Claiming New Tip and Overtime Deductions? IRS Issues Key Guidance

The IRS has issued guidance for taxpayers wanting to claim new deductions for qualified tip income and qualified overtime compensation for 2025. The guidance details alternative calculation methods for the deductions because 2025 information forms, including Form W-2 and Forms 1099, won’t be updated to account for the deductions. To determine the tips deduction, employees […]

Is Your Remote Workforce Creating State Tax Exposure?

Allowing employees to work remotely from other states may introduce significant tax and compliance challenges for employers. For example, when employees are located in multiple states, employers may be required to withhold and remit income and payroll taxes in each jurisdiction. Having employees in another state can also establish what’s known as a “nexus.” This […]

First-Time Abatement: Relief Exists, But Awareness Doesn’t

Recently, National Taxpayer Advocate Erin Collins told attendees of an American Institute of CPAs conference that she thought the IRS needed to address problems more quickly. As an example, she said that approximately 1 million taxpayers are eligible for first-time abatements each year, but many aren’t aware of it. The IRS acknowledged the problem a […]

Think You’ll Get a Whistleblower Reward? Not Always

Taxpayers who give the IRS Whistleblower Office (WBO) credible, specific tips about unpaid taxes may qualify for cash awards. To qualify for an award, the IRS must take action based on the tip and the WBO must collect proceeds from that action. In one new case, a tipster alleged tax fraud by several targets, including […]

Self-Employed? Don’t Miss This Valuable Health Insurance Deduction

If you’re self-employed and have realized a net profit for the year, you may be eligible for the self-employed health insurance deduction. This is an adjustment to income, rather than an itemized deduction, for premiums you paid on a health insurance policy covering medical care, including a qualified long-term care insurance policy for yourself, your […]

A Smart Tax Move You Might Be Missing: The 0% Gains Bracket

How does a 0% tax rate sound? Pretty great, right? Unfortunately, most people don’t qualify for it. But some lower-income taxpayers qualify for a 0% long-term capital gains rate if their taxable income keeps them within the 10% or 12% ordinary-income brackets. If you have adult children in one of these tax brackets, you might […]

When Loans to Friends Go Bad — Your Tax Break Might Not

If you’ve been burned after lending money to a friend or family member who didn’t pay you back, take heart: You may be able to deduct your loss. For federal income tax purposes, certain personal loans you make that aren’t repaid are classified as short-term capital losses. You can use the losses to offset short-term […]

Businesses: It’s Time to Gear Up for the SECURE 2.0 Roth Requiremen

Is your business prepared to implement the SECURE 2.0 Act’s Roth catch-up contribution rule? The rule requires that catch-up contributions made by certain high earners be invested in Roth accounts rather than traditional 401(k) plans. Earlier IRS guidance enabled a two-year administrative transition period, but time is almost up and the rule is scheduled to […]

Nonprofits: Form 990 Extended Filing Deadline Approaches (Nov. 17)

Did your nonprofit organization opt last May for an automatic six-month extension for filing Form 990, Return of Organization Exempt from Income Tax? If so, your 2024 information return (Form 990, Form 990-EZ or Form 990-PF) must be filed with the IRS by Nov. 17. Take steps to reduce the odds of your Form 990 […]

Giving Back This Holiday Season? You Might Get a Tax Break, Too!

As the holiday season approaches, you may be thinking about volunteering for a charity. Volunteering can provide tax-saving opportunities if it’s for an IRS-approved tax-exempt organization and you itemize. You can’t deduct the cost of your time, but mileage costs (at a flat rate of 14 cents per mile) and other transportation expenses while volunteering […]