Withum, a Top 25 Firm, has released its annual Year-End Tax Planning Guide, along with a Resource Center with articles and checklists that taxpayers and tax professionals can use to prepare for the new year.
Withum’s Year-End Tax Planning Guide explains federal, state, local, and international tax issues and compliance concerns, along with CARES Act highlights, transfer pricing strategies, charitable contribution strategies, R&D tax credits and wealth management.
The guide also includes some of the top planning considerations for several specific industries.
“We’ve seen a tremendous uptick in business activity this year, and [our] year-end tax planning guide will be particularly important for taxpayers to address both new and pending legislation,” said Daniel Mayo, national lead of federal tax policy at Withum, in a statement. “Taxpayers need to adjust their tax planning to account for new tax provisions as well as for expiring tax provisions relating to the CARES Act.”
The guide recommends that individual taxpayers postpone their income if they can until 2022 and accelerate deductions into 2021. “Doing so may enable you to claim larger deductions, credits, and other tax breaks for 2021 that are phased out over varying levels of adjusted gross income,” said the guide. “Married couples with children who have an AGI around $150,000 may want to consider strategies to lower their AGI to take advantage of the expanded child tax credit, dependent care credit, and any missed recovery rebate credits.”
Postponing income can also be helpful for taxpayers who expect to be in a lower tax bracket next year due to changed financial circumstances because the Build Back Better Act that the Biden administration is trying to pass in the Senate would impose a new 5% surtax on households with AGI above $10 million and an additional 3% tax (for a combined 8%) on those with AGI above $25 million. “If enacted, high net worth individuals should consider accelerating income into 2021, and deferring deductions into 2022, to avoid these higher rates,” said the guide.