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In today’s competitive business environment, offering a retirement plan can be a significant advantage for small businesses looking to attract and retain talented employees. However, the costs associated with setting up and maintaining these plans can be a barrier for many small employers. Fortunately, the Internal Revenue Code (IRC) provides a valuable incentive through Section 45E, which offers a tax credit for employer contributions to new retirement plans. This article will explore the details of the Sec 45E credit, including retirement plan qualifications, employer qualifying contributions, employer eligibility, phase-out based on the number of employees, employee qualifications, and the phase-out of the credit over five years. We will also discuss how this credit fits into the general business credit framework and its effective years, with a focus on employers who do not currently have a pension plan. 

• Retirement Plan Qualifications – To qualify for the Sec 45E credit, the retirement plan must be a new qualified defined benefit or defined contribution plan. This includes plans such as a 401(k), SIMPLE plan, or a Simplified Employee Pension (SEP). The plan must be newly adopted by the employer, meaning it should not have been in place in the three tax years preceding the year in which the plan becomes effective. This requirement ensures that the credit is used to encourage the establishment of new retirement plans rather than subsidizing existing ones. 

• Employer Qualifying Contributions – The Sec 45E credit is designed to offset the costs associated with employer contributions to new retirement plans. Qualifying contributions include both matching and nonelective contributions made by the employer. These contributions must be made to an eligible employer plan, which excludes defined benefit plans. The credit is calculated as a percentage of these contributions, up to a maximum of $1,000 per employee. Contributions for an employee who receives more than $100,000 in wages from the employer for the tax year (adjusted for inflation after 2023) aren’t eligible. 

• Employer Eligibility – To be eligible for the Sec 45E credit, an employer must have no more than 100 employees who received at least $5,000 in compensation during the preceding tax year. This threshold ensures that the credit is targeted towards small businesses that may need additional support to establish retirement plans. Additionally, the employer must not have established or maintained a qualified employer plan for substantially the same employees in the three tax years preceding the effective year of the new plan. 

• Phase-Out Based on Number of Employees – The Sec 45E credit is subject to a phase-out based on the number of employees. Specifically, the credit amount is reduced by 2% for each employee when the employer had more than 50 employees during the preceding tax year who received at least $5,000 of compensation from the employer. This phase-out mechanism ensures that the credit is more beneficial to smaller employers, who may face greater financial challenges in setting up retirement plans. 

• Employee Qualifications – Employees who qualify for the Sec 45E credit must have received at least $5,000 in compensation from the employer in the preceding tax year. This requirement ensures that the credit supports contributions made on behalf of employees who are actively engaged in the business and earning a meaningful income. 

• Phase-Out of Credit Over Five Years – The Sec 45E credit is available for a total of five years, with a phase-out of the credit percentage over this period. For the first and second years, the credit is 100% of the qualifying contributions, up to $1,000 per employee. In the third year, the credit percentage decreases to 75%, followed by 50% in the fourth year, and 25% in the fifth year. This gradual phase-out encourages employers to continue contributing to their retirement plans while gradually reducing their reliance on the credit. 

• Part of the General Business Credit – The Sec 45E credit is part of the general business credit, which means it is subject to the rules and limitations that apply to this category of credits. This includes the ability to carry back unused credits for one year and carry them forward for up to 20 years. By being part of the general business credit, the Sec 45E credit provides flexibility for employers to maximize their tax benefits over time. 

• Effective Years – The Sec 45E credit, as amended by the SECURE 2.0 Act, is effective for tax years beginning after December 31, 2022. This means that employers can start claiming the credit for qualifying contributions made in 2023 and subsequent years. The recent amendments have increased the credit percentage for small employers with no more than 50 employees, making it even more attractive for small businesses to establish new retirement plans. 

• Encouraging Employers Without a Pension Plan – For employers who do not currently have a pension plan, the Sec 45E credit offers a compelling incentive to consider establishing one. By reducing the financial burden of employer contributions, this credit makes it more feasible for small businesses to offer retirement benefits, which can enhance employee satisfaction and retention. Additionally, offering a retirement plan can improve the overall competitiveness of a business in attracting top talent.  

In conclusion, the Sec 45E credit for employer contributions to new retirement plans is a valuable tool for small businesses looking to enhance their employee benefits package. By understanding the qualifications, eligibility requirements, and phase-out mechanisms, employers can effectively leverage this credit to support the establishment of new retirement plans. As part of the general business credit, the Sec 45E credit provides flexibility and long-term tax benefits, making it an attractive option for employers without a current pension plan. With the recent amendments under the SECURE 2.0 Act, now is an opportune time for small businesses to explore the benefits of offering a retirement plan to their employees. 

Contact this office with questions and how this tax incentive might benefit your business. 

An Offer in Compromise (OIC) is a program offered by the Internal Revenue Service (IRS) that allows taxpayers to settle their tax debts for less than the full amount owed. This program is particularly beneficial for individuals who are unable to pay their full tax liability or if doing so would create a financial hardship. The purpose of an OIC is to provide a path for financially distressed taxpayers to resolve their tax liabilities in a manner that is fair and equitable for both the taxpayer and the government. 

