How Tax Pros Can Maximize Their Own Deductions

Generally speaking, the same tax planning principles apply to tax pros as they do to the client, but here are some key things CPAs and EAs should know when working on their taxes.

There is planning in connection with itemizing or using standard deductions. The 2022 standard deduction is $12,950 for singles, $25,900 in a joint return, and $19,400 for heads of household.  ((Rev.  Proc. 2021-45.))   “Bunching” itemized deductions in alternate years can help maximize deductions over the long-term.

The most common problem with itemizing is the $10,000 limit on deducting income tax, which is still with us barring legislative change.  The $300 ($600 in a joint return) charitable deduction without itemizing went away with 2021.   

Medical above a percentage of adjusted gross income is deductible; the familiar 10 percent rule went away with 7.5 percent of AGI now a permanent change for medical deductions. The personal exemption remains at zero in 2022.  This deduction is scheduled to return after 2025.

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There is the concept of maximizing deductions but understanding the incremental tax savings arising from added deductions (or lost when refraining from a deduction).  For example, shifting earned income to a C corporation incurs the 21 percent corporate tax but avoids an immediate tax at the highest marginal rates in the federal and state individual return.