December 2021

Happy Holidays from the team at Riley Wigle CPAs LLC! We hope that 2021 has been a safe and prosperous year for you, your family, and your business.

As we close out the year and prepare for the fast‐approaching spring tax season, we want to update you on changes within our firm, remind you of a few important end‐of‐year considerations, and let you know about key tax changes to look for in 2022.

Firm Updates

2021 has been a year of incredible growth in Central Oregon, and our firm is thrilled to be growing along with our community. We have three new staff members to welcome aboard.

Alyssa Potok received her bachelor’s degree from The University of Oregon and completed graduate programs at The University of Portland and Portland State University. She is currently testing to obtain her CPA license and joins the firm with more than four years of tax and bookkeeping experience.

Andrew Scott moved to Bend from Dallas, Texas where he gained experience in public accounting and corporate fund accounting. He graduated from The University of Texas at Tyler and took graduate classes at Lonestar College to gain CPA eligibility. He is currently testing to obtain his CPA license.

Shawna Junker joins us from the Bend‐La Pine School district, where she worked as an office manager. Born and raised in Oregon, she graduated with an accounting degree from Linfield College.

We’re sad to have seen two familiar faces move on in 2021: Suzanne Markoya and Calli Riley. We’re thankful for all the time these two committed to ensuring the firm’s continued success and wish them all the best in their new endeavors.

Please keep an eye out for tax organizers in the next couple of weeks and call or email with any questions you may have. Your organizer packet includes a short summary of our new secure portal. We’re excited to improve our communication tools and hope that you find the new portal helpful and intuitive.

2021 Tax Year Reminders ‐ Personal

Virtual currency made headlines many times in 2021, and the IRS continues to adapt its methods for cryptocurrency reporting. 2021’s Form 1040 will require disclosure of any gift, sale, exchange, or disposal of a financial interest in virtual currency. Cryptocurrency is treated as a capital asset by the IRS meaning that any gains or losses are reportable and taxable. Let us know if you bought or sold cryptocurrency in 2021 so that we can avoid potentially costly reporting errors.

As the year draws to a close, make sure to maximize the tax benefits of tax‐advantaged plan contributions. Whether it be through a 401(k), IRA, SIMPLE IRA, HSA, FSA, 529 Plan, or other vehicle, contributing in the current year could save you both current and future tax dollars.

An individual who itemizes may take the charitable deduction for cash contributions up to 100% of their AGI for 2021. This rule will sunset after 2022 and return to the 60% limitation.

A deduction for charitable contributions is typically limited to those who take the itemized deduction, but the CARES Act allows users of the standard deduction to deduct up to $300 dollars of cash contributions to qualified organizations per taxpayer. If you plan on giving this holiday season, remember to keep documentation to support your philanthropy. This deduction will go away after 2022 for non‐itemizers.

The Child Tax Credit saw significant changes in 2021 including amount increases and the ability to take advance payments throughout the year. If you received advance payments of this credit, you will receive a letter from the IRS (Letter 6419) providing the total amount of advance Child Tax Credit payments disbursed to you in 2021. Make sure to save this letter and provide it along with your usual collection of tax documents.

Residents of Portland and Multnomah County saw two new income taxes take effect January 1st, 2021. The Metro Tax is a 1% personal income tax on income exceeding $125,000 for single files and $200,000 for joint filers. The Multnomah County Tax levies a 1.5% tax on personal income over $125,000 and $200,000 for single and joint filers, respectively, and an additional 1.5% (for a total of 3%) on income over $250,000 and $400,000.

2021 Tax Year Reminders – Business

Business owners and self‐employed individuals are typically required to make estimated tax payments through the year to avoid underpayment penalties. Remember to make your Q4 estimated payments by January 15, 2022. Business meals remain 100% deductible through 2021 and 2022. Deductibility will return to 50% at the end of 2022.

Section 179 expensing and 100% bonus depreciation remain in effect through 2021, allowing many purchases to be completely written off in the year they are placed in service. Purchasing new equipment before year end while these tax‐favorable options are available could help lower current year tax bills.

If you are a 2% or greater shareholder in an S Corporation and pay your own health insurance premiums through your business, remember that to deduct the costs of coverage, 2021 premiums should be included in Box 1 wages on your W‐2 or reported to your payroll service provider.

2022 Tax Updates

Tax laws saw significant changes in 2021 that will take effect in 2022. As usual, certain limits increased to account for inflation. The standard deduction will rise from $25,100 in tax year 2021 to $25,900 in 2022 for married couples filing jointly and from $12,550 to $12,950 for those filing as single or married filing separately. 401(k) contribution limits will increase from $19,500 in 2021 to $20,500 in 2022. Individual IRA contribution limits remain at $6,000, and HSA contributions for those with high deductible health plans will increase by $50 to $3,650 per taxpayer.

In Oregon, Governor Kate Brown signed SB 727 into law on June 19, 2021. This piece of legislature will allow passthrough entities to elect to pay Oregon state and local taxes at the entity level rather on the owners’ individual returns. An annual election will allow Oregon businesses to take advantage of the SALT Cap workaround included in the federal Tax Cuts and Jobs Act and could result in significant tax savings for Oregon business owners. This law is effective January 1, 2022 and sunsets at the end of 2023. Please contact us for tax planning regarding this election.

Thank you for trusting our firm with your business, and we look forward to another year of providing exceptional professional service to the Central Oregon community.