• Purpose of an Offer in Compromise – The primary goal of an OIC is to facilitate tax debt resolution for taxpayers who are unable to pay their full tax liabilities. By allowing taxpayers to settle their debts for less than the full amount, the IRS aims to collect what it can, rather than potentially collecting nothing if the taxpayer declares bankruptcy or remains unable to pay. This program also helps taxpayers avoid the long-term financial strain and stress associated with unresolved tax debts. 
• Requirements for Filing an OIC – Before submitting an OIC, taxpayers must ensure that all required tax returns have been filed. The IRS will not consider an OIC application if the taxpayer has outstanding tax returns or is involved in an open bankruptcy proceeding. Additionally, taxpayers must be up to date with their estimated tax payments for the current year, and employers must have made tax deposits for the current and past 2 quarters before applying. If these requirements are not met, the IRS will return the application without consideration, although any initial payment submitted with the offer will be applied to the outstanding tax debt. 
• Application Fee and Partial Payment Requirement – Submitting an OIC requires a $205 application fee. However, this fee may be waived for individuals or sole proprietors whose household gross income meets low-income guidelines. Along with the application fee, taxpayers must make a nonrefundable, up-front payment. For lump-sum offers, 20% of the offer amount must be paid with the application, with the balance paid in five or fewer installments within five months of acceptance. For periodic payment offers, the first payment must be made with the offer, and the remaining balance paid within 6 to 24 months according to the proposed terms. 
• Possible Upfront Payment Waivers and Low-Income Offers – The Taxpayer First Act amended the Internal Revenue Code to waive the OIC application fee for individuals whose adjusted gross income (AGI) does not exceed 250% of the applicable poverty level. Taxpayers who qualify under these guidelines are not required to make the initial payment with their offer. 
• Grounds for an OIC – An OIC can be based on doubt as to liability, doubt as to collectability, or to promote effective tax administration.  
  • Doubt as to Liability – Doubt as to liability exists when there is a genuine dispute about the existence or amount of the tax debt.  
  • Doubt as to Collectability – Doubt as to collectability arises when the taxpayer’s assets and income are insufficient to pay the full amount.  
  • Effective Tax Administration – Offers based on effective tax administration are considered when collecting the full amount would create an economic hardship or be unfair due to exceptional circumstances. 
• OIC Procedures and Processing – The OIC process begins with the taxpayer submitting a request for an offer in compromise, along with the necessary financial documentation. An offer can be submitted by individuals, including those who are self-employed, or for business entities. The IRS will conduct a thorough analysis of the taxpayer’s financial situation, including the taxpayer’s income, expenses, assets, and liabilities.      

The IRS uses national and local standards to determine allowable living expenses, which are essential for the taxpayer’s health and welfare or for the production of income. If a taxpayer’s expenses exceed these standards, they must provide reasonable substantiation. 

• Accepted and Rejected Offers – If the IRS accepts an OIC, the taxpayer will receive written notice, and prompt payment and compliance with the offer terms are required to prevent default. Once the payment terms are met, the IRS will release any Notices of Federal Tax Lien against the taxpayer. For offers involving more than $50,000, a written opinion from the IRS Chief Counsel is required. 

Rejected offers are not considered final until the IRS issues a written notice of rejection. Taxpayers have the right to request a meeting to discuss alternative solutions or file a protest with appeals within 30 days of rejection. The application fee is not refunded, but taxpayers can submit another offer with a new application fee.  

• Analysis of a Taxpayer’s Financial Information – The IRS conducts a detailed analysis of the taxpayer’s financial information to determine the amount of disposable income available to apply to the tax liability. This analysis includes reviewing the taxpayer’s income, expenses, and assets to assess their ability to pay. The IRS expects taxpayers to pay a tax liability equal to the amount over and above necessary expenses. 
  • Necessary Expense Test – The necessary expense test is used to determine which expenses are essential for the taxpayer’s health and welfare or for income production. Allowable expenses include basic living costs such as housing, utilities, food, transportation, and healthcare. Taxpayers must provide documentation for any expenses that exceed the standard amounts. 
  • Taxpayer Assets and Living Expenses – The IRS evaluates a taxpayer’s reasonable collection potential by considering their assets, future income, and allowable living expenses. Assets are assessed at their quick sale value, which is the amount the IRS believes could be obtained from selling the asset quickly. The realizable value is the amount the IRS expects to collect after accounting for any encumbrances. 
  • Future Income and Necessary Expenses – Future income is a critical component in determining a taxpayer’s ability to pay. For OICs paid in five or fewer months, the IRS considers one year of future income, while for offers paid in six to 24 months, two years of future income is considered. Necessary expenses are those that meet the necessary expense test, which defines expenses essential for the taxpayer’s health and welfare or for income production. 
  • Considerations for Unemployed Taxpayers – Unemployed taxpayers may face additional challenges in meeting their tax obligations. The IRS considers the taxpayer’s current financial situation, including unemployment, when evaluating an OIC. Taxpayers must provide documentation of their unemployment status, and any unemployment benefits received.
• Lump Sum and Periodic Payments – Taxpayers can choose between lump-sum and periodic payment options when submitting an OIC. Lump-sum offers require a 20% initial payment, with the balance paid in a short period. Periodic payment offers allow for more extended payment terms, providing flexibility for taxpayers with limited immediate resources. 
• Tax Liens – The IRS may file a Notice of Federal Tax Lien to protect the government’s interest during the OIC investigation. If the offer is accepted, the lien will be released once the terms of the offer are satisfied. Taxpayers should be aware that tax liens can impact their credit and ability to obtain financing.

Filing an offer in compromise with the IRS is a complex and time-consuming process that can significantly benefit from the expertise of a tax professional. Tax professionals are well-versed in the intricacies of tax law and the specific requirements of the offer in compromise program, which can help ensure that the application is completed accurately and efficiently. They can determine the most suitable type of offer for the taxpayer’s situation, whether it be doubt as to collectability, doubt as to liability, or effective tax administration. Additionally, tax professionals have experience working with the IRS, which can expedite processing times and provide valuable insights into what the IRS is looking for in a successful offer. By handling the detailed paperwork and potential appeals, tax professionals can save taxpayers time and reduce the stress associated with the process, increasing the likelihood of a favorable outcome. Please contact our office for assistance. 

