Early distributions from an IRA can be costly

If you take an early distribution from your traditional IRA, (before you reach age 59½), you may be hit with a penalty. In addition to the income tax you’ll pay for the withdrawal, you’ll typically pay a 10% early withdrawal penalty. Exceptions exist, such as withdrawals to pay higher education costs. Suppose you’re under 59½, […]

Deductible Bonus payments

November’s here. With the holiday season and year end coming soon, many employers are planning to pay employee bonuses. If you are, the timing of bonus payments may help reduce your business tax. For example, cash-basis businesses must deduct bonuses in the year paid. So, you can pay bonuses in late 2024 or early 2025, […]

Receive an inheritance?

If you receive an inheritance valued at less than the estate tax exemption amount ($13.61 million in 2024 and $13.99 million in 2025), it isn’t subject to federal tax. Regardless of an estate’s size, heirs don’t have to report to the IRS, either. However, an estate’s executor must file a final tax return for the […]

IRS issues guidelines for 2024 substitute tax forms

Recently, the IRS issued guidelines for 2024 substitute tax forms. If you’ve never heard of substitute tax forms, you’re not alone. As IRS Publication 1167 (https://bit.ly/3YUOw5P ) explains, taxpayers may create and file their own versions of official forms. Substitute forms must be approved by the IRS but the agency generally will accept those that […]

2025 Federal Gift and Estate Tax Exemption announced

Several recently announced 2025 inflation adjustment numbers may affect affluent taxpayers. One is the federal gift and estate tax exemption. For 2025, the exemption will be $13.99 million, up from $13.61 million for 2024. What happens with the exemption after 2025 is uncertain. Without further legislation, it’s scheduled to return to an inflation-adjusted $5 million […]

Don’t forget about Sec. 179 depreciation options

Under Sec. 179, your business may be able to currently deduct eligible property placed into service during a tax year. This generally includes new and used machinery, equipment, off-the-shelf software, roofs, improvements to building interiors and HVAC, as well as fire, security and alarm systems. For 2024, you can expense a maximum of $1.22 million. […]

Happy Veterans Day

“The brave men, living and dead, who struggled here, have consecrated [this ground], far above our poor power to add or detract. The world will little note, nor long remember what we say here, but it can never forget what they did here.” – President Abraham Lincoln, 1863, in the Gettysburg Address We Remember…… Thank […]

Take aways from National Cybersecurity Awareness Month

As National Cybersecurity Awareness Month (October) ended last month, the IRS and its Security Summit partners are sharing some best practices as a take away for the months best practices. Be careful about revealing too much personal information on social media. Be alert for unsolicited emails and social media messages that ask for tax information. […]

WOTC is a valuable employer tax credit

A valuable one-time federal tax credit is available through 2025 to employers looking to hire new workers. The Work Opportunity Tax Credit (WOTC) encourages employers to hire from certain groups that face employment barriers. Targeted groups include veterans, qualified recipients of specific aid programs, ex-felons, qualified long-term unemployment recipients and certain summer youth employees. Employers […]

Tax-Exempt organizations get AMT filing relief for 2023

Good news for tax-exempt organizations: You don’t have to file Form 4626 for tax year 2023. This form is used to report liability for the corporate Alternative Minimum Tax (AMT), created by the Inflation Reduction Act. There has been some ambiguity about whether tax-exempt organizations can be considered corporations subject to the corporate AMT. Regulations […]