Business Accounting & Tax Preparation1585 W Wetmore Road, Tucson, AZ 85705Mailing Address: P O Box 35743, Tucson, AZ 85740Phone: 520-292-9773 Fax: 520-292-9878
Accounting By Design, Inc.
Per Diem Rates
To view new per dim rates visit www.gsa.gov/perdiemRailroad per diem rates are subject to different rulesLodging per diem cannot be used for self-employed. Only actual costs can be used. Meals and incidentals are allowed at per diem for this group, Lodging for employees can only be used for substantiation purposes for employers to determine reimbursement and income exclusion.
Standard Deductions - 2021
Married Filing Joint - $25,100 (2022 $12,950)Single/Married Filing Jointly (other than head of household or surviving spouse) - $12,550 (2022 $12,950)Head of Household - $ 18,800 (2022 $19,400)Standard deduction for dependent on another’s return is the greater of $1,100 of the individual’s earned income for the year plus $350 but not more than the standard deduction amountAge 65 and over or blind, per person - MFJ, QW or MFS $1,350 , Single or Head of Household $1,700
Foreign Earned Income Exclusion
The maximum amount for Foreign Earned Income Exclusion is $108,700. If both spouses have FEI then each spouse qualifies for this exclusion.
Section 179 Deduction
For 2021 the maximum Section 179 deduction is $1,050,000. This does NOT include SUV’s unless over GVWR rating of 6,000 lbs (sport utility vehicles). The Section 179 cannot exceed the taxpayers income. If the cost of the Section 179 property placed into service in 2021 exceeds $2,620,000, the available Section 179 deduction is reduced by the amount of the excess (but not below zero). Amounts disallowed can be carried forward.Kiddie TaxKiddie tax applies when a child’s unearned income (Investment income) is $2,200.00 and over. It is calculated using normal tax rates and is taxed at the parent’s marginal federal income tax rate. If they qualify a parent may add the child’s unearned income to their return. Qualifications are Married Filing Jointly or the parent with the higher income if parents are Married Filing Separate or unmarried and living together and there is not earned income for the child (ie wages, self-employment).
Student Loan Deduction
Up to $2,500 of interest including early payments not yet required, interest on refinanced or consolidated loans and capitalized interest. Must be incurred by the taxpayer solely to pay for qualified education (including debt incurred solely to pay for student loans such as home equity loans, credit cards). The loan cannot be from a related person or qualified employer plan. Ineligible for this deduction are taxpayers filing Married Separate or a taxpayer that is claimed as a dependent. Phaseout based on Modified Gross Income for Married Filing Joint is between $140,000 and $170,000 (after $170,000 no deduction is allowed), and Single, Head of Household or Qualifying Widow(er) phase out is between $70,000 and $85,000. (after $85,000 no deduction is allowed.)
Required Minimum Distributions
Taxpayers generally must start taking RMD’s upon reaching the age of 72 years. This is the minimum amount a taxpayer is required to withdraw each year. The taxpayer can take more the the RMD but will be subject to a 50% penalty for failure to withdraw the RMD in the year they turn 72. You have the option in the first year ONLY to take it the next tax year but then you must take 2 RMD’s in that year. If you have multiple IRA’s you can take the RMD from one or several - the choice is yours as long as the total overall RMD is taken in the year required.