This week is the 7th annual National Tax Security Awareness Week which is a joint effort by the IRS, state tax agencies, and the tax industry to urge increased security measures as fraudsters exploit COVID-19 concerns. The IRS is warning people to be on the lookout for scammers using fake charities during the holiday season when folks are expressing their generosity as well as year round. Some tips to avoid fake charity scams include, don't give in to pressure. Scammers often use the technique of urgent need to pressure people into making a contribution. Be wary about how a donation is requested. Don't work with charities that ask for donations by giving numbers from a gift card or wiring money. Don't give more than needed. Personal information can be just as valuable to scammers as money. Never give out your social security number, credit card numbers, or PIN numbers. Visit irs.gov/securitysummit for more tips on protecting yourself from identity theft.

If you own a small business, or even if you don't, you may be getting a lot of solicitations advising you that you may qualify for the Employee Retention Tax Credit (ERTC). Be wary of these "ERC Shops" that may advise you to claim the credit when you may not qualify. These third parties often charge large upfront fees or a fee that is contingent on the amount of the refund and may not inform taxpayers that wage deductions claimed on the business' federal income tax return must be reduced by the amount of the credit. Businesses are encouraged to be cautious of advertised schemes and direct solicitations promising tax savings that are too good to be true. Taxpayers are always responsible for the information reported on their tax returns. Improperly claiming the ERTC could result in taxpayers being required to repay the credit along with penalties and interest, and chances are that by the time that auditor comes around, those ERC Shops will be nowhere to be found. If you think you may qualify for a tax credit, discuss it with a qualified professional like your CPA.

Now that tax season 2021 is finally in the books, it's time to start thinking about next year!  The last couple of months of the year are an excellent time to revisit your tax plan and make any last-minute adjustments. It's a good time to estimate your 2022 tax liability based on how you've done in the year so far, to be prepared for any extra payments that may be needed. There are online tools to do this such as the one on efile.com, or get with your CPA. Review your charitable goals and make any additional gifts by December 31. If you haven't completed a W-4 at your job since 2019 when the form was updated, request a new one and complete it using the calculator at irs.gov. Also do so if you have any life changes, such as getting married or having a child. Designate a safe place, such as a bin or a folder to put your tax documents as they start coming in. Determine if you can or should make any additional contributions to your 401k. Contact your CPA if you have planning issues beyond what you can handle on your own!

The Inflation Reduction Act, signed into law by the President on August 16, provides significant expansion of individual tax credits for green energy. Consumers may receive tax credits on new and used clean vehicle purchases. The federal credit for up to $7,500 for new vehicles and $4,000 for used vehicles. The solar credit increases the credit amount from 26% to 30% for solar panel installation costs. There is also a 30% credit for installing efficient exterior windows, skylights, doors, water heaters, and other items. There is also a $4,000 credit for an electric load service center upgrade, a $2,500 credit for electric wiring, and a $1,600 credit for insulation, air sealing, and ventilation. Consumers may also be eligible for up to $14,000 in rebates on purchases of certain efficient electric appliances such as a heat pump water heater, a heat pump for space heating or cooling, an electric stove, or an electric heat pump clothes dryer. There are income limits on most of the credits so do your research before making any purchases.

The 2017 federal Tax Cuts and Jobs Act (the TCJA) went into effect on January 1, 2018. Among other things the TCJA capped the amount of state and local taxes (or SALT) that an individual could deduct to $10,000. This cap extends to individual owners of pass-through entities because business income generated from pass-through entities like LLC's, partnerships, and S-Corps, is assessed at the individual owner level rather than at the business level. This limitation does not apply to C-Corporations. On June 23, 2021, Governor Polis signed into law the "SALT Parity Act" which allows owners of Colorado pass-through entities to obtain substantial federal income tax savings. The SALT Parity Act allows pass-through entities to elect to be taxed at the entity level, thereby bypassing the $10,000 SALT cap and allowing business owners to obtain substantial federal income tax savings. On May 16, 2022, Governor Polis signed another bill that makes the election available going back to 2018. Speak with your CPA about whether making this election is appropriate for your business, and what needs to be done differently to make sure your taxes are paid on time.