2022-2023 TAX PLANNING GUIDE - Year-round strategies to make the tax laws work for you
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2022-2023 TAX PLANNING GUIDE Year-round strategies to make the tax laws work for you
Tax planning may be a
real challenge this year
M
inimizing taxes is never easy. But in times of legislative and economic uncertainty, it can be a real chal-
lenge. To take advantage of all available breaks, you first need to be aware of relevant tax law changes that
are going into effect — or that have expired. For example, the Inflation Reduction Act, signed into law in
August, includes some tax breaks related to clean energy, plug-in electric vehicles and home energy improvements.
But tax provisions intended to provide relief during the height of the pandemic generally have expired.
You also can’t forget about the massive Tax Cuts and Jobs Act (TCJA) that generally went into effect four years ago,
because the TCJA still significantly impacts tax planning. Finally, you need to keep an eye out for any new tax law
changes that might still be signed into law this year and affect 2022 planning.
This guide provides an overview of some of the key tax provisions you need to be aware of. It offers a variety of
strategies for minimizing your taxes in the current tax environment. Use it to identify the best strategies for your
particular situation with your tax advisor, who also can keep you apprised of any new tax law developments that
might affect you.
Contents
Income & Deductions 2 Click here
Family & Education 4 Click here
Investing 6 Click here
Business 8 Click here
Retirement 12 Click here
Estate Planning 14 Click here
Tax Rates 16 Click here
2 Income & Deductions
Reducing your
taxable income with
deductions and other breaks
D
eductions are valuable because
they reduce the amount of your
income that’s subject to federal Chart 1 2022 standard deduction
tax — and in many cases, state tax, too.
Income can also be tax-free if it comes Filing status Standard deduction1
from certain tax-advantaged accounts
or is eligible for some other type of Singles and separate filers $ 12,950
exclusion. In recent years, deduction Heads of households $ 19,400
planning has been greatly impacted by
the TCJA. For example, this 2017 law Joint filers $ 25,900
reduced or eliminated many deduc- 1
Taxpayers who are age 65 or older or blind can claim an additional standard deduction: $1,400
tions while significantly increasing the each if married, $1,750 if unmarried.
standard deduction. It also generally
reduced tax rates, and deductions save Deducting sales tax instead of income Home office deduction. If you’re
less tax when rates are lower. Proper tax may be beneficial if you reside in a an employee and work from home,
timing of deductible expenses and state with no, or low, income tax or you under the TCJA, home office expenses
taking advantage of other breaks can purchased a major item, such as a car aren’t deductible through 2025 —
help maximize your tax savings. or boat. even if your employer has required
you to work from home. Why? For
Standard deduction vs. itemizing Home-related breaks employees, this is a miscellaneous
Taxpayers can either itemize certain itemized deduction subject to the
Consider both deductions and exclu-
deductions or take the standard deduc- 2% of adjusted gross income (AGI)
sions in your tax planning:
tion for their filing status. Itemizing floor, and the TCJA suspended such
saves tax when the total will be larger deductions. (If you’re self-employed,
Property tax deduction. As noted
than the standard deduction, but it you may still be able to deduct home
earlier, unless proposed tax law changes
makes filing more complicated. office expenses. See page 11.)
come to fruition, through 2025 your
property tax deduction is subject to the
The TCJA nearly doubled the standard Personal casualty and theft loss
state and local tax deduction limit.
deduction for each filing status. Those deduction. Through 2025, the TCJA
amounts are to be annually adjusted suspends this itemized deduction
Mortgage interest deduction. You gen-
for inflation through 2025, after which except if the loss was due to an event
erally can claim an itemized deduction
they’re scheduled to drop back to the officially declared a disaster by the
for interest on mortgage debt incurred to
amounts under pre-TCJA law. (See President.
purchase, build or improve your principal
Chart 1 for 2022 amounts.)
residence and a second residence. Points
But, under an exception, personal
paid related to your principal residence
The combination of a higher standard casualty losses not related to a disaster
also may be deductible. Through 2025,
deduction and the reduction or elimina- can be deducted to the extent of any
the TCJA reduces the mortgage debt
tion of many itemized deductions means personal casualty gains. Such gains
limit from $1 million to $750,000 for
that many taxpayers who once benefited occur when the amount you receive
debt incurred after Dec. 15, 2017 (from
from itemizing are now better off taking from insurance or other reimbursements
$500,000 to $375,000 for separate filers),
the standard deduction. is more than the cost or adjusted basis
with some limited exceptions.
of the property.
State and local tax deduction Home equity debt interest deduction.
Rental income exclusion. If you rent
Under the TCJA, through 2025, your entire Through 2025, the TCJA effectively limits
out all or a portion of your principal
itemized deduction for state and local the home equity interest deduction to
residence or second home for less than
taxes — including property tax and the debt that would qualify for the home
15 days during the year, you don’t have
greater of income or sales tax — is limited mortgage interest deduction. (Under
to report the income. But expenses
to $10,000 ($5,000 if you’re married filing pre-TCJA law, interest was deductible
directly associated with the rental, such
separately). Increasing or eliminating the on up to $100,000 of home equity debt
as advertising and cleaning, won’t be
limit has been discussed. Check with your used for any purpose, such as to pay off
deductible.
tax advisor for the latest information. credit card debt or to buy a car.)
Income & Deductions 3
Home sale gain exclusion. When Tax-advantaged tax if it would help you exceed the appli-
you sell your principal residence, saving for health care cable floor and you’d have enough total
you can exclude up to $250,000 of itemized deductions to benefit from
If medical expenses not paid via tax-
gain ($500,000 for married couples itemizing. Of course, your and your
advantaged accounts or reimbursable by
filing jointly) if you meet certain tests. family’s health is more important than
insurance exceed a certain percentage
Warning: Gain that’s allocable to a tax savings, so don’t adjust timing in a
of your AGI, you can claim an itemized
period of “nonqualified” use generally way that would be harmful health-wise.
deduction for the amount exceeding that
isn’t excludable.