Cybersecurity is no longer just an IT issue—it’s a business imperative. North American SMBs are grappling with a surge of cyberattacks, and the stakes have never been higher. According to a recent press release from Okta, many small and medium businesses are facing significant challenges that could have lasting financial repercussions. “As AI-powered attacks become more sophisticated, SMBs must strengthen their identity protections to safeguard operations and, most importantly, customer trust.”  

The New Wave of Cyber Threats 

Cybercriminals are getting smarter. Gone are the days when simple malware was enough to breach a system. Today’s scams include sophisticated voice and video calling tactics that mimic trusted contacts or vendors. One moment, a seemingly legitimate call prompts an urgent funds transfer; the next, a breach triggers a cascade of financial losses and reputational damage. 

The High Cost of Inaction 

A single cyberattack can do more than just disrupt operations—it can derail your financial future. The data from Okta reveals that a growing number of SMBs are on the front lines of these digital assaults. When a breach occurs, the immediate cost is just the beginning. Lost revenue, legal fees, and a damaged reputation can all compound over time, undermining years of hard-earned financial stability. 

Best Practices to Protect Your Financial Health 

1. Stay Updated:
   Regular software updates and patch management are non-negotiable. Cybercriminals exploit outdated systems, so keeping your software current is your first line of defense.
2. Adopt Multi-Factor Authentication (MFA):
   MFA acts like a digital bouncer, ensuring that only authorized personnel gain access to sensitive systems.
3. Invest in Employee Training:
   Equip your team with the knowledge to spot the latest scams, including those using voice and video technology. Continuous training can prevent a small oversight from turning into a costly mistake.  
4. Prepare for the Worst:
   Develop a robust data backup strategy and incident response plan. Think of it as your financial safety net—a necessary precaution that can save you from a complete meltdown.
5. Monitor Actively:
   Implement tools to continuously monitor and audit your systems. Being proactive means identifying and neutralizing threats before they escalate into full-blown crises. 

Securing Your Business for the Long Run 

Your business’s financial longevity depends on a proactive approach to cybersecurity. Each digital threat isn’t just a potential disruption; it’s a risk to your entire financial foundation. By treating cybersecurity as a core business strategy, you’re not only preventing immediate losses—you’re safeguarding your future. 

We’re Here to Help Your SMB Thrive 

We understand that a robust cybersecurity strategy is critical to financial success. Don’t let the next cyberattack be the turning point for your business. Our expert team is ready to help you build defenses that protect your financial data. 

Your business’s longevity is too important to leave to chance. Take control now and build a resilient future. 

When tax season rolls around, small and medium businesses often feel like they’re juggling flaming torches—one wrong move and everything could come crashing down. Balancing operating expenses with looming tax obligations isn’t just a challenge; it’s an opportunity to optimize your cash flow strategy and safeguard your business’s future. 

The Tightrope Act of Tax Payments and Daily Operations 

Imagine your business is a tightrope walker. On one side, you have day-to-day operations: rent, payroll, supplies. On the other side looms a massive tax bill that can throw your balance off at any moment. The secret isn’t in avoiding taxes—it’s in managing your cash flow so that every step is calculated, steady, and secure. 

Real-World Example: The Boutique Manufacturer’s Turnaround 

Consider a boutique manufacturer that was hemorrhaging cash every month. Their monthly tax estimates, combined with unexpected operating costs, were putting a strain on their finances. By reconfiguring their payment schedule and negotiating flexible payment terms with vendors, they freed up enough cash to cover their tax bill without cutting corners on quality or service. The result? They not only met their tax obligations on time but also had surplus cash to reinvest in growth initiatives. 

Smart Strategies to Balance Cash Flow and Tax Payments 

1. Forecast and Plan Ahead:
   Forecasting isn’t just about predicting sales—it’s about understanding when cash will come in and when major outflows, like tax payments, are due. Set aside a specific portion of your revenue each month to build a reserve. Think of it as a safety net that ensures you’re never caught off guard.
2. Negotiate Payment Terms:
   Don’t assume your vendors or even the tax authorities can’t be flexible. Many vendors are open to negotiating extended payment terms, and some tax authorities offer installment options or deferments. This can give you breathing room during crunch times.
3. Automate and Monitor:
   Leverage technology to automate cash flow monitoring. Use accounting software that tracks your cash inflows and outflows in real time. With the right tools, you can quickly identify potential shortfalls and take corrective action before they escalate.
4. Reduce Unnecessary Expenditures:
   A critical look at your operating expenses can reveal areas to cut back without affecting your core business. For example, consolidating subscriptions or renegotiating supplier contracts can free up cash without sacrificing quality.
5. Consider a Line of Credit:
   Sometimes, having access to a line of credit can be a game-changer. It provides a buffer during periods when cash flow is tight, ensuring that your business remains solvent even when tax bills loom large. 

Navigating Economic Uncertainty with Confidence 

In today’s climate, economic uncertainty is more than a buzzword—it’s a daily reality. Fluctuating revenues, unexpected expenses, and the possibility of regulatory changes can all impact your cash flow. A proactive approach to managing your cash isn’t just about surviving; it’s about thriving even when the financial waters get choppy. 

Picture this: A small retail operation faced declining sales due to an economic downturn. Instead of panicking, the owner used detailed cash flow projections to cut non-essential spending and secured a short-term credit line. This strategy not only covered their tax obligations but also provided the flexibility to invest in targeted marketing campaigns that eventually turned the tide. 

Your Next Step: Secure Your Financial Future Today 

We believe that strategic cash flow management is the cornerstone of business resilience. Whether it’s navigating tax payments, optimizing operational expenses, or preparing for economic uncertainty, our team is here to empower your business with expert advice and actionable strategies. 

If you’re ready to take control of your cash flow and turn financial challenges into growth opportunities, contact our firm today. Let’s work together to ensure that your business remains robust, agile, and profitable—even in the face of uncertainty. 

