Volume 2021 Number 4 - Year End Edition for All Clients
Engagement Letters & Organizers/Checklists for the Upcoming Tax Season to be Distributed in January
During the month of January, we will be distributing organizer checklists and engagement letters to all clients via email. The engagement letter is simply a summary of the services we will be providing plus the proposed fee. We would appreciate your including the signed letter when you submit your tax documents.

The IRS currently plans to start accepting filed returns on January 31, 2022 although they often move that date back a week or so depending on circumstances (like a pandemic).

If you would like to make an appointment to meet with Steve, either in-person, by Zoom or my phone call, feel free to click the Appointment Link below and set up a time!

Don't forget that we always appreciate your referral of quality new clients to the practice !!

Infrastructure Investment Law Passed
Build Back Better Bill Looking Doubtful
Tax Law Changes Impacting NC Clients
In mid-November, President Biden was finally able to sign the Infrastructure Investment and Jobs Act. The final compromised version of the bill will cost $1.2 trillion over eight years and will focus on roads, bridges, railways, water, sewage, broadband, the electricity grid and electric vehicles. In the end, there was some bipartisan support for the bill.

The other major piece of legislation proposed by the Democrats was the Build Back Better bill which had passed the House of Representatives but now appears to be serious trouble in the Senate due to the lack of support from Senator Joe Manchin of West Virginia plus zero support from Republicans. This bill would have extended the increased Child Tax Credit amounts through 2022 (including the monthly Advanced Child Tax Credit payments that millions of Americans received in the 2nd half of 2021), provided universal pre-K for all children, added a hearing aid benefit to those on Medicare, plus allocated $555 billion to combat climate change (including greatly increased tax credits for purchasing electric vehicles). Please be aware if you were receiving the Advanced Child Tax Credit payments on the 15th of the month from July through December of 2021, these payments will no longer be distributed effective 2022 unless the bill is somehow revived and passed. Note that this is possibly a fluid situation and that one possibility is the Democrats may carve out a priority item such as the increased Child Tax Credit or climate change funding into a separate bill that would satisfy all parties involved.

For my North Carolina clients, the NC legislature made some state tax law changes, most of which are not effective until the filing of 2022 tax returns. The flat tax rate on individual income remains 5.25% for 2021 but will drop to 4.99% for 2022. Starting with 2022 returns, the standard deduction for single taxpayers will increase from $10,750 to $12,750 and the Married Filing Jointly deduction will increase from $21,500 to $25,500.
One NC change impacting 2021 tax returns is a new exemption for qualified military pensions from NC taxes.
No Passage of Build Back Better Bill Keeps "Back Door" Roth IRA Contributions as a Viable Financial Planning Option
The version of the Build Back Better bill passed by the House of Representatives included a provision to eliminate "back door" Roth IRA conversions, where those taxpayers over the income cap could make Roth IRA contributions by contributing to a traditional IRA instead and then later "convert" them over to a Roth IRA. Several of my clients have taken advantage of this strategy.

As it appears that the Build Back Better bill in its current form will not make it through the Senate, this strategy currently would remain as a viable option for taxpayers above the Roth IRA contribution income cap.
One footnote: there is no income cap to contribute to a Roth 401(k) plan through one's employer.
By The Numbers

1. WHO WILL GET THE WORK? - HR # 3684, the “Infrastructure Investment and Jobs Act” was signed into law by President Biden on 11/15/21. The bill contains $65 billion allocated to expand broadband assess throughout the country. The agency tasked with the disbursal of the funding is taking 6 months (to 5/15/22) to develop its selection process, e.g., the broadband speeds and prices that internet service providers will be required to offer (source: National Telecommunications and Information Administration).

2. EVERY DAY (A PRIMARY REASON FOR LABOR SHORTAGES) - An estimated 11,050 Americans will turn 65 years old each DAY next year (2022), i.e., 1 every 8 seconds. This group represents the 12th year of 19 years of “Baby Boomers” turning age 65. An estimated 11,525 Americans will turn 65 years old each day in the year 2029 (source: Government Accountability Office).

3. MORE PLUGS - An estimated 2.4 million charging stations for electric vehicles will be needed nationwide by 2030, up from 45,500 existing charging stations today (source: International Council on Clean Transportation).

4. HAVE TO MOVE QUICKLY - For the 12 months ending 6/30/21, US homes for sale were on the market for a median period of just 7 days before going under contract. That’s the shortest period recorded nationwide in data that has been tracked since 1989 or more than 3 decades (source: National Association of Realtors).

5. QUESTIONING THE STATUS QUO - 71% of 1,025 high school teenagers (ages 14-18) surveyed in May 2020 were “likely to pursue” a 4-year college degree. Just 48% of 1,052 high school teenagers surveyed in September 2021 were “likely to pursue” a 4-year college degree. Many teenagers want to “forge their own educational path” and are seeking information on other post high school career options (source: ECMC Group)

6. JUST AN AVERAGE CAR - The average new car purchased in the United States in September 2021 cost $45,031, an all-time record price and up +12.1% from $40,159 as of September 2020 (source: Kelley Blue Book).

7. UP AND DOWN - The nation’s personal savings rate, which soared during the early months of the pandemic, has now fallen back to its pre-pandemic levels. The savings rate was 7.5% in November 2019, rose to 33.8% in April 2020, and now has come back to 7.5% in September 2021 (source: Bureau of Economic Analysis)

8. MOVING THERE - Of the 50 largest American cities per the 2020 Census, Fort Worth, TX experienced the largest percentage growth rate (+24.0%) over the last decade, while Detroit suffered the largest percentage loss (down 10.5%). Just 4 of the top 50 US cities lost population in the last decade (source: Census Bureau).

