Tax

Earlier this month, President Biden signed the Inflation Reduction Act (Act) into law. It was a significant step forward in accomplishing the Administration’s climate change agenda. Passed through the Senate budget reconciliation process, it’s much less expensive than the non-starter Build Back Better Act but includes several provisions which originated with that legislation. Still, it is the single biggest climate action bill to date with additional measures to lower healthcare costs. Controlling two highly volatile cost centers – healthcare and energy – is the central focus and is expected to help control inflationary pressures.

Earlier this week, the Inflation Reduction Act  (Act) passed all Congressional hurdles and is expected to be signed into law by President Biden in the coming days. Passed through the budget reconciliation process, it’s less expensive than the Build Back Better Act, which is where most of the provisions started. Still, it is the single biggest climate action bill to date with additional measures to lower healthcare costs. Controlling two highly volatile cost centers – healthcare and energy – is thought to dampen the effects of inflation, though experts disagree on the extent.

As it turned out, semiconductor chips make the world turn. Though most notably missing from the auto industry, semiconductor chips also power smartphones, computers, electronic toothbrushes, and more. Since COVID began, there’s been a worldwide chip shortage. Unfortunately, it is unclear when this crucial-shortage will be resolved. In fact, it appears many major automobile manufacturers, including Ford, have elected to re-start production because of a lack of certainty about when the shortage will be resolved.

New equipment, machinery, new office furniture, business vehicles, and updated computer software are items that most businesses invest in from time to time. Since these can be expensive purchases, most will plan before buying by carefully crafting the annual budget to ensure enough capital is available. Although there are many considerations that must be made prior to asset acquisition, it is important not to forget about taxes. When making a large investment the last thing any business wants to do is pay more in taxes than is necessary.

For the most part, the IRS releases its annual mileage rate updates for the following year in December. These rates are used to determine the deductible costs of operating an automobile for business, charitable, medical, or moving purposes. The rates are determined through either an annual study on the fixed and variable costs of operating a vehicle. For the medical/moving rates, the changes are only based on variable costs. While taxpayers can track and claim actual expenses related to these qualifying activities, the mileage deduction rates make the process much simpler. There are specific rules that apply when changing deduction methods.

Like Georgia, more states are cutting income taxes in what is mostly a bipartisan effort nationwide. In 2021 alone, 14 states took steps to cut income taxes. So far in 2022, dozens of states are following suit to either lower or flatten their income taxes, and several others have been looking at proposals to lower or temporarily suspend certain excise taxes. Still others have been considering temporary tax measures. By comparison, only two states have proposed raising taxes in 2022: Hawaii and Massachusetts. What’s driving the nationwide race to cut taxes?

When an issue arises with a tax return filing, processing, or other concern, many will turn to the IRS to help with questions, address issues, and resolve outstanding situations. This has been a realistic expectation of the agency, but since the pandemic, it has all changed. The combination of staffing shortages, lack of modern technology, and previously existing backlogs, means it will be some time before the agency is operating normally. However, recent reports suggest the IRS has made notable progress in certain areas.

Almost 30 percent of global carbon dioxide emissions can be traced back to building operations. This is a surprising number that reflects the impact certain building systems can have on the environment. Beyond this, older systems are likely to be consuming more resources, and therefore cost more, to operate. That is why so many have decided to leverage renewable energy systems to address the problem.

Supply chain disruptions are nothing new to auto dealerships at this point. Chip shortages and the difficulty obtaining new semiconductors are just two factors that have strained the automotive industry. More than two years after COVID-19 was declared a global pandemic, dealerships using the last-in-first-out (LIFO) inventory method are still hurting, but for a less obvious reason.

Many Atlanta families and high net worth individuals invest significant time uncovering strategies designed to limit federal and state income taxes due. Tax planning focuses on reviewing tax law changes, updates to incentives and deductions, and other changes in areas where savings may be present. Although these activities are most common at year-end, many will make it a regular focus throughout the year.