In Notice 2021-61, the IRS recently announced 2022 cost-of-living adjustments to dollar limits and thresholds for qualified retirement plans. Here are some highlights:
Elective deferrals. The annual limit on elective deferrals (employee contributions) will increase from $19,500 to $20,500 for 401(k), 403(b) and 457 plans. As well as for Salary Reduction Simplified Employee Pensions (SARSEPs). The annual limit will rise to $14,000, up from $13,500, for Savings Incentive Match Plans for Employees (SIMPLEs) and IRAs.
Catch-up contributions. The annual limit on catch-up contributions for individuals age 50 and over remains at $6,500 for 401(k), 403(b) and 457 plans, as well as for SARSEPs. It also stays at $3,000 for SIMPLEs and SIMPLE IRAs.
Annual additions. The limit on annual additions — that is, employer contributions plus employee contributions — to 401(k)s and other defined contribution plans will increase from $58,000 to $61,000.
Compensation. The annual limit on compensation that can be taken into account for contributions and deductions will increase from $290,000 to $305,000 for 401(k)s and other plans. This includes Simplified Employee Pensions (SEPs) and SARSEPs.
Highly compensated employees (HCEs). The threshold for determining who is an HCE will increase from $130,000 to $135,000.
Key employees. The threshold for determining whether an officer is a “key employee” under the top-heavy rules, as well as the cafeteria plan nondiscrimination rules, will increase from $185,000 to $200,000.
Participation in a SEP or SARSEP. The threshold for determining participation in either type of plan will remain $650.
Business owners, along with their HR and benefits staff or providers, should carefully note when the new limits and thresholds apply. Sometimes the answer isn’t obvious. The 2022 compensation threshold used to identify HCEs will be generally used by 401(k) plans for 2023 nondiscrimination testing.
Review your employee communications, plan procedures and administrative forms, updating them as necessary to reflect these changes. Whether your company offers a 401(k) or another type of plan, we can provide further information on the tax rules.
In Notice 2021-61, the IRS recently announced 2022 cost-of-living adjustments to dollar limits and thresholds for qualified retirement plans. Businesses that offer a qualified plan, such as a 401(k), should take careful note. For example, the annual limit on elective deferrals will increase from $19,500 to $20,500 for 401(k), 403(b) and 457 plans, as well as for SARSEPs. The annual limit on compensation that can be taken into account for contributions and deductions will increase from $290,000 to $305,000. However, the annual limit on catch-up contributions for those age 50 and over will remain the same at $6,500. We can provide further information on the adjusted amounts.
Business owners: If your company offers a qualified retirement plan, such as a 401(k), you need to know how the IRS recently adjusted many of the key dollar limits and thresholds related to plan administration.
Are you a small to medium sized business near the Peoria, IL area? Do you need help with business tax preparation? Then you have come to the right place. It can be confusing and difficult to prepare your business’ taxes, so we are here to help clear up any confusion. Each business is different as well, and we know the ins and outs of taxes. Your taxes will be different depending on if:
We can help you minimize your taxes each year! Each year, businesses lose tons of money because they aren’t aware of regulations and constantly changing laws. David Mills CPA is here to help guide you through your tax season.
We also provide tax preparation near the Peoria, IL area to individuals looking for guidance. You may think your taxes are simple, but that couldn’t be farther from the truth. There are constant changes to the tax laws. Each year there are hundreds of changes. Can you keep up with those tax laws and regulations? Probably not. But we can! We will help you get the biggest return possible.
Contact us today and we will help you or your business with tax preparation. We look forward to being able to guide you or your business through the maze that can be taxes. It’s better to prepare now so you have peace of mind all year! Give us a call today.
This tax season, make sure you are getting the tax return you deserve with our help. Taxes are a complex system, and having a knowledgeable and experienced professional at your back can be the best way to improve your return. We offer tax planning and preparation for both individuals and small to medium-sized businesses.
