January 2021 E-Newsletter

JANUARY 2021 E-NEWSLETTER

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January Featured News

IRS Letter 6419

Please be on the look out for IRS letter 6419. The IRS will be mailing this letter out in January of 2022. Anyone who received at least one advance Child Tax Credit payment from July to December 2021 will receive Letter 6419.

Reasonable Compensation for S Corporation Owners

Choosing an S Corporation (S Corp) as the best legal structure for your business provides tax perks, but it also comes with limits: paying owners a reasonable salary.

New Year, Fresh Start

If the pandemic has caused a slowdown in reaching your financial goals, now is the time to review your plans and push reset for 2022. Your financial and tax professionals can guide you through this process.

Keep Beneficiary Designations Current

When was the last time you reviewed beneficiary information on your life insurance policies, retirement accounts and will? It’s important to check all accounts because in many cases, beneficiary designations on policies and retirement plans supersede what is written in your will or trust documents.

Marketing on a Budget

Small businesses often operate on tight budgets. But fortunately, there are ways you can market your business without spending a lot.

January 2022 Q & A

Q: Are there tax credits available for my small delivery business if I purchase electric vehicles?

A: A tax credit of up to $7,500 per vehicle is available when you purchase an electric car from a manufacturer that has sold less than 200,000 electric automobiles. Tesla and General Motors have already crossed that threshold, so a tax credit is not available for their vehicles. Additional requirements for the tax credit are that the car must be purchased new from the manufacturer, and you must use it primarily in the United States.

Q: The Social Security Number on my W-2 is incorrect. What should I do?

A: January is the time of year when informational tax forms like W-2s, 1099s and 1098s begin appearing in mailboxes. Be sure to check them carefully for accuracy. And if you discover a mistake, contact the sender immediately. They’ll need to issue a corrected form. If it’s an incorrect W-2, your employer will send you a W-2c. And for 1099s and 1098s, they’ll check the box next to the word corrected at the top of the form. Always use information from the updated document on your tax return because the IRS will flag anything that doesn’t match, potentially creating delays or creating an unexpected tax bill.

SHORT BITS

2022 OUTLOOK

According to a recent survey completed by The Harris Poll, 71% of small and medium-sized businesses say they survived the pandemic through digitization. And 79% say that these changes will help them to be prepared for future adversity. Just over half expect to maintain a remote work environment utilizing their new technologies.

INTERNATIONAL TRAVEL

Pew Research Center completed a recent survey and found that most Americans (71%) have traveled internationally at some point in their lives. Approximately 19% have visited one foreign country while only 11% have been to more than ten countries. College graduates are more likely to have traveled to multiple countries. At least a quarter of college graduates have been to at least ten different countries.

SOCIAL SECURITY

In 2020, nearly 70 million Americans collected benefits from the Social Security Administration, with approximately 71% receiving payments because of retirement and 13% due to disability. Of the 70 million beneficiaries, 5.8 million were new recipients in 2020 who collected an average of $1,636 per month in retirement benefits. For 2020, the Social Security trust fund collected $1.1 trillion in revenue, with nearly 90% coming from payroll tax contributions.

EDUCATION PLANS

At the end of December 2020, approximately $425 billion was invested in Section 529 plans designed to help save for education expenses. Many of those funds were in savings accounts, with only approximately $27 billion held in prepaid tuition plans. According to the Investment Company Institute, the total $425 billion represents a 14.5% increase over December 2019. The number of accounts increased 4% to 14.8 million in 2020 over 2019.