DAYTON, Ohio – With 2022 just hours away, experts say there are still some steps taxpayers can take before the end of 2021 to ease some of the burden of next year’s taxes.
One option for those who are able is to increase their IRA contributions, according to Terry Krupp, the director of tax and accounting at Laird’s Tax & Accounting. Taxpayers over 50 can make contributions of up to $7,000, while the limit for those under 50 is $6,000. These contributions are non-taxable and could therefore lead to tax reductions.
“I think this is the time of year to really look at those qualified retirement plan deferrals,” said Lance Bradstreet, a partner at Bradstreet & Co. CPAs. “It’s a great way to save money.”
Another potential option involves donating to a charitable foundation. Bruce Carter, the owner of Ladd & Carter Tax Service, said that if a taxpayer were to make a cash donation to a nonprofit organization without taking the standard deduction, the donation would become deductible. Carter added that up to $300 can be claimed on a tax return – $600 if a joint return is being filed – from this practice without any additional documentation.
Some new wrinkles to 2021 tax rules will require careful record-keeping, including changes to the IRS’s Child Tax Credit. According to the IRS, eligible taxpayers with a qualifying child automatically received monthly advanced payments totaling half of the credit’s full sum throughout the year.