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2 Tax Tips to Close Out 2022
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Happy to announce that Tuttle Ventures was awarded 2022’s Best Investment Company in Corona!
For all my readers here in Corona, California you know how much this means to me.
We recognize the Inland Empire has many options to choose from and appreciate the recognition.
Today I’ll be sending out two separate newsletters.
Current portfolio holdings and commentary will be sent separately.
2 Tax Tips to Close Out 2022
With only 48 days until the end of the year, now is the time to get your financial affairs in order. It's also never too soon to start planning for next year's taxes. We expect tax rates to increase in the future.
In fact, the sooner you start, the more likely you are to get a lower tax bill. Now, I am not a tax professional and everyone’s situation is different — I recommend speaking directly with your tax professional based on your individual circumstances.
When it comes to taxes, my general opinion is:
You shouldn't be afraid to pay the least amount of taxes legally possible.
In fact, it's a good way to save money for later on in life.
Here are two tips to help you close out 2022 on a strong note:
Tax equity investing
Non-Cash charitable contributions
Tax Equity Investing
A tax credit is a dollar-for-dollar reduction of the income tax you owe.
In order to get a tax credit, you need to qualify.
*Tax equity investing has entered the chat*
The term tax equity investment describes transactions that pair the tax credits or other tax benefits generated by a qualifying physical investment with the capital financing associated with that investment.
Instead of qualifying directly, companies can provide funding for a qualified tax credit project.
In exchange for funding, the project passes on the right to claim tax benefits and cash distributions.
According to Norton Rose Fulbright, renewable energy tax equity was a $18 billion market in 2020.
It’s completely changed the way the US conducts business in the renewable energy and storage sector.
Similar to other forms of equity, the timing of an investor’s return varies and is based on the performance of the project owned by a partnership.
Notice, I said the word partnership.
The IRS has given clear guidance on acceptable partnership structures for tax equity investors.
Individuals, S corporations and closely-held C corporations, meaning corporations with five or fewer individuals owning more than half the stock, have a harder time than large companies acting as tax equity investors.
They must thread passive loss and at-risk rules that make it harder for investors to use tax benefits from such investments.
As a tax investor you should not hard commit to a project until you are certain you will have tax “appetite” (taxable income they would like to offset) in the year the project would generate a tax credit.
That being said, the key to successful tax equity investing is simple: Diversify your income streams to thrive even in changing regulatory environments and topsy-turvy markets. With a little active risk management, you can build a long-term, highly profitable portfolio.
In order to fully understand the costs and benefits with tax equity investing, we suggest you hire a tax expert.
Non-Cash charitable contributions
For those that itemize tax deductions, non-cash charitable contributions could be something to consider.
Making "noncash contributions"—in other words, donating clothing, art, books, cars, or other items—requires more documentation and sometimes a special IRS form.
The basic rule is that you may deduct no more than the property's "fair market value" at the time of the donation. But fair market value can be a tricky thing.
For property donations of under $5,000, you can determine the fair market value yourself and no appraisal is required. The IRS recommends that you consider all relevant factors, including:
the item's cost or selling price
sales of comparable items
the item's replacement cost, and
an expert opinion.
Above $5,000 you’ll need an appraisal done to determine fair market value.
Volunteer work for a charity organization or church can also come into play.
You can write off expenses incurred that are directly related to volunteer work for a church or qualifying charity.
That means: Vehicle, parking fees and tolls, travel expenses and out-of-pocket expenses all qualify.
Here’s a picture from last weekend in Scottsdale, Arizona with my brother supporting his charity gala for the Tuttle Shuttle.
It was a great event and I was happy to support. The drive out to Arizona is an example of a qualifying expense that I will be sure to keep receipts to show my tax professional at the end of the year.
Bottom line: We think working with a professional can help you save money on your taxes. A good tax professional will know all the ins and outs of the tax code and can help you take advantage of every deduction and credit you're eligible for. They can also help you plan for retirement and other financial goals.
By following these two tips, you can close out 2022 on a strong note financially. Remember, it's never too early to start planning for your taxes. And, if you want to save money and avoid surprises, working with a professional is always a good idea.
Thank you for reading and I am grateful and humbled to be able to learn, grow and invest alongside you at Tuttle Ventures.
Vision, Courage and Patience leads to successful investing.
Darin Tuttle, CFA
NOTE - This is not investment advice. Do your own due diligence. I make no representation, warranty or undertaking, express or implied, as to the accuracy, reliability, completeness, or reasonableness of the information contained in this report. Any assumptions, opinions and estimates expressed in this report constitute my judgment as of the date thereof and is subject to change without notice. Any projections contained in the report are based on a number of assumptions as to market conditions. There is no guarantee that projected outcomes will be achieved. Unless there is a signed Investment Management or Financial Planning Agreement by both parties, Tuttle Ventures is not acting as your financial advisor or in any fiduciary capacity.