“floor.” Fortunately the 7.5% floor that
had in recent years been a temporary You may be able to save taxes without
Loss deduction. If you sell your home reduction from 10% is now permanent. having to worry about the medical
at a loss and part of your home is expense deduction floor by contributing
rented out or used exclusively for your to one of these accounts:
Eligible expenses may include health
business, the loss attributable to that
insurance premiums, long-term-
portion may be deductible. HSA. If you’re covered by a qualified
care insurance premiums (limits
apply), medical and dental services, high-deductible health plan, you can
Moving expense deduction. Under and prescription drugs. Mileage driven contribute pretax income to an employer-
the TCJA, through 2025, work-related for health care purposes also can be sponsored Health Savings Account — or
moving expenses are deductible only deducted — at 18 cents per mile for make deductible contributions to an HSA
by active-duty members of the Armed Jan. 1 – June 30, 2022, and at 22 cents you set up yourself — up to $3,650 for
Forces (and their spouses or dependents) per mile for July 1 – Dec. 31, 2022. self-only coverage and $7,300 for family
who move because of a military order coverage (plus $1,000 if you’re age 55 or
that calls for a permanent change of older) for 2022. HSAs can bear interest or
Consider whether there are any medical
station. (If you’re eligible, you don’t have be invested, growing tax-deferred similar
services and purchases you could bunch
to itemize to claim this deduction.) to an IRA. Withdrawals for qualified
into alternating years. This could save
medical expenses are tax-free, and you
can carry over a balance from year to
WHAT’S Expanded charitable deductions have expired, year, allowing the account to grow.
NEW! but giving still offers tax-saving opportunities
FSA. You can redirect pretax income
Generally, donations to qualified charities are fully deductible — but only to an employer-sponsored Flexible
if you itemize deductions. For 2020 and 2021, pandemic relief legislation Spending Account up to an employer-
allowed taxpayers who claimed the standard deduction to deduct up to determined limit — not to exceed $2,850
$300 of cash donations to qualified charities (for 2021 only, $600 for married in 2022. The plan pays or reimburses
couples filing jointly). As of this writing, nonitemizers can’t claim any charitable you for qualified medical expenses. (If
deductions for 2022, but it’s possible Congress could bring back the break.
you have an HSA, your FSA is limited
Check with your tax advisor for the latest information.
to funding certain permitted expenses.)
If itemizing no longer will save you tax because of the increased standard What you don’t use by the plan year’s
deduction, you might benefit from “bunching” donations into alternating years end, you generally lose — though your
so that your total itemized deductions in those years would then surpass your plan might give you a 2½-month grace
standard deduction. You can then itemize just in those years. period to incur expenses to use up the
For large donations, dis- previous year’s contribution. Or it might
cuss with your tax advisor allow you to roll over up to $570 to 2023.
which assets to give and Warning: Some provisions allowing
the best ways to give them. added FSA flexibility because of the
For example, if you made pandemic have expired.
cash donations in 2020
and 2021 because of the More considerations
100% of adjusted gross
income (AGI) deduction Keep in mind that legislation could be
limit for such gifts to public signed into law that would suspend or
charities, in 2022 you may alter some of the TCJA provisions affect-
want to consider giving ing deductions or make other changes
appreciated securities to deduction rules. Check with your tax
instead. Why? For 2022, advisor for the latest information.
the deduction limit for cash
gifts returns to the normal
Also be aware that there are other
60% of AGI limit. While an
types of taxes that could affect you and
even lower limit of 30%
applies to appreciated should be factored into your planning,
security donations, you such as the alternative minimum tax
can avoid any capital gains (AMT). Your tax advisor can help you
tax you’d owe if you sold determine if you’re among the small
the securities. number of taxpayers who still need to
plan for the AMT after the TCJA. 
4 Family & Education
Parent or student?
Here’s how you can
save taxes in 2022
R
aising children and helping them for one child or 20% of up to $6,000 Kiddie tax
pursue their educational goals — of such expenses for two or more The “kiddie tax” generally applies to
or pursuing your own — can children. So, the maximum credit is unearned income beyond $2,300 (for
be highly rewarding. But it also can be usually $600 for one child or $1,200 2022) of children under age 19 and of
expensive. Fortunately, a variety of tax for two or more children. Warning: full-time students under age 24 (unless
breaks can offset some of the costs. The expanded credit that was available the students provide more than half
However, a few tax break enhancements for 2021 hasn’t as of this writing been of their own support from earned
available last year expired Dec. 31, 2021. extended to 2022. Check with your tax income). Such income is generally
advisor for the latest information. taxed at the parents’ tax rate.
Child, dependent
and adoption credits Child and dependent care FSA. For
529 plans
2022, you can contribute up to $5,000
Under the TCJA, these two tax credits If you’re saving for education expenses,
pretax to an employer-sponsored child
for families are available through 2025: consider a Section 529 plan. You can
and dependent care Flexible Spending
Account. The plan pays or reimburses choose a prepaid tuition plan to secure
1. For each child under age 17 at the you for these expenses. You can’t claim current tuition rates or a tax-advantaged
end of the tax year, you may be savings plan to fund education expenses:
a tax credit for expenses reimbursed
able to claim a $2,000 credit. The
through an FSA. Warning: The higher
credit phases out for higher-income Although contributions aren’t
contribution limit available for 2021
taxpayers (see Chart 2) but the deductible for federal purposes, any
hasn’t as of this writing been extended
income ranges are much higher growth is tax-deferred. (Some states
to 2022. Check with your tax advisor
than before the TCJA. Warning: do offer tax breaks for contributing.)
for the latest information.
The expanded credit and advanced
payments available in 2021 haven’t
as of this writing been extended to
2022. Check with your tax advisor Case
Study 1
Why Roth IRAs make tax-sense for teens
for the latest information.
Liam, 16, is starting his first part-time job this year. Liam’s parents would like to get
2. For each qualifying dependent
him in the habit of saving for the future, and they ask their tax advisor for the most
other than a qualifying child (such
tax-advantaged option. She suggests a Roth IRA, which can be perfect for teen-
as a dependent child over the agers because they likely have many decades to let their accounts grow tax-free.
age limit or a dependent elderly
parent), you may be able to claim a Roth IRA contributions aren’t deductible, but if Liam earns no more than the stan-
$500 family credit. But it’s also sub- dard deduction for singles ($12,950 for 2022) and has no unearned income, he’ll
ject to the income-based phaseout. pay zero federal income tax anyway. So the tax-free treatment of future qualified
distributions will be well worth the loss of any current deduction. Even if Liam’s
earned income exceeds the standard deduction, he’ll probably be taxed at a very
If you adopt in 2022, you may qualify low rate. So the long-term tax benefits of a Roth IRA will typically still outweigh the
for the adoption credit — or for an benefit of the current deduction available with a traditional IRA.
employer adoption assistance program
income exclusion. Both are $14,890 for
2022, but the credit is also subject to an
income-based phaseout. (See Chart 2.)
