Tag: taxes

2021 Tax Changes For Personal Filing

Before you know it, tax season will be here, and unless you’re an accountant or working for the IRS, you’re probably not too excited to look at W2s. As it goes, personal taxes will be a little bit different than it has been in previous years. 2022 brings with it new rules and changes that may take you by surprise if you’re not prepared early in the season. What specific new tax changes should you watch out for before you send in your return?

The Expanded Child Tax Credit

Was your family eligible for the expanded child tax credit? The American Rescue Plan boosted the credit to $3,000 for families with children 17 years of age or younger. In addition, an extra $600 was made available for children under 6 years of age to help families struggling during the pandemic.

While millions of Americans received advanced credits, some filers ended up earning more than expected in 2021 and may need to pay some of the credit back. How do you know if you may need to pay back some (if not all) of the credit?

Recipients can also easily check their advanced payments on the IRS website and determine whether they qualified for the payments received.

Health Insurance Premiums

In March 2021, Congress increased health insurance premium subsidies, capping premiums at 8.5 percent of household income, helping millions of Americans save money on their monthly premiums.

Did you get a raise or a new job in 2021, meaning an increase in wages? If so, your subsidies may not have been appropriately reflected throughout the year. What does this mean?

Similar to the child tax credit, 2022 filers may owe money back. Take time now to get an estimate of how much money you may need to set aside come tax season to offset these subsidies.

Required Minimum Distributions

In 2020, the CARES Act waived required minimum distributions, meaning that retirement plan participants, IRA owners (including beneficiaries) did not have to take RMDS from their IRAs.

The waiver has since ended, as did the RMD age, which changed to 72 from 70.5 years of age. If you’re unsure of the rules, deadlines, and requirements, visit the IRS’s site, check by plan, and learn about potential penalties.

Donohoo Can Handle Your Taxes

We realize these changing tax rules are hard to follow and stay on top of year after year. Donohoo Accounting Services is here to help make tax season easy for you while also helping you find every tax deduction you are entitled to.

When it comes time to file your 2021 taxes, you don’t have to do it on your own. We have been filing tax returns for individuals in the Greater Cincinnati area and beyond for more than 20 years, and our team is well versed in tax laws and rules, saving you time and money. Contact us today to schedule your free consultation! For more tips and our latest updates, check us out on Facebook, Twitter or LinkedIn!

Donohoo Accounting Services

2021 Tax Changes For Businesses

Filing taxes for your small business is likely one of your least favorite things about being your own boss. Tax season might be months away, but now is the time to determine if you will need any extensions. Plus, waiting until the week before the deadline might increase your risk of making a mistake and getting unwanted attention from the IRS!

Work-From-Home Related Deductions

Were you working from home for a majority of 2021 due to the pandemic? If so, you might have loved the quick commute from your bedroom to the home office and being able to spend more time in comfortable clothes.

You may be eligible for a home office deduction, adding extra money to your pocket. A home office deduction is usually reserved for those who are not employed by a company that provides a W2, but if you’re self-employed or an independent contractor, it might be worth looking into, as it could save you hundreds of dollars.

Paycheck Protection Program Loans

In 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act helped small business owners keep their heads above water during shutdowns, layoffs, and COVID surges by offering Paycheck Protection Program (PPP) loans.

These loans were used on business expenses like payroll, mortgages, utilities, rent, but became effectively exhausted in May 2021. Were you one of the business owners who were eligible and received loans in the first part of 2021? If you’re looking into having your loans forgiven, you must submit a loan forgiveness application and have it approved by the Small Business Administration.

Charitable Donation Deductions

2021 has been a hard year for us all as we worked to recover as a nation in the midst of a pandemic. Many non-profits and shelters found themselves in dire need of supplies to help feed and clothe those who were laid off or struggling to make ends meet.

Did your restaurant or food-related business donate to food banks or shelters during 2021 to help feed others in need? If so, you may qualify for an increased deduction limit on your 2021 taxes if you meet certain requirements outlined by the IRS.

Donohoo Can Handle Your Taxes

Donohoo Accounting Services is here to help make tax season easy for your small business by finding every tax deduction you are entitled to, saving you time that can be spent focusing on keeping your business running.

We have been filing tax returns for small businesses in the Greater Cincinnati area and beyond for more than 20 years, and our team is well versed in tax laws and rules, saving you time and money. Contact us today to schedule your free consultation! For more tips and our latest updates, check us out on Facebook, Twitter or LinkedIn!

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Mortgage Refinancing 101

Even before you’re ready to replace your current home loan with a new loan, you may be asking yourself, “Where do I start? Who should I talk to? What documents will I need?” In other words, the mortgage refinancing process may seem a bit overwhelming. The good news is there are steps to refinancing that are simple to follow. Take a look at the five steps below to begin your walk down the path to refinancing your home mortgage.

