today’s TOPIC
Things to know about
taxes for 2021 filing BY » Peter Eisenhauer
N
ot to interrupt your holiday celebrations, but some might say that December is also the month for making sure you are ready to square accounts with Uncle Sam early in the coming year.
Naturally, the IRS advises that we get ready. “Tax planning is for everyone,” according to a recent IRS press release. “Get ready today to file your 2021 federal income tax return. Planning ahead can help you file an accurate return and avoid processing delays that can slow your tax refund.” And the IRS provides detailed guidance on gathering and organizing your tax records, and making use of online account information that is available to taxpayers. There is a comprehensive set of resources available at this link: https://www.irs. gov/individuals/steps-to-take-nowto-get-a-jump-on-next-years-taxes. Among the general tips offered are to take advantage of free filing, and to file electronically and select direct deposit to get the fastest possible refund. As an added incentive, the 10 LimitlessMagOnline.com | December 2021
IRS notes that direct deposit saves all taxpayers money as it is substantially cheaper to issue refunds electronically. We asked two Lake Norman area financial professionals for their tips on preparing to file this year’s tax returns. David Hedges, a Certified Wealth Strategist (CWS®), and President of Bookman Bright Inc. in Davidson says, “The end of every year is always an important time for financial review and clean up; especially as it relates to taxes. So, while you may be thinking about Thanksgiving, Hannukah, Christmas and any other holidays that are celebrated at the end of the year, you should put aside just a little sliver of time to make sure that your “financial ducks are in a row” and that you’ve met any end of the year IRS requirements.” Daniel Tobias, a Certified Financial Planner, and founder of Passport Wealth Management, in Cornelius says, “With all the changes we’ve experienced this year, and are still expecting in the coming years, tax planning is becoming increasingly complex. Therefore, it can be valuable to work with a financial professional who can advise on taxes and to begin the process as
early in the year as possible. Some deadlines have already passed while others are just around the corner.” Where to begin? According to Hedges, “First, what you should do and what I do for my clients is review your tax situation as it relates to short and long-term capital gains taxes. Make sure that you don’t have any large and taxable realized gains that could easily be offset with realizing some losses before the end of the year.” “I can run quick and easy reports for my client accounts to give me a taxable gain status and hopefully you have a similar resource available as well,” Hedges said. “This is typically the time of year where we might review last year’s tax return against the income events of this year for a given client. Doing so, against long-term income projections and a corresponding long-term plan, will help us to determine if it makes sense to convert any deductible IRA assets to Roth. ” Tobias said. “This isn’t specific to 2021 but with the Tax Cuts and Jobs Act scheduled to sunset in a few years, it’s possible that we may never see tax rates this low again. People who