Dependent care breaks
A couple of tax breaks can offset the
costs of dependent care:
Child and dependent care tax credit.
For children under age 13 or other
qualifying dependents, generally a
credit is available that equals 20% of
the first $3,000 of qualified expenses
Family & Education 5
Distributions used to pay the follow-
ing expenses are income-tax-free for 2022 child and education breaks:
federal purposes and potentially also Chart 2
Are you subject to a phaseout?
for state purposes, making the tax
deferral a permanent savings: Tax break MAGI1 phaseout range
Qualified postsecondary school Single / Head of household2 Married filing jointly
expenses, such as tuition,
mandatory fees, books, supplies, Child credit $ 200,000 – $ 240,000 $ 400,000 – $ 440,000
computer equipment, software, Adoption
$ 223,410 – $ 263,410 $ 223,410 – $ 263,410
Internet service and, generally, credit
room and board, Dependent
$ 15,000 – $ 43,000 $ 15,000 – $ 43,000
Elementary and secondary school care credit3
tuition of up to $10,000 per year ESA
$ 95,000 – $ 110,000 $ 190,000 – $ 220,000
per student, and contribution
Up to $10,000 of student loans American
per beneficiary. Opportunity $ 80,000 – $ 90,000 $ 160,000 – $ 180,000
credit
The plans usually offer high con- Lifetime
tribution limits, and there are no $ 80,000 – $ 90,000 $ 160,000 – $ 180,000
Learning credit
income limits for contributing.
Student
There’s generally no beneficiary age loan interest $ 70,000 – $ 85,000 $ 145,000 – $ 175,000
limit for contributions or distributions. deduction
You can control the account, even
1
Modified adjusted gross income.
after the child is of legal age.
2
These ranges also apply to married taxpayers filing separately, except that separate filers aren’t eligi-
ble for the American Opportunity or Lifetime Learning credit or the student loan interest deduction.
You can make tax-free rollovers to 3
The phaseout is based on AGI rather than MAGI. The credit doesn’t phase out altogether, but the
another qualifying family member. minimum credit percentage of 20% applies to AGIs above $43,000.
A special break for 529 plans allows
you to front-load five years’ worth
Education credits If your employer pays some of your
of annual gift tax exclusions and
If you have children in college now student loan debt, you may be eligible
make up to an $80,000 contribution
or are currently in school yourself, to exclude up to $5,250 from income.
(or $160,000 if you split the gift with
you may be eligible for a credit: (Student loan interest payments for
your spouse) per beneficiary in 2022.
which the exclusion is allowable can’t
be deducted.) This break is scheduled
The biggest downside of 529 plans may American Opportunity credit.
to expire after 2025.
be that your investment options — This tax break covers 100% of the
and when you can change them — are first $2,000 of tuition and related
expenses and 25% of the next $2,000 2021’s American Rescue Plan Act allows
limited.
of expenses. The maximum credit, the tax-free treatment of student loan debt
per student, is $2,500 per year for forgiven after Dec. 31, 2020, and before
ESAs Jan. 1, 2026. (Forgiven debt otherwise is
the first four years of postsecondary
Coverdell Education Savings Accounts typically treated as taxable income.)
education.
are similar to 529 savings plans in that
contributions aren’t deductible for fed- ABLE accounts
Lifetime Learning credit. If you’re
eral purposes, but plan assets can grow
paying postsecondary education Achieving a Better Life Experience
tax-deferred and distributions used
expenses beyond the first four years, accounts offer a tax-advantaged way
to pay qualified education expenses
you may benefit from the Lifetime to fund qualified disability expenses
are income-tax-free. ESAs are worth
Learning credit (up to $2,000 per for a beneficiary who became blind
considering if you’d like to have direct
tax return). or disabled before age 26. For federal
control over how your contributions are
purposes, tax treatment is similar to
invested or you want to pay elementary
Warning: Income-based phaseouts that of 529 college savings plans.
or secondary school expenses in excess
of $10,000 or that aren’t tuition. apply to these credits. (See Chart 2.)
If your income is too high for you to Under the TCJA, through 2025, 529 plan
qualify, your child might be eligible. funds can be rolled over to an ABLE
But the $2,000 contribution limit is low,
account without penalty if the ABLE
and it’s phased out based on income.
Student loan breaks account is owned by the beneficiary of
(See Chart 2.) Also, contributions can
the 529 plan or a member of the benefi-
generally be made only for beneficiaries If you’re paying off student loans,
ciary’s family. Such rolled-over amounts
under age 18. When the beneficiary you may be able to deduct up to
count toward the ABLE account annual
turns age 30, the ESA generally must $2,500 of interest (per tax return).
rollover and contribution limit ($16,000
be distributed, and any earnings may An income-based phaseout applies.
for 2022).
be subject to tax and a 10% penalty. (See Chart 2.)
6 Investing
Tax planning for investments
involves many considerations
Y
ou need to understand the Being tax-smart with losses After all, if you hold on to the invest-
potential tax consequences of Losses aren’t truly losses until they’re ment, it may recover the lost value. In
buying, holding and selling a realized — that is, generally until you fact, a buy-and-hold strategy works
particular investment. However, you sell the investment for less than what well for many long-term investors
shouldn’t let tax considerations propel you paid for it. So while it’s distressing because it can minimize the effects
your investment decisions. So, as you to see an account statement that shows of market volatility. But in certain
buy and sell investments, be sure you a large loss, the loss won’t affect your situations it can make sense to accu-
also consider your investment goals, current tax situation as long as you still mulate tax losses that you can carry
time horizon, risk tolerance, factors own the investment. forward to offset future gains. (See
related to the investment itself, fees and Case Study 2.)
charges that apply to buying and selling
Realized capital losses are netted against
securities, and your need for cash. Mutual funds
realized capital gains to determine
capital gains tax liability. If net losses Mutual funds with high turnover
Capital gains tax and timing exceed net gains, you can deduct only rates can create income that’s taxed
Although time, not timing, is generally $3,000 ($1,500 for married taxpayers at ordinary-income rates. Choosing
the key to long-term investment suc- filing separately) of losses per year funds that provide primarily long-term
cess, timing can have a dramatic impact against ordinary income (such as wages, gains can save you tax dollars because
on the tax consequences of investment self-employment and business income, of the lower long-term rates.
activities. Your marginal long-term interest, dividends, and taxable retire-
capital gains rate can be as much as ment plan distributions). But you can Also pay attention to earnings reinvest-
20 percentage points lower than your carry forward excess losses until death. ments. Unless you or your investment
ordinary-income tax rate. advisor record increases in your tax basis
If you don’t have enough gains to accordingly, you may report more gain
The long-term gains rate applies to absorb losses, you could be left with than required when you sell the fund.
investments held for more than 12 losses in excess of the annual ordinary- Brokerage firms are required to track
months. The rate varies depending on income deduction limit. So think twice (and report to the IRS) your cost basis in
your income and the type of assets. (See before selling an investment at a loss. mutual funds acquired in recent years.
