Tax tips from a CPA

It’s that time of year: tax season. We spoke with Tom Wheelwright, CPA and author of tax-free wealth, for tips on filing taxes.

Wheelwright says this is a complicated season to be filing your taxes. “We have everything from Covid. We have the PPP loans, employee retention credit, we have got the stimulus checks, we have got the child tax credit, and now Arizona along with other states has special small business taxes and small business tax forms. This is probably the toughest year I’ve seen,” Wheelwright says.

Stimulus checks are considered a tax credit, so “as long as what you have matches up with what the IRS says you have” you should have no problem, but you need to make sure they match.

Unemployment benefits are fully taxable this year, and must be included in income.

Child and dependent care credit are credits that must again match to what you should be getting. “A lot of people got advanced payments of those credits from July to December, and that was just six months of advance payment, and if you should not have gotten them then you’ll get some tax. If you didn’t get them you should get some credit,” Wheelwright says.

Earned income tax credits have not changed that much, its a refundable credit. You get the credit even if you did not pay any tax. You have to be careful to answer all the questions on the form you fill out for it.

For charitable donations, you can give up to 100% of your income and get a deduction for the whole thing.

One thing to note, tax brackets change with inflation. He says you can get “bracket creep” and be taxed in a higher bracket because you got a big raise.