Posted on

Get Prepared

Now’s the time to prepare your company’s books for tax time. Your tax preparer may have a checklist to help you get organized. Start by reconciling your accounts as of December 31.

If you paid independent contractors, you have until the end of January to get those tax forms out. Remember that you’ll need to send copies to the IRS.

Pull out receipts for depreciable assets purchased in 2024. Your tax preparer will need these to update your records and calculate depreciation for your tax return.

Once you have all your tax documents ready, call your tax professional to schedule your appointment early so you can file your taxes on time.

Do not underestimate the importance of accounting for the growth of your business. Work with your accountant throughout the year to monitor cash flow and profits.

Posted on

Revive Your Retirement Funding Strategy

Few people would argue about the wisdom of putting money away for retirement. Yet, many of us either don’t start, take time off from contributing, or abandon this strategy altogether when financial obstacles hit. However, most people can revive their retirement savings strategy at almost any age by making a few changes in how they deal with money.

THAT’S LIFE

We may know that time and compounding make a powerful combination, but we often let other financial obstacles get in the way of saving. We buy first homes, have children, pay for their education, deal with parents’ long-term care, and more, so we put retirement savings on the back burner. So, let’s say you let some time slip by. While it’s difficult to catch up, every little bit helps.

For starters, consolidate your retirement plan assets if you have contributed to savings plans at previous jobs. Roll funds into an IRA or your current employer’s plan, if allowed. You’ll benefit from the ease of having all your retirement assets in one place with potentially lower overall fees.

Also, take advantage of your plan’s automatic tools, including automatic contributions, rebalancing, and escalation. The latter feature increases your contribution when you earn a pay increase.

MORE MONEY

If you have a 401(k) plan, know that IRS contribution limits are generous. Effective in the 2025 tax year, active 401(k) participants who attain age 60 and are at least age 63 by the end of the calendar year can contribute the greater of $10,000 or 150% of the catchup contribution. Consider opening a traditional IRA, which may help you put away a little more tax-deferred money for the future.

Looking for extra money to put toward retirement? Find more money to invest by cutting back on expenses like dining out. Consider gigging to earn extra cash in addition to your primary income. And think about delaying retirement because even a couple of years of extra contributions and potential growth can make a difference.

Talk to your tax professional to learn about these and other ways to help get your retirement savings back on track.

Posted on

January 2025 Client Line Newsletter

Revive Your Retirement Funding Strategy – most people can revive their retirement savings strategy at almost any age by making a few changes in how they deal with money.

Get Prepared – now’s the time to prepare your company’s books for tax time.

Disability Insurance for Businesses – there is a type of insurance that may help keep your business afloat in hard times.

January 2025 Client Profile

Money Hacks – consider these ways to save time.

A Win-Win Planning Solution – consider a charitable lead trust.

January 2025 Question and Answer

Stick to the Basics – cling to these well-known fundamentals to build toward a financially secure future.

6 Ways to Find More Money to Budget – here are some ways to find more money.

Posted on

Year-End Tax-Saving Opportunities

As the year draws to a close, it’s time to maximize your current year’s tax deductions and other tax planning opportunities. Here’s a brief checklist of moves you can make to help reduce current or future tax exposure.

BUSINESS EXPENSES

You may be able to reduce your 2024 tax bill by pre-paying certain business expenses before the year’s end. For example, you can renew subscriptions, pay ahead for advertising, business insurance premiums, rent, business licenses, and other items that don’t extend more than 12 months.

EQUIPMENT

Repair broken equipment and physical plant items by the end of the year. Buy business equipment and put it into service by year’s end. Your business can deduct the entire cost of qualified equipment up to a purchase limit of $1,220,000 for tax year 2024.

MAXIMIZE QBI DEDUCTIONS

If you meet certain income limits, owners of S corporations, partnerships, and sole proprietorships may deduct up to 20% of qualified business income (QBI).

For tax year 2024, eligibility for the deduction begins to phase out at income levels of $191,950 for single filers and $383,900 for joint filers.

If you’re over the income threshold, consider finding some more deductions.

Posted on

December 2024 Question and Answer

QUESTION:

I received a CP-501 notice from the IRS claiming I have a balance due, but I disagree. What should I do?

ANSWER:

Since the CP-501 notice is the first notice you will receive about a past due amount, you’ll want to call the IRS immediately using the phone number provided.

But before you call, do your research and have all the information available to explain why you believe there is a mistake.

Although talking with the IRS may seem scary, don’t ignore the notice. Interest and penalties may continue to be charged, and they have the right to place a lien on your property.

Posted on

Health Insurance Deduction For Self-Employed

There are many reasons why being self-employed isn’t for everyone, not the least of which is that you’re responsible for buying your own health insurance. However, most likely you can deduct health insurance premiums paid from your taxable income on your 2024 tax return.