Chart 3.) Under the TCJA, current rates
are scheduled to be in effect through
2025. Lawmakers could, however, make
changes to the rates sooner. Chart 3 What’s the maximum 2022 capital gains tax rate?
Holding on to an investment until Type of gain Rate1
you’ve owned it more than one year
Taxpayer’s ordinary-
may help substantially cut tax on any Short-term (assets held 12 months or less)
income tax rate
gain. But be sure to look at your spe-
cific situation, and keep an eye out for Long-term (assets held more than 12 months) 15%
possible tax law changes. Some key exceptions
Long-term gain of certain higher-income taxpayers 20%2
Most long-term gain that would be taxed at 10% or
0%
12% based on the taxpayer’s ordinary-income rate
Long-term gain on collectibles, such as artwork
28%
and antiques
Long-term gain attributable to certain recapture of
25%
prior depreciation on real property
1
In addition, the 3.8% net investment income tax (NIIT) applies to net investment income to the
extent that modified adjusted gross income (MAGI) exceeds $200,000 (singles and heads of
households), $250,000 (married filing jointly) or $125,000 (married filing separately).
2
The 20% rate applies only to those with taxable income exceeding $459,750 (singles), $488,500
(heads of households), $517,200 (joint filers) or $258,600 (separate filers).
Investing 7
Finally, beware of buying equity mutual
fund shares late in the year. These funds
Case Sometimes building up tax losses
often make capital gains distributions
Study 2 for the future can be beneficial
toward year end. If you purchase shares
before such a distribution, you’ll end up Oscar has a large investment in his portfolio that seems to be on a downward spiral,
with capital gains reportable on your tax with no sign of potential recovery. But he’s reluctant to sell because his net capital
return for the year of the distribution. It losses for the year exceed the $3,000 he’ll be able to deduct on his 2022 tax return.
doesn’t matter whether the actual value
of the shares has increased or even Oscar talks to his tax advisor, who reminds him that tax considerations shouldn’t
be the primary driver of investment decisions. If Oscar is ready to divest himself of
decreased since you purchased them, or
a poorly performing stock because he doesn’t think its performance will improve
whether you reinvest the proceeds back
or because his investment objective or risk tolerance has changed, he shouldn’t
into the same fund. hesitate solely for tax reasons.
Why? The distribution itself is a taxable Plus, building up losses for future use could be beneficial. This may be especially
event. If capital gains distributions true for Oscar because he owns a closely held business that might generate
substantial future gains. Building up losses could also be beneficial for taxpayers
from the mutual fund are reinvested in
with large investment portfolios or real estate holdings — or if tax rates increase.
the fund, the distribution itself doesn’t
change your value in the fund. It simply
increases the number of shares you
own, yet now at a lower per-share value.
Income investments
Some types of investments produce
income in the form of dividends or
interest. Here are some tax conse-
quences to consider:
Dividend-producing investments.
Qualified dividends are taxed at the
favorable long-term capital gains tax
rate rather than at your higher ordinary-
income tax rate.
Interest-producing investments.
Bonds. These also produce interest 3.8% NIIT
Interest income generally is taxed at
income, but the tax treatment varies: Taxpayers with modified adjusted
ordinary-income rates. So stocks that
pay qualified dividends may be more gross income (MAGI) over $200,000
attractive taxwise than other income Interest on U.S. government bonds ($250,000 if married filing jointly
investments, such as CDs and taxable is taxable on federal returns but and $125,000 if married filing sepa-
bonds. But also consider nontax issues, exempt by federal law on state and rately) may owe the net investment
such as investment risk, rate of return local returns. income tax. The NIIT equals 3.8%
and diversification. Interest on state and local govern- of the lesser of your net investment
ment bonds is excludable on federal income or the amount by which
returns. If the bonds were issued in your MAGI exceeds the applicable
your home state, interest also may threshold. Net investment income
be excludable on your state return. can include capital gains, dividends,
interest, passive business income,
Tax-exempt interest from certain rental income and other investment-
private-activity municipal bonds can related income (but not business or
trigger or increase the alternative self-rental income from an active
minimum tax (AMT), but the AMT trade or business).
now occurs much more rarely.
Corporate bond interest is taxable Many of the strategies that can
for federal and state purposes. help you save or defer income tax
on your investments can also help
Bonds (except U.S. savings bonds) you avoid or defer NIIT liability.
with original issue discount build And because the threshold for the
up “interest” as they rise toward NIIT is based on MAGI, strategies
maturity. You’re generally considered that reduce your MAGI could also
to earn a portion of that interest help you avoid or reduce NIIT
annually — even though the bonds liability.
don’t pay this interest annually —
and you must pay tax on it.
8 Business
Don’t let taxes unnecessarily
drag down your bottom line
I
n 2022 some businesses are thriving Depending on your situation, a struc- Additional limits begin to apply if
while others are still struggling to ture change may sound like a good idea. 2022 taxable income exceeds the
recover from the pandemic and But keep in mind that increases to both applicable threshold — $170,050
resulting economic challenges. What- the corporate rate and the top individual or, if married filing jointly, $340,100.
ever your business’s situation, take full rate have been proposed. Even if there The limits fully apply when 2022
advantage of available tax breaks to are no tax increases, a change could taxable income exceeds $220,050
prevent taxes from dragging down your have unwelcome tax consequences. and $440,100, respectively.
bottom line more than they should. And Consult your tax advisor if you’d like
changes under the TCJA still demand to explore whether a structure change One such limit is that the 199A
attention, too. could benefit you. deduction generally can’t exceed
the greater of the owner’s share of:
Business structure 199A deduction for
Income taxation and owner liability are pass-through businesses 50% of the amount of W-2 wages
the main factors that differentiate busi- Through 2025, the TCJA provides paid to employees by the qualified
ness structures. Many owners choose the Section 199A deduction for business during the tax year, or
entities that combine pass-through sole proprietorships and owners of The sum of 25% of W-2 wages plus
taxation with limited liability, namely pass-through entities. The deduction 2.5% of the cost of qualified property.
limited liability companies (LLCs) and generally equals 20% of qualified busi-
S corporations. ness income (QBI), not to exceed 20% Another is that the 199A deduction
of taxable income. QBI is generally generally isn’t available for income
The TCJA significantly changed the tax defined as the net amount of qualified from “specified service businesses.”
consequences of business structure. The items of income, gain, deduction and Examples include businesses that
now-flat corporate rate (21%) is substan- loss that are connected with the con- provide investment-type services and
tially lower than the top individual rate duct of a U.S. business. most professional practices (other than
(37%), providing sizable tax benefits to engineering and architecture).