In the world of business, proactive cash flow management isn’t just a practice—it’s your pathway to long-term success. 

QuickBooks is one of the most powerful tools on the market for managing small business finances, but getting started can feel daunting. Setting up your account properly and taking advantage of key features is the best way to save time and avoid headaches when tax season rolls around – we promise, your tax professional will thank you for staying on top of your books all year long!

Here are five detailed tips to help you navigate QuickBooks with confidence.

1. Customize Your Chart of Accounts

Your Chart of Accounts is the backbone of your bookkeeping system, and tailoring it to your business is critical. For example, an auto repair garage might include categories like “Parts Inventory” and “Repair Labor,” while a lawyer would focus on “Billable Hours” and “Client Retainers.”

• How to Access It: Go to the Settings ⚙️ menu in the top right corner, select Chart of Accounts, and click New to add categories or edit existing ones.
• Pro Tip: Break down your categories to match your income streams and expenses. For example, if you’re a retailer, you might include “Online Sales” and “In-Store Sales” as separate categories. This specificity makes reporting and tax preparation easier.

2. Link Your Bank and Credit Accounts

Syncing your financial accounts with QuickBooks automates transaction tracking and reduces manual data entry. This saves time and minimizes the risk of human error, ensuring your financial data is accurate and up-to-date when you need it.

• How to Do It: Click Banking from the left-hand menu, then choose Link Account. Follow the prompts to connect your bank or credit card.
• Pro Tip: After syncing, QuickBooks will pull in transactions automatically. Review these weekly under the Banking tab to categorize them correctly. Doing this regularly keeps your books up-to-date and avoids a year-end rush.

3. Set Up and Use Projects or Classes for Better Tracking

QuickBooks offers powerful features like Projects and Classes to track revenue and expenses for specific initiatives or departments. These tools provide a detailed breakdown of your financial activities, helping you analyze profitability and allocate resources more effectively for each project or division.

• How to Access It: Enable these features under Settings > Account and Settings > Advanced, then look for Projects or Track Classes.
• Why It Matters: If, for instance, you’re running a seasonal marketing campaign, you can group all related income and expenses under one project. This gives you a clear picture of the campaign’s profitability.

4. Master Recurring Transactions

Recurring transactions can save you significant time if you have clients who need regular invoicing or vendors you pay monthly. Automating these repetitive tasks lets you focus on growing your business while making sure you never miss payments or invoices.

• How to Set It Up: When creating an invoice, bill, or expense, look for the Make Recurring option at the bottom of the form. Customize the frequency, amount, and start/end dates.
• Pro Tip: Automate fixed costs like rent or subscription services. You can review all recurring transactions under Lists > Recurring Transactions.

5. Leverage QuickBooks Reports for Insights

QuickBooks comes with built-in reports that give you a comprehensive view of your business’s financial health. These reports allow you to identify trends, monitor cash flow, and make data-driven decisions to improve profitability and growth.

• How to Find Reports: Navigate to Reports in the left-hand menu. You’ll see a list of common reports, including Profit & Loss, Balance Sheet, and Cash Flow Statement.
• Pro Tip: Click Customize Report at the top to customize reports to your needs. You can adjust date ranges, filter by customer, or even compare performance over time. Save these customizations to access them quickly in the future.

Extra Tips for Tax Season Readiness

1. Reconcile Regularly: Under the Banking menu, click Reconcile to match your QuickBooks records with your bank statements. Doing this monthly avoids discrepancies and errors.
2. Track Receipts with the Mobile App: Download the QuickBooks mobile app and use it to snap pictures of receipts. They’ll be automatically uploaded and matched to transactions, making expense tracking a breeze.
3. Use Accountant Access: QuickBooks allows you to invite your accountant directly into the platform. Go to Settings > Manage Users > Invite Accountant to streamline collaboration during tax season.

QuickBooks does much more than bookkeeping for small business owners—it can mimic an entire finance department when used effectively. From creating a customized Chart of Accounts to taking advantage of detailed reports, these steps will help you stay organized and reduce stress during tax season (and all year long!)

Remember when “downsizing” was something you did to your closet every spring? Now, it’s a buzzword for a major financial move: selling the big family home to streamline expenses, pocket extra cash, or fund that dream RV trip. Especially for Baby Boomers and Gen Xers stepping into retirement territory, downsizing isn’t just about purging your dusty attic—it’s about deciding how you want to live the next chapter of your life.

But there’s a caveat. Before you pop that “For Sale” sign in the ground, you’ve gotta get tax-savvy. Because the IRS? They never miss an opportunity to tag along.

Capital Gains Taxes: The Big Kahuna

Let’s get right into the heavy stuff: capital gains taxes. Suppose you sell your long-time home for more than you paid for it—yay, profit! But that profit might be taxable. There is good news, though: if the property was your primary residence for at least two of the last five years, the IRS offers a sweet exclusion—up to $250,000 for single filers, and $500,000 if you’re married filing jointly.

Sounds too good to be true? Well, there are a few catches:

• Short Occupancy: If you haven’t lived in the house for that magic two-year window, or used it as a rental or business site, you’ll likely face a bigger tax bill.
• Multiple Properties: Selling more than one home? You don’t get to claim this exclusion twice in the same two-year period.

Essentially, don’t assume your sale profit automatically sails off tax-free. You might need to plan your timing or usage to snag the best tax breaks.

Tapping Into Sneaky Deductions

Yes, you can still find deductions—but it’s complicated. Recent legislation (looking at you, Tax Cuts and Jobs Act of 2017) capped state and local tax (SALT) deductions at $10,000. That might cramp your style if you live in a high-tax state.

The moving deduction is no longer allowed except for the military.

