Individual Taxes Archives - CironeFriedberg, LLP

Understanding the Gift Tax

September 23, 2022 by David Moseman CPA

For tax purposes, gift givers, rather than gift recipients, have to account for and potentially pay the gift tax. But, you won’t owe the federal gift tax until you have given away millions in cash or other assets during your lifetime. It sounds simple enough, but you still may have to file gift tax returns even though you don’t owe any tax. Additionally, certain states have gift tax filing requirements and their exclusions and requirements may differ from federal requirements.

The annual federal gift tax exclusion changes almost every year to adjust for inflation and it allows you to give a certain amount to as many people as you wish without those gifts counting against your substantial lifetime exemption. Gifts made during your lifetime will reduce your taxable estate. So, making annual gifts up to the annual exclusion is a smart way to reduce your taxable estate without any negative side effects.

Sounds good so far, right? Well, it may not be so clear. Some gifts, for example, are exempt from federal tax, including the following:

Gifts to IRS-approved charities
Gifts to your spouse, with certain exceptions
Gifts covering another person’s medical expenses made directly to the service providers
Gifts covering another person’s tuition expenses made directly to the institution

So, when exactly do you need to file a gift tax return? Some gifts may require you to file Form 709: U.S. Gift (and Generation-Skipping Transfer) Tax Return. This is necessary even if you don’t owe taxes on the gifts you’re reporting.

If it sounds a bit confusing, it is. You don’t owe tax, so why do you need to file a gift tax form anyway? The federal gift tax exists for one reason: to prevent citizens from avoiding the federal estate tax by giving away their money before they die.

Some transactions that are not commonly thought of as gifts could be considered gifts for gift and estate tax purposes. For example, adding a joint tenant to real estate, canceling indebtedness, making a payment owed by someone else, making a gift as an individual to a corporation, giving real or tangible property all qualify as gifts that are subject to the gift tax.

Before you get bogged down in these many details, we suggest you talk to a professional about your gift habits, abilities, and financial picture. Contact us today to learn more.

If you need assistance or have any questions on the information in this article, please call your CironeFriedberg professional. You can reach us by phone at (203) 798-2721 (Bethel), (203) 366-5876 (Shelton), or (203) 359-1100 (Stamford) or email us at info@cironefriedberg.com.

2022 Tax Brackets and Standard Deductions

September 20, 2022 by David Moseman CPA

The end of the year brings tax planning into focus, since tax filing is right around the corner.

2022 Tax Brackets

Tax rates for 2022 are remaining the same as 2021 but the tax brackets are changing slightly. In 2022 a single filer with income up to $10,275 will see a 10% tax rate in comparison to up to $9,950 in 2021 for a 10% rate.

The taxable income for a married couple filing jointly, MFJ, will see a 10% tax rate up to $20,550 compared to $19,900 in 2021 and up to $14,650 for head of household (HOH) in 2022 compared to $14,200 in 2021.

These slightly wider brackets are due to inflation. Your CironeFriedberg tax CPA can review this with you. You can also find all updated 2022 tax brackets on the IRS website, 2022 IRS Tax Brackets.

Standard Deduction

The standard deduction is increasing in 2022 to account for inflation. Single filers under 65 will be able to claim a standard deduction of $12,950 in 2022 compared to $12,550 in 2021. Single filers 65 and over can claim a $14,700 standard deduction.

Married couples will be able to claim a standard deduction of $25,900 in 2022, an $800 increase over 2021’s standard deduction of $25,100. In addition each spouse 65 and older can claim an additional $1,400.

Head-of-Household taxpayers under 65 will be able to claim a standard deduction of $19,400 in 2022, up from $18,800 in 2021, while head-of-household filers 65 and older can claim a standard deduction of $21,150.

In addition, each blind person of any filing status will receive an additional $1,400 on their standard deduction in 2022, a $50 increase from the $1,350 allowed in 2021.

