The 2024 standard deduction

The standard deduction is a specific dollar amount that reduces the amount of income on which you’re taxed. The Tax Cuts and Jobs Act (TCJA) nearly doubled the standard deduction for those who don’t itemize deductions. The amounts are indexed annually for inflation through 2025, after which they’re scheduled to drop back to the amounts […]

Hiring? Your business may qualify for tax credits

Employers that are looking to hire new workers may be able to reduce their tax bills with a valuable one-time federal tax credit. The Work Opportunity Tax Credit (WOTC) encourages employers to hire from certain groups that face barriers to employment. The targeted groups include veterans, qualified recipients of certain aid programs, ex-felons, qualified long-term […]

You may qualify for an adoption tax credit

Adopting a child can be expensive. Fortunately, there may be tax benefits to help adoptive parents defray some of the costs. For 2023, a credit of up to $15,950 ($16,810 for 2024) is available for qualified expenses, with phaseouts for higher-income parents. The credit is nonrefundable, which means it’s limited to your tax liability. But […]

For a tax deduction, what is ordinary and necessary?

Taxpayers can generally deduct the ordinary and necessary costs to run a business if they can prove them. Records of vehicle costs must be contemporaneous and detailed. One taxpayer filed two Schedule C business returns, one for computer consulting, which showed a profit. The other was for construction, and resulted in a net loss, mostly […]

Happy Thanksgiving

“Now, therefore, I do recommend and assign Thursday, the 26th day of November next, to be devoted by the people of these States to the service of that great and glorious Being who is the beneficent author of all the good that was, that is, or that will be.” –George Washington’s Thanksgiving Proclamation, October 3, […]

The 2024 Foreign earned income exclusion

One of the amounts the IRS recently adjusted for inflation is the foreign earned income exclusion amount. This is the amount U.S. citizens or resident aliens who live in foreign countries for at least one uninterrupted tax year can exclude from their foreign earned income. Citizens and resident aliens taxed by the United States on […]

Small Business accelerated depreciation election

Under Section 179 of the Internal Revenue Code, companies can “expense” the full cost of qualifying fixed assets to reduce their taxable income. This means they can deduct the purchase amount currently rather than having to depreciate the asset over many years. Both new and used fixed assets can qualify. The election is available for […]

IRS announces 2024 inflation adjustments

Among the 2024 inflation adjustments just announced by the IRS are several that affect higher-income taxpayers, including changes to the Alternative Minimum Tax (AMT). The AMT exemption amount is increasing to $85,700 in 2024 for single individuals and begins to phase out at $609,350. The AMT exemption for married joint filers will be $133,300 and […]

Debate over funding continues

Emergency aid to Israel, recently passed in the U.S. House, is now the subject of contentious debate in the U.S. Senate. At issue is the source of funding. Republicans propose to rescind $14.3 billion of the $80 billion (over 10 years) appropriated to the IRS to beef up tax enforcement and make customer service and […]

Tax planning when NOLs are present

In recent years, the net operating loss (NOL) deduction for businesses has seen several important changes. Since 2021, NOLs can’t be carried back, but unused losses can be carried forward indefinitely (with some exceptions for farm businesses). However, they’re now subject to an 80% of taxpayer income limitation. The 80% standard extends to NOLs generated […]