9. BUSINESS BY STATE - Just 4 US states have economies worth at least $1 trillion as of 6/30/2021, including California ($3.3 trillion), Texas ($2.0 trillion), New York ($1.9 trillion) and Florida ($1.2 trillion). These top 4 states represent 37% of our nation’s economy (source: US Bureau of Economic Analysis)

10. THE TOP DOG - The highest paid college football coach in 2006 (15 years ago) was Bob Stoops of Oklahoma, making $3 million a year. The highest paid college football coach in 2021 is Nick Saban of Alabama, making $9.75 million this year (source: USA Today)
Winter Wolf Howl


  • For 2020 tax returns, the new charitable contributions deduction for those who took the standard deduction was capped at $300 per return (no matter whether the tax return was for a single taxpayer or married couple). For 2021 tax returns, the amount is $300 per taxpayer so the deduction for a married couple is now capped at $600. A reminder that this deduction is for cash contributions only.

  • The Department of Homeland Security has extended the deadline requirement for obtaining a REAL ID by 19 months to May 3, 2023 due to the pandemic. After that date, it is expected that a REAL ID must be presented to board a US airplane flight

  • Social Security recipients will see a 5.9% increase in 2022 benefits with the annual cost-of-living adjustment. That is the largest annual increase since 1982 when benefits increased 7.4%. The greatest factor in the inflation jump is the large increase in prices for new & used cars as well as gasoline prices. This can be tied back to the pandemic-induced migration away from crowded urban areas. The earnings cap for Social Security taxes rises to $147,000 in 2022, an increase of $4,200. Medicare premiums will rise 15% in 2022 due to Covid expenses plus a new Alzheimer drug. The maximum adjusted income in 2022 to avoid a Medicare surcharge is $91K for singles and $182K for married couples.

  • The new year brings the start of the No Surprises Act which provides new consumer protections regarding health insurance coverage. The law protects consumers from being charged for out-of-network services in emergencies or other situations in which they have little or no choice about who provides that care. The law also forces health care plans to provide more information about the cost of services.

  • Alert for those with student loan balances. The pause on student loan payments during the pandemic WAS set to expire on February 1st, but on December 22nd, President Biden announced that the pause is being extended to May 1st due to the pandemic. One related item regarding the repayment process - with many loans, there are income driven repayment options (IDR's) which allow you to structure your repayment based on your current income level which may soften the blow.

  • A dozen Hot Holiday Gifts for 2021 (once you make returns and have credits or cash to spend on yourself or a family member): 1. RADIATE Portable Campfire $27.99 on Amazon, 2. ELAGO 3-in-1 Apple Charging Station $29.99 on Amazon, 3. HANES EcoSmart Sweatshirt $22.00 on Amazon, 4. EMBER Temperature Control SmartMug $109.95 on Amazon, 5. CARHARTT Knit Cuffed Beanie (keeps your head warm) $31.00 on Amazon, 6. BRUSSEL'S BONSAI Live Bonsai Tree - up to $54.00 on Amazon, 7. MYDETHUN Moon Lamp (for your Tween child or astronomy buff) $36.00 on Amazon, 8. TEETURTLE The Original Reversible Octopus Plushie (a top toy for 2021) $15.00 on Amazon, 9. CRAZY FORTS Custom Fort Playset (for the little ones) $42.48 on Amazon, 10. EDUCATIONAL INSIGHTS Artie 3000 The Coding Robot (ages 7 and up) $56.00 on Amazon, 11. LAPGEAR Home Office Lap Desk $35.00 on Amazon, and 12. DODOW Sleep Aid Device $56.00 on Amazon (compiled from various sources including Good Housekeeping)

  • A reminder that the official deadline to sign up for Affordable Care Act (ACA) health insurance coverage for 2022 is January 15th. Note that coverage for enrollments between December 15th and January 15th is not effective until February 1st. For more information, go to healthcare.gov. The deadline for coverage effective January 1st was December 15th.

  • Top stocks for 2021 based on year-to-date return (as of December 15th) 1. Gamestop (GME) up 815%, 2. Upstart Holdings Inc. (UPST) up 321%, 3. Moderna (MRNA) up 194%, 4. Devon Energy (DVN) up 175%, and 5. Continental Resources Inc. (CLR) up 167%. History has shown that each year's environment is different so this data does not provide any reliable indicator of future performance.

  • Each year on February 1st, we celebrate the Chinese New Year. 2020 was the year of the Rat as we saw the global pandemic invade our lives without an invitation. 2021 was the year of the Ox as we worked our way through the pandemic and other challenges. As we approach another Chinese New Year, let's dig out those old Survivor music CD's because 2022 is the year of the Tiger. To better days !!
Client Travel Guide:
Share some of your favorite getaway places !!
Send photos & descriptions to carycpa@nc.rr.com

New Bern, NC - a great place to stop for lunch on the way to the beach or to stay for a visit and tour of Tryon Palace. Here is the view of the Neuse River from the deck at Persimmons Restaurant on the waterfront.
Submitted by Steve Cox

Islamorada in the Florida Keys, FL - the Florida Keys have so many wonderful destinations and perfect places to catch a beautiful sunset. Thanks for sending in this photo.
Note that the Florida Keys are the top destination among US citizens this winter, followed by New York City.
Submitted by D. Kloba

Grand Canyon, AZ - one of the few things in life that is even better than advertised. You MUST take the ride on the classic train from Williams, AZ to the canyon.
Submitted by Steve Cox