Leveraging the Sale for Retirement Funding

Downsizing can do more than trim your monthly bills—it can boost your golden years. Turn your home’s equity into rocket fuel for your retirement:

1. Time Your Sale Wisely: Selling in a strong market = bigger proceeds, and a well-structured sale can minimize your tax hit.
2. Park Funds in Tax-Advantaged Accounts: Rolling part of that new nest egg into IRAs or 401(k)s (up to the contribution limits) can help cushion your post-paycheck life.
3. Diversify, Diversify, Diversify: Talk to a financial advisor about distributing your proceeds into a blend of stocks, bonds, or even real estate investment trusts (REITs). Because “eggs” and “one basket” never end well.

Carrying Over Your Property Tax Basis (Sometimes)

Heard the rumor that you might get to carry your old property’s tax basis over to a new one? In certain places—California, we’re looking at you—this is more than a myth. Laws like Proposition 13 allow eligible homeowners to transfer their property tax base to a new home.

But the rules are notoriously finicky. Age requirements, property values, and county regulations can all squash your hopes if you don’t follow them to the letter. This is the kind of nuance that can save you bundles… or cost you if you mess it up.

Don’t Wing It

Let’s be real: the money you’ve spent a lifetime building is on the line here. You want to keep as much of it as possible—preferably for fun stuff like spoiling grandkids or traveling the world, not handing it over to Uncle Sam.

That’s why a little strategic planning goes a long way. And you don’t have to be the tax code’s best friend to do it right. You just need the right people in your corner.

Next Step: Dial Our Office for Tailored Tax Smarts

Ready to turn your downsizing dreams into a fully informed reality? We’ve got you.

Call or email our office now, and let’s chat through your situation—no generic, one-size-fits-all advice here. We’ll help you:

• Identify tax pitfalls specific to your property
• Pinpoint opportunities for deductions and exclusions
• Map out strategies to amplify your retirement savings

Don’t let confusion about capital gains or complicated tax rules derail your next life move. Get clarity today—and set yourself up for a smoother, more profitable transition into those well-earned golden years.

Remember: The smartest moves are made with eyes wide open… and a solid tax plan under your belt.

Running a small business is a round-the-clock hustle. You juggle employees, invoices, marketing, and a million other tasks that always demand your attention. The last thing you want is to overlook a perfectly legal tax deduction that could save you thousands—or worse, get stuck paying more than your fair share.

Ready for a quick win? Let’s dive into some powerful tax deductions that small business owners often miss—and learn how you can bank that extra cash instead.

1. Vehicle Expenses: More Than Just Mileage

Think of all the errands you run in your car for your business—client meetups, supply runs, on-site visits. Each of those trips could be padding your deduction total instead of draining your bank account on gas. The IRS offers two routes here:

• Standard Mileage Rate: Track how many miles you drive for business and multiply by the current IRS mileage rate.
• Actual Expenses: Deduct a portion of your actual vehicle expenses (gas, insurance, repairs, etc.).

Pro Tip: Choose the method that nets you the highest deduction. But remember—meticulous record-keeping is key. Apps like MileIQ are a lifesaver for logging those miles.

2. Home Office Deduction: It’s Not Just for Freelancers

If you use a portion of your home exclusively for business, you’re sitting on a deduction goldmine. That means a chunk of your mortgage or rent, utilities, and even repairs could be deductible on your business return.

• Exclusive Use: Keep that space business-only—no letting the kids watch Netflix there at night.
• Regular Use: Make sure you use this space regularly. (A corner desk you touch once a year won’t qualify.)

This one’s a game-changer when done correctly, so don’t overlook it if you work from home.

3. Equipment Depreciation: Turbocharge Your Assets

Buy a new laptop this year? What about that top-of-the-line printer or ergonomic office chair?

• Section 179: Deduct the full purchase price of qualifying equipment in the year you buy it.
• Depreciation: Spread the cost out over the asset’s useful life if it makes more financial sense.

The right strategy can seriously reduce your taxable income—so choose wisely based on your cash flow and growth plans.

Beyond the Basics: Your Custom Roadmap to Bigger Savings

Health insurance premiums, travel costs, even business meals—can all add up to major deductions if you know how to document them properly. It’s not just about what you can deduct, but how to ensure the IRS stays happy while you claim everything you’re entitled to.

Why Going DIY Could Cost You

Sure, you can try to handle taxes on your own. But with so many moving parts in the tax code, one slip could cost you big time—or leave dollars on the table that you could have reinvested in your business. Working with a tax pro isn’t just an expense. It’s an investment in peace of mind and bigger returns.

Let’s Make the Tax Code Work for You

Here’s the bottom line: Every dollar saved in taxes is a dollar that can drive your business forward—whether that’s hiring new talent, upgrading equipment, or simply boosting your personal paycheck. Don’t let hidden tax breaks slip through the cracks.

Looking to supercharge your deductions? That’s what we’re here for. Let’s take a deep dive into your finances, tailor the perfect tax strategy, and keep more money where it belongs: in your business.

Get in touch today for a consultation, and let’s start checking off those hidden tax opportunities—together.

Many individuals may find themselves earning below the income thresholds that require them to file a federal income tax return. However, even if you are not required to file, doing so may be beneficial. This article will explore the filing thresholds for 2024, the potential benefits of filing a tax return even when one isn’t required, and the refundable credits available, such as the Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC).

• Filing Thresholds for 2024 – The filing thresholds for 2024 depend on your filing status, age, and type of income. Here are the general thresholds:
  • Single Filers: If you are under 65, the threshold is $14,600. For those 65 or older, it is $16,550.
  • Married Filing Jointly: For couples where both spouses are under age 65, the threshold is $29,200. If one spouse is 65 or older, it is $30,750, and if both are 65 or older, it is $32,300.
  • Married Filing Separately: The threshold is $5, regardless of age.
  • Head of Household: For those under 65, the threshold is $21,900. For those 65 or older, it is $23,850.
  • Surviving Spouse with Dependent Child: If under 65, the threshold is $29,200. For those 65 or older, it is $30,750. This status applies only for the first and second year after the year of the spouse’s death.