Set Your Re-fi Goals

Just like any other journey, the route to mortgage refinancing must have a destination. Some common refinancing goals include lowering your monthly payment, paying down the principal, withdrawing the equity in your home to pay off high-interest debt, and shortening the term of the loan. If you’re planning to move in five years or more, you may have other goals like re-investing the equity in smart improvements to increase your home’s resale value.

Know Your Credit Score

Having a great credit score usually translates into securing an excellent interest rate. That’s why knowing your credit score before you refinance is important. Does your credit score need some work? Take the time and effort to improve it. You may save yourself thousands of dollars over the term of your mortgage by earning a lower interest rate. A full credit report including your credit score is usually available free of charge from your bank and from many online resources.

Determine Your Home’s Equity

Before you refinance, call your lender to determine the payoff on your current mortgage. Then, have a trusted real estate agent show you a list of comparable properties (similar in size, age and updates in your neighborhood) that recently sold. Knowing the current market value of your home and subtracting what you owe on your current mortgage will help you determine the equity you have before you refinance.

Research Interest Rates

Knowing in advance the interest rates offered by various lenders will give you an advantage when you decide to refinance. Rates often differ by what seem like small amounts, but those fractions of percentage points add up over time. As well, depending on the type of loans you may qualify for, different home loan programs, such as VA, FHA, USDA and conventional offer different interest rates. Do your homework: research the best mortgage loans with the lowest rates that meet your needs.

Gather Your Money and Documents

Before applying to refinance your home mortgage, collect the necessary documents and data about your debt and assets, including income tax returns, W2s, bank statements, credit reports and personal identification. Also, be ready to pay closing costs by setting aside money in advance (about two to five percent of the appraised market value of your home).

With more than 20 years of experience helping individuals, small businesses and non-profit organizations with their finances, Donohoo Accounting Services is here to help you with your tax planning, tax filing and accounting needs. If you would like to set up a free consultation, contact us at 513-528-3982. For more tips and our latest updates, check us out on Facebook, Twitter or LinkedIn!

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How Tax Filing Will Be Different In 2021

The coronavirus pandemic brought unforeseen challenges to all aspects of business around the world, so it should be no surprise that it will impact this year’s taxes as well. Coronavirus legislation and inflation adjustments changed some of the most influential tax rules. Here is what you can expect to be different when you file your taxes this year.

February 12 is the opening date, and April 15 is the deadline

The first day to file in 2021 is February 12. We were all given a tax filing extension last year, but we’re back to April 15 for 2021. That doesn’t mean you can’t get an extension; but remember that being granted an extension only gives you more time to file your taxes, not more time to pay what you owe.

Charitable Deduction

The CARES Act allowed taxpayers to deduct up to $300 in monetary deductions in 2020 even if they chose to take the standard deduction. This was the IRS’s way to encourage Americans to contribute more money to charity during the pandemic.

Higher HSA Limits

Contributions limits for HSA-eligible workers who elected to participate in high deductible health insurance policies increased by $50 for self-only coverage (from $3,500 to $3,550) and by $100 for family coverage (from $7,000 to $7,100).

Higher Retirement Account Contribution Limits

Some workplace retirement accounts have higher contribution limits in 2020, so be sure to check yours. To illustrate, 401(k) plans had a base contribution limit of $19,000 in 2019, but that increased by $500 to $19,500 in 2020. For those who are age 50 and older, the catch-up contribution limit increased by $500 also, from $6,000 in 2019 to $6,500 in 2020. This means that if you are age 50 or older, you could potentially contribute a total of $26,000 ($19,500 + $6,500) to a 401(k) plan in 2020.

Higher Standard Deductions

Each year the IRS adjusts the standard deductions for inflation. This reduces the amount of income that is subject to federal taxes. In 2020, the IRS raised the standard deduction by anywhere between $200 and $400. The breakdown is as follows:

  • Married filing jointly: (+400 from 2019) – $24,800
  • Married individuals filing separately: (+$200) – $12,400
  • Head of household: (+$300) – $18,650
  • Single: (+$200) $12,400

Donohoo Accounting Services realizes these changing tax rules are hard to understand and stay on top of. When it comes time to file your 2020 taxes, you don’t have to do it alone. We are here to help you realize and take advantage of every tax deduction you are entitled to. We have been filing tax returns for individuals and small businesses for more than 20 years, so we are well versed in tax laws and rules and can help save you money, time and headaches.

If the thought of filing taxes fills you with dread or stress, please call Donohoo Accounting Services at 513-528-3982. We can handle the details and ensure you are receiving the tax credits, deductions and refunds you deserve. For more tips and our latest updates, check us out on Facebook, Twitter or LinkedIn!

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