Important Tax Deadlines

September 9, 2022 by David Moseman CPA

Important Tax Deadlines

Estimated Quarterly Tax Payments

For income you earned June 1 – August 31, 2022, your tax payment deadline is September 15, 2022.

For income you earn September 1 – December 31, 2022, your tax payment deadline is January 17, 2023.

Individual Income Tax Returns on Extension

Those taxpayers who received an extension of time to file their 2021 individual income tax returns have until October 17, 2022, to file their returns and pay.

For guidance on how this may affect your situation, reach out to one of our tax advisors at CironeFriedberg. You can reach us by phone at (203) 798-2721 (Bethel), (203) 366-5876 (Shelton), or (203) 359-1100 (Stamford) or email us at info@cironefriedberg.com.

Connecticut’s Sales Tax Holiday in August

August 10, 2022 by David Moseman CPA

Annually, Connecticut offers a sales and use tax exclusion during a one-week period in August for clothing and footwear costing less than $100 per item.

This “sales tax holiday” occurs during the third Sunday in August through the following Saturday. This year, it occurs Sunday, August 21 through Saturday, August 27.

Note: Tax does not apply to the sale of an article of clothing or footwear costing less than $100 sold during the exclusion week by mail, telephone, or over the Internet.

For more information, visit the CT Department of Revenue with this link.

Or, as posted on the Connecticut Department of Revenue Services (DRS) website, you can call DRS during business hours, Monday through Friday:

1-800-382-9463 (Connecticut calls outside the Greater Hartford calling area only); or
860-297-5962 (from anywhere)

TTY, TDD, and Text Telephone users only may transmit inquiries anytime by calling 860-297-4911.

If you need assistance or have any questions on sales and use tax, please call your CironeFriedberg professional. You can reach us by phone at (203) 798-2721 (Bethel), (203) 366-5876 (Shelton), or (203) 359-1100 (Stamford) or email us at info@cironefriedberg.com.

Good News for Teachers’ Taxes

August 1, 2022 by Adam O'Feeney CPA

If you are a teacher or eligible educator, you may have to reach into your own pockets for your classroom needs.

AdoptAClassroom.org first began surveying teachers in 2015. Their data shows that what teachers spend out of pocket for school supplies has increased 25%. According to their 2021 survey, teachers spent an average of $750 on school supplies out of pocket, with 30% of them spending $1,000 or more on school supplies.

In 2021 the teacher’s expense deduction was capped at $250. For the 2022 tax year, the maximum deduction jumps to $300 (or $600 for a married couple filing a joint return where both spouses are eligible educators).

These eligible expenses may include items such as, COVID-19 protective gear, books, supplies and other materials used.

Keep in mind this is an “above-the-line” deduction, and therefore you do not have to itemize to claim it.

Taxes for Americans Working Abroad

July 29, 2022 by David Moseman CPA

According to the Association of Americans Resident Overseas (AAR), 8.7 million American (excluding military persons) live in over 160 countries. AAR obtains this number through the US State Department. Even so, these numbers are a few years old and are only an estimate.

As a U.S. citizen, if you live and work abroad, the first $112,000 of foreign-sourced income you earn can be excluded from your taxable income for 2022. This amount is up from $108,700 in 2021. You would file a Form 2555 with your income tax return.

You can also potentially exclude up to an additional $15,680 by claiming a foreign housing exclusion for housing costs you incur while living abroad and pay for with your foreign-sourced income. This is contingent upon passing a bona fide residence test or physical presence test establishing your consistent residency abroad throughout the majority of the tax year.

Americans living outside the United States face particular tax requirements and compliance issues. To understand how this may affect your personal situation, consult with a CironeFriedberg tax advisor.

Understanding the Gift Tax

2022 Tax Brackets and Standard Deductions

Important Tax Deadlines

Important Tax Deadlines

Connecticut’s Sales Tax Holiday in August

Good News for Teachers’ Taxes

Taxes for Americans Working Abroad

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