These thresholds are subject to change based on inflation adjustments and IRS updates, so it is always wise to check the latest figures when preparing your taxes.

• Why File a Tax Return Anyway? – Even if your income is below these thresholds, filing a tax return can be advantageous. The reason? You may qualify for refundable tax credits, which can provide a refund even if you owe no tax.
  • Earned Income Tax Credit (EITC): This credit is designed to benefit low- to moderate-income workers and can result in a significant refund.
  • Child Tax Credit (CTC): This credit can provide substantial financial support to families with children.
  • State Benefits: Some states offer additional credits or benefits that require a federal tax return to be filed in addition to the state return.
• Earned Income Tax Credit (EITC) – The EITC is a refundable tax credit aimed at helping low- to moderate-income workers. It can significantly reduce the amount of tax owed and may result in a refund.

Earned income includes wages, salaries, tips, and other taxable employee pay. It also includes net earnings from self-employment and certain disability payments. However, it does not include income from pensions, unemployment benefits, or Social Security.

The amount of EITC varies based on your income, filing status, and number of qualifying children. For 2024, the maximum credit amounts are approximately:

• No Children: Up to $632
• One Child: Up to $4,213
• Two Children: Up to $6,960
• Three or More Children: Up to $7,830

To qualify, you must meet certain criteria, including having earned income, a valid Social Security number, and filing a tax return. The credit amount decreases as income increases and phases out completely at higher income levels.

• Child Tax Credit (CTC) – The Child Tax Credit is another valuable benefit for families. It provides financial support for each qualifying child under the age of 17.
  • Amount of the Credit – For 2024, the CTC is up to $2,000 per qualifying child. Of this amount, up to $1,700 is refundable, meaning you can receive it as a refund even if you owe no tax.
  • Qualifying Children – To qualify, a child must meet several criteria, including age, relationship, residency, and support tests. The child must be under 17 at the end of the tax year, related to you, live with you for more than half the year, and not provide more than half of their own support.
  • High-Income Earners Phase Out – The CTC begins to phase out for higher-income earners. For 2024, the phase-out begins at $200,000 for single filers and $400,000 for married couples filing jointly. The credit is reduced by $50 for each $1,000 of income above these thresholds.

Filing a tax return, even when not required, can be beneficial for individuals with income below the filing thresholds. By filing, you may qualify for valuable refundable credits like the Earned Income Tax Credit and the Child Tax Credit, which can provide significant financial support. Understanding these credits and the filing thresholds can help you make informed decisions and potentially receive a refund that can aid in your financial well-being.

If you were not required to and did not file returns in the past, tax years 2021 2022, and 2023 are still open years, and returns for those years can still be filed for refundable credits that you are entitled to. However, note that the statute of limitations for filing the 2021 return for a refund expires after April 15, 2025.

Contact our office to determine what your benefit from filing may be and for assistance in preparing your current or past returns.

The world of college athletics has undergone significant changes in recent years, particularly with the introduction of Name, Image, and Likeness (NIL) income opportunities for student-athletes. As these athletes balance academics and sports, they must also navigate the complexities of taxation related to their various sources of income. This article explores the tax implications of NIL income, scholarships, grants, financial aid, part-time jobs, education credits, education loan interest and more.

Scholarships

Scholarships can be either taxable or non-taxable depending on how they are used and the terms of the scholarship. Here are the general rules:

• Non-Taxable Scholarships: Scholarships are generally non-taxable if they are used for qualified education expenses. These expenses typically include tuition, fees, and required books, supplies, and equipment for courses at an eligible educational institution. The scholarship must not exceed the amount of these expenses.
• Taxable Scholarships: If any part of the scholarship is used for non-qualified expenses, such as room and board, travel, or optional equipment, that portion is considered taxable income. Additionally, if the scholarship terms specify that it must be used for non-qualified expenses, it is taxable.
• Athletic Scholarships: These are often a mix of qualified and non-qualified funds. Student-athletes must carefully track how their scholarships are used to determine the taxable portion.

Reporting Requirements: Whether you need to report a scholarship on your tax return depends on whether any part of it is taxable. If the scholarship is entirely non-taxable, it generally does not need to be reported. However, if any portion is taxable, it must be included in your gross income.

Education Tax Credits: When calculating education tax credits, qualified tuition must be reduced by any tax-free scholarship amounts. However, if the scholarship terms allow, students can allocate funds to maximize tax benefits by choosing how to apply the scholarship to different expenses.

Understanding these rules can help in planning how to use scholarship funds effectively to minimize tax liability and maximize education tax credits.

Grants and Financial Aid

Pell Grants and other federal student aid are generally not taxable if they are used for qualified education expenses. Qualified education expenses typically include tuition and fees, books, supplies, and equipment required for courses as well as transportation and living expenses (such as room and board at the educational institution or off-campus rent).,

However, if a student chooses to apply the Pell Grant to non-qualified expenses, the amount used for those expenses must be included in gross income, which could make it taxable.

Pell Grants generally do not have to be repaid.

Income from NIL (Name, Image, and Likeness)

NIL is the acronym for name, image, and likeness. In 2020, the NCAA changed its rules to allow schools to pay athletes for academic performance, but this was overruled by the Supreme Court in the NCAA vs. Alston case, which removed limits on such payments. In July 2021, the NCAA adopted a policy allowing student-athletes to profit from their NIL, marking a significant shift in college sports.

Now student-athletes can earn NIL income through endorsements, sponsorships, social media promotions, autograph signings, and appearances. These earnings are typically treated as self-employment income.

