This could be another challenging tax season for the IRS and taxpayers. Although this year’s filing season opens on January 24, 2022 (i.e., it is the first day the IRS will accept and start processing 2021 returns), the Service still has a backlog of prior year returns to process and is plagued by staff shortages due to the pandemic and reduced funding in the last few years.
Fact: When you pass, you will leave behind an estate, and somebody will need to settle it. Your estate may be worth a little or a lot, but there’s no escaping death and taxes.
So why do so many families put off their essential estate planning until push comes to shove?
Estate Planning Is an Act of Love
Early in 2021, Congress passed the American Rescue Plan Act which included a provision that increased the child tax credit amount and upped the age limit of eligible children. Under ARPA, the maximum amount for the Child Tax Credit (CTC) was increased from $2,000 to $3,600 for each child 5 years old and under. For children ages 6 - 17, the maximum increased to $3,000.
“The American marketplace is an economic jungle. As in all jungles, you easily can be destroyed if you don’t know the rules of survival… but you also can come through in fine shape and you can even flourish in the jungle — if you learn the rules, adapt them for your own use, and heed them.” — Sylvia Porter
In our last two pieces, we covered some tools of the tax-planning trade, as well as how to deploy them for tax-efficient investing.
However, tax planning isn’t just for your investments. Life happens. Often, we cannot predict its next moves, but we can weave each event into the tax-planning fabric of your financial life.