C corporations and mitigating the impact
of double taxation on owners. (The new
Projecting income
15% corporate alternative minimum tax
imposed by the Inflation Reduction Act Projecting your business’s income
[IRA] effective for tax years beginning for this year and next can allow you
after Dec. 31, 2022, applies only to the to time income and deductions to
very largest C corporations.) But, the your advantage. It’s generally — but
TCJA also introduced a powerful deduc- not always — better to defer tax, so
tion for some owners of pass-through consider:
entities. (See “199A deduction for pass-
through businesses” at right.) Deferring income to next year. If
your business uses the cash method
of accounting, you can defer billing for
2022 income tax differences products or services at year end. If you
Chart 4 use the accrual method, you can delay
based on business structure
shipping products or delivering services.
Flow-through entity
or sole proprietorship C corporation Accelerating deductible expenses
into the current year. If you’re a
Two levels of taxation: The business is
One level of taxation: The business’s cash-basis taxpayer, you may pay
taxed on income, and then shareholders
income flows through to the owner(s). business expenses by Dec. 31, so you
are taxed on any dividends they receive.
can deduct them this year rather than
Losses flow through to the owner(s). Losses remain at the corporate level. next. Both cash- and accrual-basis
The top individual tax rate is 37%, but, taxpayers can charge expenses on a
The flat corporate tax rate is 21%, and
for eligible taxpayers, up to 20% of credit card and deduct them in the year
the top rate on qualified dividends is 20%.
qualified business income is deductible. charged, regardless of when the credit
card bill is paid.
Business 9
Warning: Don’t let tax considerations Congress intended QIP placed in Vehicle-related depreciation
get in the way of sound business deci- service after 2017 to have a 15-year Vehicle purchases may be eligible for
sions. For example, the negative impact MACRS recovery period and, in turn, Sec. 179 expensing, and buying a
on your cash flow or customers may not qualify for 100% bonus depreciation. large truck or SUV can maximize
be worth the tax benefit. (See Case Study 3.) But, the statutory the deduction. The normal Sec. 179
language didn’t define QIP as 15-year expensing limit (at left below) generally
Taking the opposite approach. If property, so QIP defaulted to a 39-year applies to vehicles with a gross vehicle
your business is a pass-through entity recovery period, making it ineligible for weight rating of more than 14,000
and it’s likely you’ll be in a higher tax bonus depreciation. pounds. A $27,000 limit applies to
bracket next year, accelerating income vehicles (typically SUVs) rated at more
and deferring deductible expenses may Fortunately, in 2020 the CARES Act than 6,000 pounds, but no more than
save you tax over the two-year period. included a technical correction to fix the 14,000 pounds.
QIP drafting error. Businesses that made
Depreciation qualified improvements from 2018 Even if you prefer to buy a smaller
through 2021 can claim an immediate vehicle, you can still potentially enjoy a
For assets with a useful life of more than
tax refund for any bonus depreciation valuable first-year deduction. Vehicles
one year, you generally must depreciate
they missed. Businesses investing in rated at 6,000 pounds or less are subject
the cost over a period of years. In most
QIP in 2022 and beyond also can claim to the passenger vehicle limits; contact
cases, the Modified Accelerated Cost
bonus depreciation going forward, your tax advisor for details.
Recovery System (MACRS) will be pref-
according to the phaseout schedule.
erable to other methods because you’ll
get larger deductions in the early years
of an asset’s life.
Case Taking advantage of 100% bonus
But if you make more than 40% of the Study 3 depreciation while it’s still available
year’s asset purchases in the last quarter,
Sara is working on a five-year plan
you could be subject to the typically less
for her business. One area she’s
favorable midquarter convention. Careful focusing on is when she should
planning can help you maximize depreci- purchase equipment and make
ation deductions in the year of purchase. other asset investments. Her tax
advisor recommends that she
Other depreciation-related breaks and factor bonus depreciation into her
strategies may be available: decision making.
This additional first-year deprecia-
Section 179 expensing election. This tion is available for qualified assets,
allows you to currently deduct the cost which include new tangible property
of purchasing eligible new or used with a recovery period of 20 years
assets. Examples include equipment, or less (such as office furniture and
furniture, off-the-shelf computer soft- equipment), off-the-shelf computer
ware, qualified improvement property software, and water utility property.
and certain personal property used Under the TCJA, through Dec. 31,
predominantly to furnish lodging. The 2026, the definition has been
following improvements to nonresiden- expanded to include used property
and qualified film, television and live
tial real property are also eligible: roofs,
theatrical productions.
HVAC equipment, fire protection and
alarm systems, and security systems. For qualified assets placed in service through Dec. 31, 2022, bonus depreciation
is 100%. But, bonus depreciation is scheduled to be gradually reduced and even-
For qualifying property placed in tually eliminated:
service in 2022, the expensing limit is 80% for 2023
$1.08 million. The break begins to phase
60% for 2024
out dollar for dollar when asset acquisi-
tions for the year exceed $2.7 million. 40% for 2025
20% for 2026
Bonus depreciation. This additional 0% for 2027 and future years
first-year depreciation is available for
qualified assets. (See Case Study 3 to (For certain property with longer production periods, these reductions are delayed
learn more.) by one year.)
Sara’s tax advisor suggests that, to the extent that it otherwise makes strategic and
QIP deduction financial sense for her business, she should consider accelerating her equipment
and asset investments into 2022, while 100% bonus depreciation is available.
