you choose someone who you need to trust with your short and long-term goals, your legacy, your compliance with tax legislation, your business’s financial performance, and more?

Being in this business has taught us that there are three major skills a great accountant has:

1. CPAs Know the Accounting Basics

This seems too obvious to state, but the accountant must know the basic principles of the profession. A great example is the matching principle. This principle states that the related revenues and expenses must be matched in the same period to link the costs of an asset or revenue to its benefits.

Another is the convention of conservatism, or doctrine of prudence. This is a policy of anticipating possible future losses but not future gains. It states that when choosing between two solutions, the accountant should select the one that will be least likely to overstate assets and income.

2. CPAs Know Tax Regulations Backwards and Forwards

There’s no quicker way for a business to fall on hard times than to run afoul of tax regulations. Tax laws differ from state to state and so it is critical that your accountant is entirely familiar with the tax legislation that is in effect where your business is registered and derives most of its income.

Not only will this keep you out of trouble, but it could also be to your company’s benefit as there may be credits and other advantages of which you are unaware. A good accountant will have a thorough knowledge of the best business practices for your field to ensure tax optimization.

Certified public accountants are as well-versed in tax regulations and loopholes for individuals’ needs.

3. CPAs Provide Customer Service

The old stereotype of an accountant has long ceased to exist in real life. Gone are the days of colorless old men entering numbers into huge books with their sharp pencils. The world of accounting has become exciting and has attracted bright and interesting professionals.

Your accountant needs to interface with the Board of your business and understand the work that you do as well as the people that you are. They also need to understand your goals and the legacy you would like to leave. The financial side of your life should be a joy and not a grudge.

Certified Public Accountants

Discover what superior accounting professionals can do for your business. Contact Georgen Scarborough Associates, PC to help you navigate your personal and business finances.