Tax Reporting for NIL Income: Athletes receiving NIL income are generally considered independent contractors. They should receive Forms 1099-NEC or 1099-K, depending on the payment method. Athletes must report this income on their tax returns and may need to make estimated tax payments quarterly.  The income is generally reported as self-employment income on a 1040 Schedule C.

• Deductions and Expenses: Student-athletes can deduct ordinary and necessary business expenses related to their NIL income, such as travel, marketing, and professional fees related to the NIL income.
• Self-Employment Tax: Since NIL payments are generally considered self-employment income, student athletes must pay self-employment (SE) taxes if their net earnings exceed $400 in a tax year. SE tax is like the FICA (6.2%) and Medicare (1.45%) withholding for employees. The key difference is that while employers pay an amount equal to what their employees pay, self-employed individuals act as both employer and employee, thus paying both portions, resulting in a total SE tax rate of 15.3%. Unlike employees, who are taxed on their gross taxable wages, self-employed individuals are only subject to SE tax on their net profit, which is calculated as gross income minus business expenses deductions.
• Cryptocurrency: Occasionally a student athlete will receive NIL payments in cryptocurrency. When this occurs, there are several tax implications to consider:
• Income Recognition: Cryptocurrency received as payment for services, including NIL activities, is considered taxable income. The fair market value of the cryptocurrency at the time of receipt must be reported as income. Thus, a student-athlete receiving NIL payments in cryptocurrency would include that compensation, converted into U.S. dollars, on their Schedule C as part of their gross income.
• Capital Gains Tax: If the athlete holds the cryptocurrency and later sells or exchanges it for a different cryptocurrency or fiat currency, any gain or loss from the transaction will be subject to capital gains tax. The gain or loss is calculated based on the difference between the sale price and the fair market value at the time the cryptocurrency was received.
• Record Keeping: It is crucial for the athlete to maintain detailed records of all cryptocurrency transactions, including the date of receipt, fair market value at the time of receipt, and any subsequent sales or exchanges.

Overall, receiving NIL payments in cryptocurrency adds significant complexity to tax reporting and compliance.

NCAA Eligibility and Tax Considerations

Maintaining NCAA eligibility is crucial for student-athletes, and understanding the tax implications of their income is part of this process:

• Impact on Financial Aid: NIL income and other earnings can affect a student-athlete’s eligibility for need-based financial aid. It’s important to report all income accurately on the Free Application for Federal Student Aid (FAFSA).
• Compliance with NCAA Rules: While the NCAA now allows NIL income, athletes must still comply with institutional and conference rules. This includes understanding how income affects their amateur status and eligibility.

Part-Time Jobs

Many student-athletes take on part-time jobs to supplement their income. The income earned from these jobs is subject to federal and state income taxes. Key considerations include:

• W-2 Income: Employers provide a W-2 form detailing wages earned and taxes withheld. Student-athletes must report this income on their tax returns.
• Self-Employment: If a student-athlete engages in freelance work or gigs, they may be considered self-employed. This requires filing a Schedule C and paying self-employment taxes on net earnings over $400. If the student also has NIL income, the two are combined for SE tax purposes and the $400 limit applies to the combined total.

Student’s Standard Deduction

The standard deduction for a dependent, such as a full-time student-athlete under the age of 24, is calculated based on their earned income. This includes salaries, wages, tips, and other compensation for work performed, as well as any taxable portion of scholarships or fellowship grants.

• Dependent: A student who does not provide over half of their own support is claimed as a dependent by their parents. The standard deduction for such a dependent is the greater of $1,350 or their earned income plus $450, but it cannot exceed the regular standard deduction for a single filer, which is adjusted annually for inflation. If the student’s unearned income (such as interest and dividends) is more than $1,350 but less than $13,500, their parents have the option to claim this unearned income on their tax return.
• Non-Dependent: A non-dependent is a self-supporting student who pays more than half of their own support and does not qualify as a dependent. This student is eligible for the regular standard deduction, which is adjusted annually for inflation, and is $15,000 for 2025 if the student is not married or $30,000 if married a filing a joint return with their spouse.

Education Credit

The American Opportunity Tax Credit (AOTC) is a tax credit available to help offset the costs of higher education by reducing the amount of income tax the taxpayer may have to pay. For 2025, a credit of up to $2,500 for adjusted qualified education expenses paid for each student who qualifies for the credit may be claimed.

The credit is partially refundable: if the credit reduces the tax to zero, 40% of any remaining amount of the credit (up to $1,000) is refundable.

To claim the AOTC, the student must be pursuing a degree or other recognized education credential, be enrolled at least half-time for at least one academic period beginning in the tax year and not have completed the first four years of higher education at the beginning of the tax year. Additionally, the credit can be claimed for a maximum of four tax years per eligible student.

The person who claims the student as a dependent on their tax return is generally the one who can claim the AOTC for that student. Most often this will be the parent(s) of the student. However, if the student is not claimed as a dependent, they can claim the credit on their own tax return.

There is another type of higher education credit called the Lifetime Learning Credit (LLC). Since students in their first four years of college will virtually all qualify for the larger AOTC, this article does not discuss the LLC.

When calculating education tax credits, qualified tuition must be reduced by any tax-free scholarship amounts. However, if the scholarship terms allow, students can allocate funds to maximize tax benefits by choosing how to apply the scholarship to different expenses.

Student Loan Interest Deduction

The student loan interest deduction allows borrowers to deduct up to $2,500 of interest paid on qualified student loans from their taxable income each year. This deduction is considered an above-the-line deduction, meaning it can be claimed regardless of whether the taxpayer itemizes deductions or takes the standard deduction.

• Qualified Student Loans: The loan must be used solely for qualified higher-education expenses, which include tuition, fees, room and board, books, equipment, and other necessary expenses related to attending an eligible educational institution.

