December Tax Updates

December 12th, 2022

For additional information on these tips and strategies, please reach out to a member of the Siegfried Advisory team.

Year-end tax planning

The final weeks of December offer a great opportunity to make last-minute tax moves for 2022. Year-end tax planning generally involves strategically increasing and decreasing income to achieve a desirable tax outcome. Year-end bonus payments, asset acquisitions and charitable contributions are common year-end tax considerations. In addition, net operating losses and gift tax implications should be part of year-end analysis. Please reach out to one of our staff members to assist with optimizing year-end tax planning strategies.

Wage & income transcripts for Form 1120-S

The IRS has issued an alert noting that certain Wage and Income Transcripts for Form 1120-S may contain incorrect information. The forms that printed in error were for tax years 2020 and 2021 and would have been obtained through the IRS’ Transcript Delivery System. The IRS expects to fix this error in early January 2023.

Philadelphia extends NOL period to 20 years

The Philadelphia Department of Revenue has announced that all Philadelphia businesses can now carry forward net operating losses (NOLs) incurred in 2022 and thereafter for 20 years for purposes of the business and income receipts tax (BIRT). This new legislation only applies to losses incurred in tax year 2022 and beyond. Net losses incurred before 2022 may only be carried over for three tax years.

Estate Planning

The estate tax exemption is still a moving target. For 2022, the exemption is 12.06 million dollars. Estates for individuals who pass away in 2023 will have an exemption of $12.92 million. In 2026, that exemption will be reduced to pre-2018 level of approximately 5 million dollars. As the year comes to a close, taxpayers should review their estate plans to determine the most advantageous next steps. While many Americans will have estates that will still be shielded under the smaller exemption amount of approximately 6 million per person, tax law changes offer a timely opportunity to revisit estate plans in order to optimize current strategies.

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