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2021 Tax Increases and How Tax Preparation Services Can Help

 

2021 Tax Increases, Latest Bill, Drafted In The House

2021 will see an increase in taxes, but have no fear: tax preparation services can help you navigate the changes and maximize your benefit. In this article, we’ll outline the new tax changes proposed for 2022.

Firstly, the Ways and Means Committee, essentially the chief tax-writing committee in the House, just released their first draft of how the government plans to fund the $3.5 trillion infrastructure bill laid out last month.

These are essentially the details of what an INCREASE IN TAXES will look like in 2022.

The draft, just over 830 pages, includes significant changes to the current tax code and needs to be correctly assessed and planned for, should this draft become law. Here are a few insights into what this bill means for you:

What Does This New Bill Mean?

  • Top corporate tax rate moving to 26.5% if making over 5M, 21% making between 400k-5M and 18% for all C Corps under 400k.
  • Accelerates the termination of the employer credit for paid family and medical leave to 2023 rather than 2025.
  • Creates a new top tax bracket of 39.6% for income over $400,000. ($500,000 for joint filers, $450,000 for head of household filers, $225,000 for married filing separately status).
  • Creates a new 25% capital gains rate for taxpayers with incomes that fall into the new 39.6% income tax bracket. Effective for gains recognized after September 13, 2021.
  • Applies the net investment income tax to ordinary trade or business income of taxpayers with taxable income over $400,000 (individual) or $500,000 (joint filers), with an exception for wages subject to FICA taxes.
  • Caps the allowable qualified business income deduction under §199A to $400,000 for an individual, $500,000 for joint filers (half that for married filing separately), and $10,000 for a trust or estate.

 

  • Must include the assets of any grantor trust the taxpayer owns. Must include in the taxpayer’s estate. Transactions between a grantor trust and the owner of the trust must be treated as if between the trust and an unrelated party. Applicable only to trusts created or assets transferred after the date of enactment.


And this is just the tip of the iceberg of the 830-page draft bill. You don’t have to be an expert on taxes or read every page of the new bill. For this reason, let expert tax preparation services do that for you. 

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Need help understanding how this may apply to you? Without delay, understand what proactive strategies you must implement before these changes occur. Book Your Free Assessment Here.