The TCJA classified qualified
retail-improvement, restaurant and Warning: Under the TCJA, in some cases a business may not be eligible for bonus
leasehold-improvement property as depreciation. Contact your tax advisor for details.
qualified improvement property (QIP).10 Business
If you use a vehicle for business and benefits to employees, see page 12.) HSAs, FSAs and HRAs. If you
personal purposes, the associated Certain small employers may also be provide employees with a qualified
expenses, including depreciation, eligible for a tax credit when setting high-deductible health plan (HDHP),
must be allocated between deduct- up a retirement plan. you can also offer them Health
ible business use and nondeductible Savings Accounts. (See page 3.)
personal use. Warning: If business use Fringe benefits. Certain fringe benefits Regardless of the type of health
is 50% or less, you won’t be able to use aren’t included in employee income, insurance you provide, you can offer
Sec. 179 expensing or the accelerated yet the employer can still deduct the Flexible Spending Accounts for
regular MACRS; you’ll have to use the portion, if any, that it pays and typically health care. (See page 3.) You can
straight-line depreciation method. also avoid payroll taxes. Examples are also offer FSAs for child and depend-
employee discounts, group term-life ent care. (See page 4.)
Employee benefits insurance (up to $50,000 per person)
Offering a variety of benefits not only and health insurance. A Health Reimbursement Account
can help you attract and retain the reimburses an employee for medical
best employees, but also may save tax Warning: You might be penalized expenses up to a maximum dollar
because you generally can deduct your for not offering health insurance. The amount. Unlike an HSA, no HDHP
contributions: Affordable Care Act can in some cases is required. Unlike an FSA (other
impose a penalty on “large” employers than when an exception applies),
if they don’t offer full-time employees any unused portion can be carried
Qualified deferred compensation
“minimum essential coverage” or if the forward to the next year. But only the
plans. These include pension, profit-
coverage offered is “unaffordable” or employer can contribute to an HRA.
sharing, SEP and 401(k) plans, as well
as SIMPLEs. (For information on the doesn’t provide “minimum value.”
Interest expense deduction
Generally, under the TCJA, interest
paid or accrued by a business is
Case Meals, entertainment and deductible only up to 30% of
Study 4 transportation: What’s deductible? adjusted taxable income (ATI). Tax-
payers with average annual gross
Chris used to regularly claim
receipts of $25 million or less for the
business deductions for meal,
three previous tax years generally
entertainment, vehicle and
travel expenses, as well as are exempt from the limitation. Some
employee reimbursements of other taxpayers are also exempt —
such expenses. Chris knew check with your tax advisor for more
that the TCJA changed some information.
of the rules related to these
expenses and that there The CARES Act generally increased
also were some more recent the interest expense deduction limit
changes to the rules regarding to 50% of ATI for the 2019 and 2020
meals, but wasn’t 100% clear tax years, but the TCJA’s 30% deduc-
on the current rules. So the tion limit returned beginning in 2021,
business owner consulted a tax
with tighter rules for 2022.
advisor, who explained what’s
deductible and what’s not:
Loss deductions
Meals. Under the TCJA,
business-related meal expenses, A loss occurs when a business’s
including those incurred while expenses and other deductions for
traveling on business, remain the year exceed its revenue:
50% deductible. But, the TCJA
expanded the 50% disallowance rule to meals provided via an on-premises cafeteria Net operating losses (NOLs). The
or otherwise on the employer’s premises for the convenience of the employer. (Such TCJA generally reduces the amount
meals used to be 100% deductible.) However, some temporary relief generally of taxable income that can be offset
increases the deduction to 100% for food and beverages provided by a restaurant in with NOL deductions from 100%
2021 or 2022. to 80%. It also generally prohibits
Entertainment. Under the TCJA, these expenses are no longer deductible. NOLs from being carried back to an
earlier tax year — but allows them
Transportation. Employer deductions for providing commuting transportation (such to be carried forward indefinitely (as
as hiring a car service) aren’t allowed under the TCJA, unless the transportation is
opposed to the previous 20-year limit).
necessary for the employee’s safety. The TCJA also eliminated employer deductions
for qualified employee transportation fringe benefits (for example, parking allowances,
There was a temporary respite from
mass transit passes and van pooling). But, those benefits are still tax-free to recipient the TCJA rules for NOLs arising in
employees. Transportation expenses for business travel are still 100% deductible, 2018 through 2020 tax years, but the
provided they meet the applicable rules. rules generally returned for NOLs
arising in 2021 or later.Business 11
Pass-through entity “excess” business
losses. Through 2025, the TCJA applies
Case
a limit to deductions for current-year
Study 5
Tax planning for a sale or acquisition
business losses incurred by noncorporate
taxpayers: Such losses generally can’t Steve is getting ready to sell his business,
offset more than $250,000 ($500,000 but before he puts it on the market, he
for married couples filing jointly) of wants to understand the potential tax
income from other sources, such as consequences. His tax advisor provided
salary, self-employment income, interest, a few key tax considerations:
dividends and capital gains. (The limit is
Asset vs. stock sale. With a corpora-
adjusted annually for inflation.) Excess
tion, sellers typically prefer a stock sale
losses are carried forward to later tax for the capital gains treatment and to
years and can then be deducted under avoid double taxation. Buyers generally
the NOL rules. want an asset sale to maximize future
depreciation write-offs.
Although the CARES Act temporarily
Taxable sale vs. tax-deferred transfer.
lifted the limit, allowing taxpayers to
A transfer of ownership of a corporation
deduct 100% of business losses arising can be tax-deferred if made solely in
in 2018, 2019 and 2020, it returned exchange for stock or securities of the recipient corporation in a qualifying reorga-
beginning in 2021. In addition, the IRA nization. But the transaction must comply with strict rules. Although it’s generally
extended the limit through 2028. better to postpone tax, there are some advantages to a taxable sale:
The seller doesn’t have to worry about the quality of buyer stock or other
Tax credits business risks that might come with a tax-deferred transfer.
Tax credits reduce tax liability dollar The buyer benefits by receiving a stepped-up basis in its acquisition’s assets.
for dollar, making them particularly
beneficial. A couple of COVID-19-relief The parties don’t have to meet the technical requirements of a tax-deferred
tax credits for businesses and other transfer.
employers have expired, namely the Installment sale. A taxable sale might be structured as an installment sale if the
employee retention credit and the paid buyer lacks sufficient cash or pays a contingent amount based on the business’s
leave credit. But there are still many performance. An installment sale also may make sense if the seller wishes to
other valuable tax credits available, spread the gain over a number of years — which could be especially beneficial if
such as these: it would allow the seller to stay under the thresholds for triggering the 3.8% NIIT
(see page 7) or the 20% long-term capital gains rate (see page 6).
