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Brodie Friedman’s 2022 Tax Survival Guide

December 31, 2022 is upon and this date is critical in your tax planning if you are considering getting married…or divorced.

First, looking back over 2022, did you give money to family or friends, not including your own children. If so, we highly recommend a Zero-Taxes Planning Strategy.

Let’s get back to your own under-18 kids. Have you paid them for work they might have done for your business over the past year? If so, did you pay them the RIGHT way?

Believe it or not, there is a hidden gem of opportunity tucked away in the tax code’s offset game and your stock market portfolio is the key to lowering your 2022 income taxes.

Now that we’ve got your attention, here are our Top Three 2022 Holiday Survival Strategies

1. Put Your Children on Your Payroll
Assuming you operate your business as a Schedule C Sole Proprietorship or as a Spousal Partnership, putting a child on your payroll is a tax advantage power move. Why?
First, neither you nor your child will pay payroll taxes on that child’s income.
Second, the child can avoid ALL federal income taxes on up to $18,950 of earned income using a traditional IRA for the child.
However, if your business operates as a corporation, you can still benefit by employing the child although both the corporation and child will incur some payroll taxes.

2. Postpone that Divorce Until AFTER December 31
The marriage rule considers you to be married for the ENTIRE year if you are married on December 31. While lawmakers have made many changes to eliminate the differences between married and single taxpayers, your joint tax return will work to your advantage in most cases.

Alimony Alert! The Tax Cuts and Jobs Act (TCJA) changed the tax treatment of alimony payments under divorce and separate maintenance agreements executed after December 31, 2018. Under prior law, the payor deducts alimony payments while the recipient includes these payments in income reporting. However, under the new law which applies to all agreements executed after December 31, 2018, the payor gets no tax deduction and the recipient does not recognize income.

3. Stay Single to Increase Mortgage Deductions
Believe it or not, two people can deduct MORE mortgage interest than a married couple can. Yes. Read that again.
If you own a home with someone other than your spouse, and you purchased it on or before December 15, 2017, you individually can deduct mortgage interest on up to $1 million of a qualifying mortgage.

Here’s how that looks in the real world. If you and an unmarried partner live together and own the home together, the mortgage ceiling on deductions for both of you is $2 million. However, if you get married, the ceiling drops to only $1 million.
If you and your unmarried partner bought your house after December 15, 2017, the reduced $750,000 mortgage limit applies and your ceiling is $1.5 million.

Keep these three key strategies in mind as you wind up 2022. Remember, you’re not alone. The team at Brodie Friedman is here to help you every step of the way.