NO COVERAGE ELSEWHERE

You need to meet two major requirements to qualify for this tax break.

First, you and your spouse cannot be eligible for an employer- sponsored health insurance benefit.

Second, you must have enough business income to qualify. You can take a partial deduction if you don’t have enough. For example, you can only deduct $10,000 from a $15,000 health insurance policy if your income is $10,000. If your income is greater than the cost of insurance, deduct the entire premium.

ITEMIZE OR NOT

You don’t have to itemize this on your tax return, meaning you may also want to take the standard deduction if you only have a few other deductions.

The health insurance deduction, unlike many others, is considered “above the line,” meaning it is deducted from your gross income and lowers your eventual adjusted gross income.

The latter category often determines your availability for other tax breaks, including deductible IRAs.

Posted on

December 2024 Client Profile

Jenny owns a warehousing company and wants to give a holiday party, but she has heard that the cost is either 50% deductible or 100% deductible from business income. Which number is correct, and can she also give cash gifts to employees?

Jenny may have heard two similar IRS rules. The first allows companies to deduct 50% of employee meal costs during the course of normal business. She can deduct 100% of meals provided employees when offering company recreational or social activities, such as holiday parties or annual picnics.

To qualify, the holiday party should be primarily for the benefit of employees other than officers, shareholders or other owners who own a 10% or greater interest of the business.

Jenny can also give cash gifts to employees, but she and her employees should be aware that they are considered taxable income. She could include a gift to each employee that is typically worth no more than $25, which they don’t have to report as income.

Client Profile is based on a hypothetical situation. The solutions discussed may or may not be appropriate for you.

Posted on

Don’t Be Your Own Worst Investing Enemy

Many investors aim to have their gains match or beat a standard investment benchmark. According to Dalbar’s annual Quantitative Analysis of Investor Behavior, 2024, the average investor falls short, earning 5.5% less than their targeted stock benchmark and 2.63% less than their chosen fixed income benchmark.

BEHIND THE STATISTICS

Often, investors weigh emotional behavior and personal recommendations too heavily against the knowledge and experience of investment professionals. Look at the checklist to see if this could be you.

  • When deciding whether to sell a stock, you may be emotionally fixed on the price you paid for it and avoid selling so you won’t regret having made a “bad” investment, resulting in a reportable loss.
  • Are you hesitant to sell an investment that’s had significant gains but its performance has fallen off? Remember, the past performance of any investment doesn’t guarantee future results.
  • Beware that paper losses are stressful and can trigger you to sell prematurely.
  • Being too quick to jump on the latest trend or family or friends’ recommendations without thorough research and talking with your financial professional first can be detrimental to achieving your goals.
Posted on

Year-End Tax Planning

Ideally, you have strived to minimize your taxes all year. Good news! Here are some year-end strategies that may help cut your tax bill even more. Before implementing these or any year-end strategies, talk with your tax advisor.

DEFER OR ACCELERATE INCOME

Project whether you’ll have higher taxable income in 2024 or 2025. If it’s 2025, consider receiving any potential bonus, investment and other supplemental income this year.

Do the opposite if, for example, you’ll have fewer dependents to deduct next year, have a spouse taking leave, suffer business losses, etc., resulting in having less taxable income in 2025.

BUNCH DEDUCTIONS

For instance, if medical expenses for 2024 year exceed the deductible minimum threshold of 7.5% of adjusted gross income (AGI), squeeze in medical expenses planned for 2025 to maximize tax 2024 savings.

Before bunching any expenses into 2024, consider your overall tax bracket for this tax year and 2025. If you anticipate income increasing enough in 2025 to put you in a higher bracket, it may make sense to postpone a deduction.

TOP OFF YOUR CONTRIBUTIONS

You have until the April 15, 2025, tax filing deadline to make Health Savings Account (HSA) contributions for this year. If you have not already maximized your contribution, do so. Contributions and earnings are generally excluded from taxable income.

Posted on

Plan For A Cash-Only Holiday

Do you often find yourself still paying off credit card debt long after the holidays? Keeping spending under control can be difficult at this time of year, which is why using cash — not credit — is so important. Here are a few tips.

BE EFFICIENT

To help keep you focused, list people you’re shopping for and the amount you intend to spend. Include ideas for gifts.

USE CASH OR A DEBIT CARD

This makes you accountable for staying on budget. You won’t be able to spend more than you have in your wallet or in your bank account.

AVOID THE MALL

Colorful displays, new gift ideas and sales might tempt you to buy items that aren’t on your list. Your favorite stores and online vendors have websites where you can order specific items without the distractions found in local stores, which tend to trigger impulse spending.