Eligible loans can include federal student loans, private loans, home equity lines of credit, personal loans from unrelated parties, and even credit cards, provided they are used exclusively for education expenses.

Loans from relatives or pension plans do not qualify.

• Eligibility for Deduction: The borrower must be legally responsible for the loan and must have used the loan for qualified education expenses.

The deduction is phased out for higher-income taxpayers. For single filers, the phase-out range for 2025 is an Adjusted Gross Income (AGI) of $85,000 to $100,000. For married couples filing jointly, the range is $170,000 to $200,000.

The deduction is not available for those who file as married filing separately or for an individual who is claimed as dependents on another taxpayer’s return.

• Additional Requirements:

The student must be enrolled at least half-time in a degree or certificate program at an eligible educational institution.

The loan must be used within a reasonable time frame, typically defined as within 180 days of the start of the academic period for which the expenses are incurred.

State Tax Considerations

State tax laws can vary significantly, impacting student-athletes differently depending on where they attend school and where they earn income:

• State Income Taxes: Some states have no income tax, while others have high rates. Athletes must file state tax returns in states where they earn income, which may include their home state and the state where their college is located, depending on the filing threshold set by each state.
• NIL-Specific Legislation: Several states have enacted NIL-specific legislation, which may include tax provisions. Athletes should be aware of these laws and how they affect their tax obligations.

Planning and Compliance

Effective tax planning and compliance are essential for student-athletes to avoid penalties and maximize their financial benefits:

• Record Keeping: Maintaining detailed records of all income, expenses, and scholarships is crucial for accurate tax reporting.
• Professional Advice: Consulting with a tax professional who understands the unique circumstances of student-athletes can help navigate complex tax issues.
• Education and Resources: Universities and athletic departments can provide resources and education to help athletes understand their tax responsibilities.

The financial landscape for student-athletes is evolving rapidly, with NIL income opportunities adding new dimensions to their tax obligations.

Understanding how the various tax implications of education benefits impact students and parents can lead to more beneficial use of the various tax benefits. Contact our office for assistance.

The “Where’s My Refund” tool is accessible via the IRS website and the IRS2Go mobile app. It provides personalized refund information based on the processing of your tax return. To use the tool, you need to provide your Social Security number, filing status, and the exact whole dollar amount of your expected refund. This information allows the IRS to locate your return and provide an update on its status.

• How to Use the Tool:
  • Access the Tool: Visit the IRS website or download the IRS2Go app on your mobile device.
  • For amended returns, visit: Where’s My Amended Return.
  • Enter Required Information: Input your Social Security number, filing status, and the exact refund amount from line 35a of your Form 1040.
  • Check Status: The tool will display your refund status, which progresses through three stages:
    • Return Received,
    • Refund Approved, and
    • Refund Sent.
    • Update Frequency: The tool is updated once every 24 hours, typically overnight, so there is no need to check more frequently than that.

If you e-file your return, you can usually see your refund status after about 48 hours with Where’s My Refund? You can get your refund information for the current year and past 2 years.

• The Role of Your Social Security Number – Your Social Security number is a critical piece of information when using the “Where’s My Refund?” tool. It serves as a unique identifier that allows the IRS to match your inquiry with your tax return. Ensuring the accuracy of this number is vital to avoid delays or errors in accessing your refund status.
• Expected Timelines for Refunds – The IRS issues more than 90% of refunds in less than 21 days for e-filed returns. However, the timeline can vary based on several factors, including the method of filing and any additional reviews required.

• • Up to 21 days for an e-filed return.
  • Allow 4 weeks or more for returns sent by mail.
  • Generally, allow 8 to 12 weeks for an amended return (Form 1040-X) to be processed. However, in some cases, processing could take up to 16 weeks.
  • Longer if your return needs corrections or extra review.

• EITC and ACTC Delays and Restrictions – Taxpayers claiming the Earned Income Tax Credit (EITC) or the Additional Child Tax Credit (ACTC) should be aware of specific delays and restrictions. By law, the IRS cannot issue refunds before mid-February for returns that claim these credits. This delay is designed to help the IRS prevent fraudulent claims and ensure that refunds are issued accurately.

The delay allows the IRS additional time to verify income and withholding information reported on returns claiming these credits. This verification process helps reduce errors and fraudulent claims, protecting both taxpayers and the integrity of the tax system.

• Caution: Potential Delays Beyond 21 Days – While the IRS processes most e-filed returns within 21 days, some returns may require additional review, leading to delays. Factors that can contribute to longer processing times include:
• Errors or Incomplete Information: Mistakes on your tax return can slow down processing.
• Identity Verification: If the IRS needs to verify your identity, it may take longer to process your return.
• Complex Returns: Returns with multiple forms or unusual circumstances may require more time to review.
• E-File vs. Paper Filing:
• E-File: Electronic filing is the fastest way to submit your tax return and receive your refund. The IRS processes e-filed returns more quickly, often within 21 days.
• Paper Filing: Mailing a paper return can significantly delay the processing time. It may take up to six weeks for the IRS to receive and begin processing a paper return.
• Direct Deposit Option – You can have your refund electronically deposited at no cost into your financial account through the IRS Direct Deposit program. This is a reliable, fast and secure method of getting your refund. You’ll receive your refund quicker than if IRS mails you a check, and you eliminate the possibility of the check being lost or stolen. Direct deposit can be used whether you file electronically or by paper. You even have the option of splitting the refund into up to three accounts. For more information about Direct Deposit, see Get your refund faster: Tell IRS to direct deposit your refund to one, two, or three accounts | Internal Revenue Service

The IRS “Where’s My Refund?” tool is a valuable resource for taxpayers seeking to track their refund status. By understanding how to use the tool and the potential for delays, you can navigate the refund process with confidence.  Remember, while most refunds are processed quickly, patience may be necessary if your return requires additional review.

If you have questions, please contact our office.