2021 Tax Planning Opportunities

2021 Tax Planning Opportunities

2021 has been another interesting year with another round of stimulus payments in early 2021, the introduction of the advance child tax credit, opportunities for employee retention tax credits, COVID-19 related grants and funding, and fluctuations in income as compared to 2020.  With all these changes and 2022 right around the corner, it is important to consider what 2021 tax planning opportunities you have now.

If you typically have a planning meeting every December or January, you might consider moving the meeting up to allow for additional time to enact any tax planning strategies. Below are questions to consider in your planning.

For business owners:

• Have you taken advantage of any COVID-19 related funding? (For example: Employee retention tax credit, Paycheck Protection Program (PPP), Restaurant Revitalization Fund, Shuttered Venue Operator Grant, Health and Human Services funds, etc.)
• Have your revenues or expenses fluctuated significantly from 2020?
• Do you have capital equipment needs? Supply chain constraints are impacting lead times, which makes the timing for ordering decisions even more critical.
• Are you considering selling your business or acquiring a business in the near future?
• Have you contributed to a retirement plan, or do you have a retirement plan?

For individuals:

• Do you typically receive an end-of-the-year bonus? Should we re-evaluate your withholdings to ensure your tax liability will be covered?
• Did you alter your retirement funding in 2020? Are you set to maximize your 2021 retirement contributions?
• Do you expect a significant change in your income between 2020 and 2021?
• Do you expect a change in filing status or dependents in 2021?

If you have questions or are unsure if you should schedule a 2021 tax planning appointment, please contact your Aliign team and we’ll be sure to put you in touch with one of our tax advisors.