Dear Family & Friends,
School is out for summer and the lazy days are upon us. If you get a chance to lounge by the pool or cool off in the A/C, take a moment to read the enclosed Mid-Year Newsletter.
By now, all Delawareans who filed their 2020 tax return should have received the 2022 $300 Relief Rebate. In April, Governor Carney signed into the law House Bill 360. This rebate is intended to help residents facing higher prices at the grocery store and gas pump. If you haven’t received your relief rebate and you filed your 2020 taxes, contact us right away. If you haven’t yet filed your 2020 tax return, the Department of Finance will develop a pathway for qualifying Delaware residents to receive the rebate. Stay tunned for additional information as it becomes available.
In our last newsletter, we talked about Tax Planning for 2022. If you haven’t started, now would be the perfect time to contact our office and meet with one of our amazing accountants. In the meantime, here are a few ideas to start planning for 2022: Review and jot down any major changes in life, whether it’s a new baby, new job or a new house. You can also maximize your contributions to your retirement accounts, your FSA and/or HSA contributions. All these plus more can be very beneficial in your planning.
Have you always gotten a refund in the past but for 2021 you owed? That would be no surprise to us in the accounting world but I’m sure a shock to some of you… Here’s a few situations that could be the culprit… The biggest cause of having to pay versus getting a refund is a change in tax withholding. The new W-4 is confusing and is causing taxpayers to have less tax withheld than they should, resulting in taxes being owed at the end of the year. The tax laws are always changing and with Covid specific provisions being enacted the last couple years did not help the situation. Do you have an older child? Children over 13 are no longer eligible for the child & dependent care credit and children over 17 will no longer qualify for a child tax credit. Are you recently retired, started receiving Social Security benefits or have a part-time job? All of these things could lead to a tax surprise come April.
Have you received a notice from the IRS recently? Don’t worry, more than likely it’s a mistake. These are automated notices the IRS sends out, but with the huge backlog of unprocessed returns and correspondence, it’s causing unnecessary stress to the taxpayers. The IRS has acknowledged this problem and have decided to temporarily stop some of the automated notices. What to do if you get a notice? Don’t panic but don’t ignore. It’s important to respond to the notice even if it’s not correct. Please contact our office if you received a notice and would like us to look into it.
Want to make your child a Tax-Free millionaire? Get a head start on your child’s retirement now. As soon as your child starts earning income, open a Roth IRA and start making Roth contributions for them. If you invest $2,500 before they graduate high school, that investment will be worth $100,000 by the time they retire. If you invest $25,000 before graduation, it will be worth $1 million at retirement! By helping your child get a head start on saving, it should ease any anxiety regarding retirement and help them focus on school and other personal goals.
We are working diligently to complete the tax returns we have on extension. If you have not dropped off your 2021 information, please do so as soon as possible. During the busy tax season, we sometimes forget to tell our clients how much we appreciate their patronage. We enjoy interacting and assisting you with your individual, business tax and financial needs. We appreciate any feedback you have on the services we provide. Only with feedback can we improve the experience you have with our firm. Have a happy and safe summer.
Starkey & Company, CPA’s