Maximize your year-end giving with gifts that offer tax benefits
As year end approaches, you may be thinking about tax strategies. One way to reduce potential estate taxes and show generosity to loved ones is to give cash gifts before Dec. 31. Taxpayers can transfer large amounts using the annual exclusion. In 2024, the exclusion amount is $18,000. It covers gifts you make to each recipient. That means if you have three children, you can transfer $54,000 to them in 2024, free of federal gift taxes. Married couples can consent to give each recipient up to $36,000 a year. Other rules may apply, and you need to file a gift tax return if you give more than $18,000 or consent to give gifts with your spouse. We can prepare a gift tax return for you.
How your business can prepare for and respond to an IRS audit
The IRS has been increasing its audit efforts, focusing on large businesses and high-income individuals. Another area of focus is taxpayers who personally use business aircraft. With proper preparation, you should fare well if you’re selected. It helps to know what might catch the IRS’s attention. For example, some audit red flags are unusually high deductions, major inconsistencies between previous years’ returns and the current one, and expenses that are markedly different from those of similar businesses. The IRS usually has three years to conduct an audit. If you’re facing one, we can help you understand the issues, gather necessary documents and respond to inquiries effectively.
Working capital management is critical to business success
For businesses to stay operational and attain profitability, liquidity is key. The good news is that working capital management is a tried-and-true way to tackle this challenge. Working capital is a metric (current assets minus current liabilities) that measures liquidity. Regularly calculating it can help you and your leadership team determine, among other things, whether you have enough current assets to cover current obligations. The amount of working capital your company needs is known as its working capital requirement. To optimize your working capital requirement, focus primarily on three key areas: 1) accounts receivable, 2) accounts payable and 3) inventory. Contact us for help.
Employers: In 2025, the Social Security wage base is going up
The Social Security Administration has announced that the wage base for computing Social Security tax will rise to $176,100 in 2025. This is up from $168,600 in 2024. (Believe it or not, it was just $3,000 from 1937–1950!) Wages and self-employment income above this amount aren’t subject to Social Security tax. The Federal Insurance Contributions Act imposes two taxes on employers, employees and self-employed workers. One is Social Security and the other is Medicare. A maximum amount of compensation is subject to the Social Security tax, but there’s no maximum for Medicare tax. For 2024 and 2025, the FICA tax rate for employers is 7.65% (6.2% for Social Security and 1.45% for Medicare).
Understanding your obligations: Does your business need to report employee health coverage?
Certain employers are required to report information about employees’ health coverage. Is your business required to comply? “Applicable large employers” (ALEs) with 50 or more full-time employees must use Forms 1094-C and 1095-C to report information about offers of health coverage and enrollment in health coverage. Specifically, an ALE uses Form 1094-C to report each employee’s summary information and transmit Forms 1095-C to the IRS. A separate Form 1095-C is used to report information about each employee. In addition, 1094-C and 1095-C are used to determine whether an employer owes payments under the employer shared responsibility provisions (also referred to as the employer mandate).
Can homeowners deduct seller-paid points as the real estate market improves?
The recent drop in interest rates created a buzz in the real estate market. Potential homebuyers may now have an opportunity to attain their dreams of purchasing property. If you’re a homebuyer, you may wonder if you can deduct mortgage points paid on your behalf by the seller. The answer is “yes,” subject to some limits. For example, the rule allowing a deduction for seller-paid points doesn’t apply to points allocated to the part of a mortgage above $750,000 ($375,000 for marrieds filing separately) for tax years 2018 through 2025 (above $1 million for tax years before 2018 and after 2025). It also doesn’t apply to points on a loan used to improve a home or in certain other situations.
How businesses can better retain their salespeople
In many businesses, the sales department tends to have a markedly higher turnover rate than other departments. If this has been the case at your company, don’t give up hope. There are ways to address the challenge. Begin with improvements to your hiring and onboarding processes. Welcome new salespeople warmly, provide ample training and consider appointing mentors to help them get comfortable. Of course, compensation matters as well. Carefully investigate the feasibility of retention bonuses and financial rewards for maintaining or increasing sales. Also, consider forming a sales leadership team that can contribute to strategic planning. Contact us for assistance.
Turnaround acquisitions are risky growth opportunities for today’s companies
Have you ever considered growing your business by acquiring a struggling company? Although “turnaround acquisitions” can yield substantial rewards, they come with considerable risks. Look for a target with hidden value, such as untapped market potential, replaceable leadership or cuttable costs. Determine whether the return on investment will likely exceed the acquisition costs and risks. Don’t rush or let emotions cloud your judgment. Conduct due diligence to understand the target’s profit drivers and roadblocks, as well as its cash inflows and outflows. If you decide to proceed, pay close attention to the deal’s structure and tax impact. Contact us for further information and help.
Make year-end tax planning moves before it’s too late!
With the arrival of fall, it’s an ideal time to begin implementing strategies that could reduce your tax burden for both this year and next. One of the first planning steps is to ascertain whether you’ll take the standard deduction or itemize deductions for 2024. You may not itemize because of the high 2024 standard […]
2024 Q4 tax calendar: Key deadlines for businesses and other employers
Here are some important fourth quarter 2024 tax-filing dates for businesses. OCT 15: If you’re the owner or operator of a calendar-year C corp. which filed an extension, file a 2023 income tax return. OCT 31: Report income tax withholding and FICA taxes for Q3 2024 (unless you’re eligible for a Nov. 12 deadline because you deposited on time, and in full, all the associated taxes due). DEC 16: If a calendar-year C corp., pay the fourth installment of 2024 estimated income taxes. Note: Certain deadlines may be postponed in federally declared disaster areas. We can provide more information about filing requirements and ensure you’re meeting all applicable deadlines.
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