Tax Day is Coming Soon, Let’s Debrief
Tax day, traditionally April 15th has been extended to April 18th with additional changes in the tax code. New Yorkers are expected to have smaller refunds, during a time when unemployment is on the rise, along with inflation.
The IRS typically expects people to file their returns electronically, providing the means to receive refunds faster through direct deposit. The IRS has also provided a program allowing taxpayers making $73,000 or less in 2021 to file using their “free” online software. Similarly, H&R Block is offering students to file for free before the deadline.
Jeff Spiegel, a local Suffolk CPA running his own private practice, said there isn’t too much to fixate on as Long Islanders are already paying a high premium for property taxes.
“The tax law changes of a couple of years ago that took away the SALT, certain deductions, the state tax deductions that limited what you can deduct for real estate taxes and state income,” said Mr. Spiegel.
Regarding filing protocols, he detailed married and filing jointly, whose brackets go up to 37 percent. But he stressed, “that’s for someone making over $314,000 [and] they’ve expanded that with 37 percent applicable to someone making more than $647,000.”
“Married couples in 2021 where their taxable income [was] more than $314,000, were paying at 37 percent but in 2022, that same couple will be paying probably at the 32 percent bracket.”
Mr. Spiegel clarified the purpose of extensions. He said they merely act as a delay to file the return, not to pay the tax to the government. Mr. Spiegel also advocated paying earlier in order to avoid last-minute troubles, suggesting a “quick projection” done by an accountant or paying a similar amount as the prior year.
“You can pay in estimates during the year, and that’ll decrease what you owe at the end of the year. If you don’t already have any sort of a retirement plan, you could set up an IRA 529 plan, which is for college savings.”
The 35-year CPA also identified several ways to attain credit towards your return. “If you have long-term care insurance, you get some credit. If you have a 529 plan that you’re contributing to for kids for college, you get credit, said Mr. Spiegel. “There are energy credits if you put in solar panels or re-insulate your home or put in new doors or windows,” which can be applied to state or federal income tax.
Mr. Spiegel also remarked on an additional real estate tax credit, new to New York. However, it is only $350 and is ultimately based on your income.
He said he has a “number of clients that have done crypto and [that] for now it’s treated as any other capital gain. You buy it at X and you sell it at Y and [if] you made a profit, you are going to pay tax.”
Before Mr. Spiegel ended our conversation to dive into his mountain of tax returns, he recommended: “increasing your withholding from a salary job or [to] increase your quarterly estimates to pay if you have a mortgage.” He again stressed the importance of a retirement plan, stating even “self-employed individuals can set up a variety [of options]. There are acceptable plans, there are IRAs, but there’s a lot of ways to save for retirement.”