Research credit. This credit gives But an installment sale can backfire on the seller. For example, depreciation recap-
businesses an incentive to increase ture must be reported as gain in the year of sale, no matter how much cash the
their investments in research. Certain seller receives. And, if tax rates increase, the overall tax could wind up being more.
start-ups (in general, those with less Of course, tax consequences are only one of many important considerations when
than $5 million in gross receipts) can, planning a merger or acquisition.
alternatively, use the credit against
their payroll tax. While the credit
is complicated to compute, the tax Family and medical leave credit. The portion is deductible “above the line,”
savings can prove significant. TCJA created a tax credit for qualify- which means you don’t have to itemize
ing employers that begin providing to claim the deduction.
paid family and medical leave to their
Work Opportunity credit. This
employees. The credit is equal to a In addition, you can deduct 100% of
credit is designed to encourage hiring
minimum of 12.5% of the employee’s health insurance costs for yourself, and
from various disadvantaged groups,
wages paid during that leave (up to for a spouse and children, too. This
such as certain veterans, ex-felons,
12 weeks per year) and can be as much above-the-line deduction is limited to
the long-term unemployed and food
as 25% of wages paid. This credit is net self-employment income. You also
stamp recipients. The maximum
scheduled to expire Dec. 31, 2025. can take an above-the-line deduction
credit is generally $2,400 per hire
but can be higher in some cases — for contributions to a retirement plan
up to $9,600 for certain veterans, for Additional rules and limits apply to (see page 12) and, if eligible, an HSA
example. This credit is scheduled to these credits. Other credits may also (see page 3) for yourself.
expire Dec. 31, 2025. be available to you. Check with your
tax advisor for more information. If your home office is your principal
New Markets credit. This gives place of business (or used substantially
investors who make “qualified equity The self-employed and regularly to conduct business)
investments” in certain low-income If you’re self-employed, you have to and that’s the only use of the space,
communities a 39% credit over a pay both the employee and employer you probably can deduct home office
seven-year period. This credit is portions of employment taxes on expenses from your self-employment
scheduled to expire Dec. 31, 2025. self-employment income. The employer income. 12 Retirement
Be tax-smart to turn your
retirement dreams into reality
W
hen it comes to retirement employer offers a match, contribute at tradeoff is that your contributions
planning, tax consider- least the amount necessary to get the don’t reduce your current-year
ations are key. For example, maximum match so you don’t miss out taxable income:
starting contributions early can make a on that “free” money.
big difference because of tax-deferred Roth IRAs. An income-based
compounding. Determining whether More tax-deferred options phaseout may reduce or eliminate
traditional, Roth or a mix of accounts is your ability to contribute. But estate
In certain situations, other tax-deferred
best for your situation is also important. planning advantages are an added
saving options may be available:
Finally, avoiding early withdrawals and benefit: Unlike other retirement plans,
being tax-smart with required minimum Roth IRAs don’t require you to take
You’re a business owner or self-
distributions are critical to being able to distributions during your lifetime, so
employed. You may be able to set
live your desired retirement lifestyle. you can let the entire balance grow
up a plan that allows you to make
tax-free for the benefit of your heirs.
much larger contributions than you
401(k)s and other could make to an employer-sponsored
employer plans plan as an employee. You might not Roth conversions. If you have a tradi-
Contributing to a traditional employer- have to make 2022 contributions, or tional IRA, a partial or full conversion
sponsored defined contribution plan is even set up the plan, before year end. to a Roth IRA can allow you to turn
usually a good first step: tax-deferred future growth into tax-free
growth and take advantage of a Roth
Your employer doesn’t offer a retire-
IRA’s estate planning benefits. The
Contributions are typically pretax, ment plan. Consider a traditional IRA.
converted amount is taxable in the
reducing your taxable income. You can likely deduct your contribu-
year of the conversion. Discuss with
tions, though your deduction may
Plan assets can grow tax-deferred — your tax advisor whether a conversion
be limited if your spouse participates
meaning you pay no income tax until makes sense for you.
in an employer-sponsored plan. You
you take distributions.
can make 2022 contributions until
“Back door” Roth IRA contribu-
Your employer may match some or the 2022 income-tax-return-filing
deadline for individuals, not including tions. If your income is too high to
all of your contributions.
extensions. (See Chart 5 for the annual make Roth IRA contributions and
contribution limits.) you don’t have funds in a tradi-
Chart 5 shows the 2022 employee
tional IRA, consider setting up a
contribution limits. Because of tax-
traditional account and making a
deferred compounding, increasing Roth alternatives nondeductible contribution to it.
your contributions sooner rather than A potential downside of tax-deferred You can then immediately convert
later can have a significant impact on saving is that you’ll have to pay the contributed amount to a Roth
the size of your nest egg at retirement. taxes when you make withdrawals account with minimal or no tax impact.
Employees age 50 or older can also at retirement. Roth plans, however, But be aware that eliminating this
make “catch-up” contributions. If your allow tax-free distributions; the option for higher-income taxpayers
has been proposed.
Roth 401(k), Roth 403(b) and Roth
Chart 5 Retirement plan contribution limits for 2022 457 plans. Employers may offer one
of these in addition to the traditional,
Regular contribution Catch-up contribution1 tax-deferred version. No income-based
phaseout applies, so even higher-income
Traditional and Roth IRAs $ 6,000 $ 1,000
taxpayers can contribute.
401(k)s, 403(b)s,
$ 20,500 $ 6,500
457s and SARSEPs2 Early withdrawals
SIMPLEs $ 14,000 $ 3,000 Early withdrawals from retirement
1
For taxpayers age 50 or older by the end of the tax year. plans should be a last resort. With a
2
Includes Roth versions where applicable. few exceptions, distributions before
Note: Other factors may further limit your maximum contribution. age 59½ are subject to a 10% penalty
on top of any income tax that ordinarilyRetirement 13
would be due on a withdrawal. Early distribution rules also become
Additionally, you’ll lose the potential important if you change jobs or retire.
tax-deferred future growth on the (See Case Study 6.)
withdrawn amount.
Warning: If you took an eligible
If you must make an early withdrawal COVID-19 distribution in 2020 under
and you have a Roth account, consider the CARES Act and haven’t yet recon-
withdrawing from that. You can with- tributed the amount or paid all the tax
draw up to your contribution amount on it, discuss your options with your
without incurring taxes or penalties. tax advisor.
