SIDNEY — “2022 has provided us with many obstacles and changes, as well as opportunities to grow and adjust,” according to Corey Kremer, partner at Monnier & Co., CPA’s. “Whether it was dealing with high inflation, or businesses trying to acquire and retain employees, 2022 has been a challenge for many businesses across all industries. Another thing that 2022 has provided us was many opportunities to take advantage of new tax law changes. Our goal is to help our clients become aware, and to take advantage of these favorable changes.”
Kremer’s report continues:
One major change that was around for the past couple of years, but was made more accessible with the passing of the Consolidated Appropriations Act of 2021, which lessened the burden for businesses to qualify for the Employee Retention Credit. The Employee Retention Credit is a payroll tax credit that businesses can qualify for by meeting certain gross receipts tests, or other COVID-19 hardship circumstances. The credit fluctuates between 50 to 70 percent of qualifying wages depending on the quarter that the credit is taken. The credit can be claimed by amending the payroll tax return for the quarter that the credit is being claimed. Businesses should be aware that unlike the PPP loan, this credit is taxable to the business once the money is received and should plan appropriately. Monnier & Co., CPA’s was able to assist our clients in receiving substantial refunds filing for the Employee Retention Credit.
For businesses, another 2021 and 2022 tax change that was enacted is the 100% deductibility of meals. Formerly limited to a 50% deduction, this change removes the 50% reduction of meals expense. However, this broadened deduction is limited to meals purchased from a restaurant. Other food purchased from a grocery store or gas station is still limited to the 50% reduction.
For individuals, a tax law change that expired at the end of 2021 was the increase in the child tax credit. For 2021, the child tax credit increased from $2,000 to $3,600 for each child under the age of six and from $2,000 to $3,000 for each child between the ages of six and seventeen. These credits were also switched from being a nonrefundable credit to being fully refundable in 2021. On top of increasing this credit, the IRS also sent out monthly advances of the projected credit in 2021 based on a taxpayers 2019 or 2020 tax return. For 2022, this credit returns to a $2,000 credit for qualifying children. Taxpayers need to be aware of this reduced credit for their 2022 tax filings and plan accordingly.
A full-service accounting firm, Monnier & Co. offers traditional audit, accounting and tax services as well as estate planning, merger and acquisition planning, business and individual tax consulting, business succession planning, financial reporting services, business valuations, and technology consulting. The staff at Monnier & Co. is dedicated to providing quality service. We invite you to consult with any of our professionals regarding these or any other accounting or tax issues. Feel free to call us at 937-492-6101 or visit our website at monniercpa.com.