“Yesterday I was clever, so I wanted to change the world. Today I am wise, so I am changing myself.” – Rumi
There has been SO MUCH talk in the latter part of 2021 of what the tax changes are going to be. A lot of fear and confusion centered around what “could” happen and how to deal with it. Like many Finger Financial Fives, let me explain with a story…
I signed up for a half marathon trail run that took place in Carolina Beach State Park on January 2nd. I was thinking of a flat trail run through the woods. Was I ever wrong! The night before, I saw the race director talk about elevation changes, hills, and sand. Ten minutes before the start, he said the tide was high and part of the trail was flooded, and that ankle deep water would be unavoidable for 600 yards.
Ugh. My thought was after the water, it would be like running with bowls of soup on your feet. The hills with sugar sand would make you seem like a cartoon character…running, running, running, and not going anywhere.
The reality was that my feet felt good after only a couple minutes out of the water. The water that bordered the park was beautiful. I walked up the hills and that was a nice break from running pace. Every negative had a positive. Well not everyone…I busted my butt on one of the many raised roots. After making sure I was not dead, got up, and kept on stepping.
The fear of obstacles was worse than the obstacles themselves. Just like the fear of change, taxes were worse than what actually has happened.
What has changed? Here are a few bullet points:
- Standard deduction increases slightly from $25,100 in 2021 to #25,900 in 2022, for married-filing jointly filers; from $12,550 to $12,950 for single and married filing separately filers, and from $18,800 to $19,400 for head-of-household filers. Source: IRS
- Long term capital gains and dividends zero percent rate is raised from $80,800 in 2021 to $83,350 in 2022 for married filing jointly returns. Source: IRS
- Gift tax. The value you can give to another without reporting has been raised from $15,000 in 2021 to $16,000 in 2022. Unlimited payments for medical and tuition are permitted. Source: IRS
- Retirement plan contributions limits have been raised. You can put in $20,500 in your 401k in 2022, raised from $19,500. The catch-up if over 50 is still $6,500. IRA contribution limits remained unchanged at $6000. Source: IRS
- Medicare costs have gone up and down for others. Click here to learn more. Source: Centers for Medicare and Medicaid Services or watch/listen to the Retire Happy podcast #9.
- Social Security benefits have increased their cost-of-living adjustments by 5.9%. You do NOT have to be collecting the benefit to experience the benefit. Meaning if you continue to delay your benefit, the 5.9% increase will reflect in your higher benefit when you start taking your Social Security. Source: SSA.gov
There are other changes to the rules in 2022 and many benefits expire in 2025. These changes may affect you. To find out how, feel free to email me at Jeremy@Riverbendwm.com or click here to set up a phone appointment.
On the not so lighter side, I have gained ten pounds over the holidays. Roxanne, in our office, has a good/bad habit of bringing in too many wonderful things to eat. Please stop by the office and remove the temptations for me. 😊
Investment advice offered through Stratos Wealth Advisors, LLC, a registered investment advisor; DBA Riverbend Wealth Management.
This content is developed from sources believed to be providing accurate information and provided by Riverbend Wealth Management. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Stratos Wealth Partners and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.