For business owners, your personal and business taxes are closely linked. It’s especially important for business owners to have proper tax preparation. One issue many business owners face is that sometimes business owners think only of yearly taxes, but they are subject to many more such as:
We have the experience and knowledge required to guide you through the many regulations and laws. Minimizing these taxes is a goal of every business. We can help you and your business through our advising!
Many individuals believe that their tax return is relatively simple. You can go the simple route, but you are likely making mistakes and missing out on deductions you are able to claim. We can help you get the most out of your tax return.
Get the most out of your tax return. Call us today so we can provide you with professional tax preparation. You’ll see the difference for yourself and your business.
If you are like most people regarding taxes, you don’t feel confident in what you are doing. A tax consultant can help relieve stress and reduce mistakes while filing taxes. Check out five reasons why you should consider hiring a tax consultant.
Have you found a mistake on a previous tax return in the past three years? You can work with a tax constant to file an amended return. A consultant can help to minimize any damage that may have been caused. It can also provide you with peace of mind in knowing that your tax return will be properly handled.
Have you gotten married or divorced in the last year? If so, your tax filing may be affected.
Filling Your taxes can be time-consuming. A tax consultant will be able to work quickly and efficiently. They will be able to save you the stress of making sure your taxes are done right.
Taxes can become confusing if you live and work in different states. If you’ve recently moved to a new state it can be confusing as well.
A tax consultant will be able to assist you in the different states’ tax rules and can help you sort out any issues that arise.
A common mistake of new business owners is waiting to hire a tax professional. How you file your taxes the first year can impact future tax filings. It is important to start off right.
David Mills is proud to assist our customers with their taxes and make recommendations that fit your needs. If you need assistance with your taxes, contact David Mills today. We look forward to working with you!
With tax season approaching, it is time to start planning and preparing for taxes. To effectively plan for taxes, it is important to plan with an experienced professional. Continue reading to learn about David Mills’ approach to tax planning and tax preparation.
How does David Mills help you and your company with effective tax planning? We take into consideration the following things:
If you are a business owner, we take into consideration both your personal and business objectives. At David Mills, we take a long-term approach to planning. Our team will provide several planning scenarios that consider both your short and long term goals.
In recent years, there have been over 300 tax law changes and revisions. Several of the laws have limited time frames. David Mill’s team keeps up with all of the current tax law developments that affect you and your business.
We also can answer any questions about any returns that you have prepared yourself or by someone else who prepared them for you. Our team can review your past tax returns to ensure they are accurate and advise you. Learn more about our tax preparation service.
As tax season approaches, it is time to call David Mills. Our team will be happy to help you with both planning and preparation for taxes. Contact our team today for all of your tax needs!
If you own a business, you have probably heard about the Section 199A Deduction. This is also known as a Qualified Business Income Deduction. You may wonder what exactly this is and how does it work? David Mills CPA has put together information to help you better understand the 199A Deduction.
The 199A Deduction reduces taxable income but not adjusted gross income. This deduction does not lower Illinois taxable income or does not lower self-employment tax.
The 199A Deduction is available to sole proprietors, partners, and S corporation shareholders. It is not available to C corporations.
The calculation for the 199A Deduction can be complex. It is partly dependent on the taxpayer’s total taxable income. There are no limits for married filing jointly taxpayers with $315,000 or less of taxable income. There are typically no limits on the deduction regardless of whether the business is a specified service trade or business.
The deduction is the lesser of the Qualified Business Income or 20 percent of taxable income minus long-term capital gains.
Limits exist for married filing joint taxpayers with taxable incomes between $315,000 and $415,000. A limit begins to phase in based on wages and/or qualified property acquisitions.
If you earn an income above $415,000, limits are determined based on W-2 wages and qualified property acquisitions. This deduction is not available to the taxpayer under certain circumstances.
If you are looking for more information or need help with your 199A Deduction, contact David Mills CPA today. Our team of experts will be happy to assist you with all of your financial needs. David Mills offers financial and accounting services to small and medium-sized businesses, as well as individuals in Peoria, IL as well as the surrounding areas. We look forward to hearing from you!