Another option: If your employer- RMDs
sponsored plan allows it, take a plan Historically, after reaching age 70½,
loan. You’ll have to pay it back with taxpayers have had to begin taking
interest and make regular principal annual required minimum distributions
payments, but you won’t be subject to from their IRAs (except Roth IRAs) and,
current taxes or penalties. (You can’t to 72 for taxpayers who didn’t turn
generally, from any defined contribution
borrow from an IRA.) age 70½ before Jan. 1, 2020 (that is,
plans. However, the age has increased
who were born after June 30, 1949).
If you don’t comply with RMD rules,
Case you can owe a penalty equal to 50%
Study 6
Avoiding retirement plan pitfalls when leaving a job of the amount you should have with-
drawn but didn’t. You can avoid the
RMD rule for a non-IRA Roth plan
by rolling the funds into a Roth IRA.
Waiting as long as possible to take
distributions generally is advantageous
because of tax-deferred compounding.
But a distribution (or larger distribution)
in a year your tax bracket is low may
save tax. Be sure, however, to consider
the lost future tax-deferred growth and,
if applicable, whether the distribution
could: 1) cause Social Security pay-
ments to become taxable, 2) increase
income-based Medicare premiums and
prescription drug charges, or 3) affect
tax breaks with income-based limits.
If you’ve inherited a retirement plan,
consult your tax advisor about the
distribution rules that apply to you.
Warning: The time period for distri-
butions has been reduced to 10 years
Justin and Matthew both change jobs in 2022 and decide to roll over funds from for beneficiaries — other than surviving
their traditional 401(k) plans with their former employers to traditional IRAs so that spouses and certain others — inheriting
they’ll have more investment choices. Each has a balance of $100,000. Justin plans after Dec. 31, 2019.
requests a direct rollover from his old plan to his IRA. Because he never personally
receives the funds, he owes no income tax or penalties. IRA donations to charity
Matthew, however, doesn’t request a direct rollover. Instead, he receives a lump-sum Taxpayers age 70½ or older are allowed
check. Much to his surprise, the check is for only $80,000, because his employer to make direct contributions from their
withheld 20% for federal income taxes. IRA to qualified charitable organizations
After consulting a tax advisor, Matthew learns that he needs to make an indirect up to $100,000 per tax year. A charita-
rollover to his IRA within 60 days to avoid tax and potential penalties. (He may be ble deduction can’t be claimed for the
able to receive a refund of the $20,000 withheld when he files his 2022 tax return, contributions. But the amounts aren’t
depending on his overall tax liability for the year.) included in taxable income and can be
Matthew also learns that if he doesn’t roll over the gross amount of $100,000 —
used to satisfy an IRA owner’s RMD. A
which will require him to make up for the withheld amount with other funds — he’ll direct contribution might be especially
be subject to income tax on the $20,000 difference. And, because he’s under age tax-smart if you won’t benefit from
59½, he’ll also owe the 10% early withdrawal penalty. the charitable deduction. (See “What’s
new!” on page 3.) 14 Estate Planning
Locking in tax
savings while you can
B
ecause the TCJA has put estate,
gift and generation-skipping
transfer (GST) tax exemptions at Chart 6 2022 transfer tax exemptions and rates
record-high levels, far fewer taxpayers
are worrying about these taxes. But the Estate tax Gift tax GST tax
high exemptions are only temporary. So
whether or not you’d be subject to estate Exemption $12.06 million1 $12.06 million $12.06 million
taxes under the current exemptions, it’s Rate 40% 40% 40%
a good idea to consider whether you 1
Less any gift tax exemption already used during life.
can seize opportunities to potentially
lock in tax savings today.
Warning: Each year you need to use The GST tax exemption can be a
Estate tax your annual exclusion by Dec. 31. The valuable tax-saving tool for taxpayers
While the TCJA keeps the estate tax exclusion doesn’t carry over from year with large estates whose children also
rate at 40%, it has doubled the exemp- to year. For example, if you don’t make have — or may eventually have —
tion base amount from $5 million to an annual exclusion gift to your grand- large estates. With proper planning,
$10 million. The inflation-adjusted son this year, you can’t add $16,000 to they can use the exemption to make
amount for 2022 is $12.06 million. (See your 2023 exclusion to make a $32,000 transfers to grandchildren and avoid
Chart 6.) tax-free gift to him next year. any tax at their children’s generation.
Without further legislation, the estate GST tax State taxes
tax exemption will return to an The GST tax generally applies to trans- Even before the TCJA, some states
inflation-adjusted $5 million in 2026. fers (both during your lifetime and at imposed estate tax at a lower thresh-
So taxpayers with estates in the death) made to people more than one old than the federal government did.
roughly $6 million to $12 million range generation below you, such as your Now the differences in some states
(twice that for married couples), whose grandchildren. This is in addition to are even more dramatic. To avoid
estates would escape estate taxes if any gift or estate tax due. The GST tax unexpected tax liability or other unin-
they were to die while the doubled exemption also has increased under tended consequences, consult a tax
exemption is in effect, still need to the TCJA. (See Chart 6.) advisor familiar with the law of your
keep potential post-2025 estate tax particular state.
liability in mind. Plus, it’s possible the
exemption could be reduced sooner. Exemption portability
If part (or all) of one spouse’s estate tax
Gift tax exemption is unused at that spouse’s
The gift tax continues to follow the estate death, the estate can elect to permit the
tax, so the gift tax exemption also has surviving spouse to use the deceased
increased under the TCJA. (See Chart 6.) spouse’s remaining exemption. This
Any gift tax exemption used during your exemption “portability” provides flex-
lifetime reduces the estate tax exemp- ibility at the first spouse’s death, but it
tion available at death. Using up some has some limits. Portability is available
of your exemption during your lifetime only from the most recently deceased
can be tax-smart, especially if your estate spouse, doesn’t apply to the GST tax
might exceed roughly $6 million (twice exemption and isn’t recognized by
that if you’re married). many states.
Under the annual exclusion, you also And portability doesn’t protect future
can exclude certain gifts of up to $16,000 growth on assets from estate tax like
per recipient in 2022 ($32,000 if your applying the exemption to a credit
spouse elects to split the gift with you shelter (or bypass) trust does. Such a
or you’re giving joint or community trust also offers creditor and remarriage
property) without depleting any of your protection, GST tax planning, and pos-
gift and estate tax exemption. sible state estate tax benefits.You can also read
