As 2025 unfolds, U.S. tax policy is poised for significant shifts, particularly with a new Republican administration under President Donald Trump. The year ahead will likely see a range of tax reforms, largely driven by the GOP’s objectives and campaign promises. In this article, we’ll explore the major tax policy trends, legislative developments, and administration changes that may shape U.S. tax law in 2025. The Impact of Supreme Court Decisions 2024 also saw two major Supreme Court decisions with significant tax implications. In the Moore case, the Court ruled narrowly on the issue of wealth taxation, leaving open the possibility of revisiting the question in the future. While wealth tax proposals had gained some traction among Democrats, the Court’s decision, […]

The word “innocent” in innocent spouse relief can be misleading. It doesn’t imply you’re perfect or blameless – it’s more about whether you knew or should have known about the tax issue. The IRS defines “innocence” in a specific way, and it hinges on the concept of reasonable ignorance. In short, the issue isn’t one of morality; it’s about whether you could have reasonably been unaware of a tax problem. Innocent spouse relief allows you to avoid being held responsible for tax debts, penalties, and interest stemming from a joint tax filing. In the case that a spouse (or ex-spouse) made an error that led to a tax issue, regardless of intention, you may not have to shoulder the burden. […]

Personal Income Tax Planning Strategies for Year-End 2024 As 2024 draws to a close, it’s the perfect time to review your personal income tax situation and implement strategies to minimize your tax liability for the year. Proactive year-end tax planning can lead to significant savings, as well as ensure that you take full advantage of tax credits, deductions and other opportunities available to you. 1. Maximize Contributions to Retirement Accounts One of the most effective ways to reduce your taxable income is by contributing to tax-advantaged retirement accounts. In 2024, you may contribute up to $23,000 to a 401(k) or similar employer-sponsored plan, with an additional $7,500 catch-up contribution if you’re over age 50. These contributions are made pre-tax, meaning […]

According to estimates, inflation adjustments to the internal revenue code are expected to yield increases of 2.8 percent compared to 2024 amounts. This means wider tax brackets and increased exemptions, among other things. With the U.S. Bureau of Labor Statistics consumer price index (CPI) moderating, this increase is about 50 percent less than 2024’s inflation adjustment. Below, we’ll look at what the projected 2025 inflation adjustment means in terms of dollars and cents for you and your taxes. Individual Income Tax Brackets The tables below illustrate what the individual income tax rates and brackets are projected to be for 2025. Projected Individual Income Tax Brackets & Rates: Tax Year 2025 Single Taxpayers 10% 0 – $11,925 12% $11,926 – $48,475 […]

Former President and current candidate Donald Trump introduced a new policy of his in a recent Arizona rally: No more income tax on overtime pay. This follows both Trump and Vice President Harris’ proposal for a no income tax on tips policy, as well. Below we will look at the two recent proposals and what they could mean for both taxpayers and businesses. No Tax on Tips The no tax on tips policy looks to lighten the tax burden on service industry workers. According to the Fair Labor and Standards Act, anyone who “customarily and regularly” receives $30 or more in tips per month is considered a tipped worker. The mechanism to exempt tip income could possibly come through three […]

On Jan. 1, 2024, the U.S. government debuted the Corporate Transparency Act (CTA). This legislation established the requirement for the majority of private companies, both big and small, to file information with the Financial Crimes Enforcement Network (FinCEN). As with most new laws, the initial guidance and interpretations have been both challenged and questioned. In response, FinCEN recently turned out new FAQs, which we review below. Big Question First: To Report or Not Reporting is generally required by all private, for-profit entities. This includes corporations, LLCs, S-Corps, etc., whenever the company was created by filing a document with the office of the Secretary of State. Entities formed under the laws of jurisdictions outside the United States are also likely subject […]

The enactment of the Tax Cuts and Jobs Act (TCJA) in 2017 brought with it major changes to the tax code on both personal and business levels. While many taxpayers have not only enjoyed but come to see these tax provisions as normal over the past seven years, many provisions of the TCJA are set to expire at the end of 2025. This makes 2026 and beyond potentially a very different tax landscape than the one we operate in today. This article reviews main provisions of the TCJA that could be affected and what it could mean for taxpayers. Return of Higher Tax Rates Lower tax rates were a hallmark of the TCJA. Rates on all income brackets were lowered […]

I sincerely hope you have never had to go through an IRS audit – and never have to in the future. But what if that dark day does arrive? Should you go it alone and defend yourself or hire a CPA to be on your side? The temptation to handle this alone is usually prompted by one of two things. First, the notion is that this is not such a big deal. Other times, people think if they handle it themselves, they will save money. Unfortunately, neither of these are good reasons to defend yourself in a tax audit against the IRS. While the decision to hire a CPA or tax lawyer does depend on the case and the issues […]

Marriage is a major life event. One that comes with all kinds of change, including financial. After getting married, there is so much to consider, from merging bank and brokerage accounts to setting up a will; from changing your withholding to updating retirement account beneficiary forms. If this seems like a lot to consider, it’s important to keep in mind that when a U.S. citizen marries a non-U.S. citizen, the situation gets even more complex. Among some of the more complex tax considerations of mixed citizenship marriages are gift and estate taxes, which we will dive into below. Gift and Estate Tax Overview Before getting into the details on non-citizen spousal situations, here is a recap of the basics on […]

Anyone who lives in a highly seasonal tourist destination knows you can make money on short-term rentals during events and festivities in your city or town. Think high concentration, short-term, tourist-driven events such as horse racing season in Saratoga Springs, N.Y., or The Masters Tournament in Augusta, Ga. As a result, it is common for locals to get out of dodge and rent out their place during these highly lucrative periods. Typically, this is just for a very brief period while they are on vacation somewhere else themselves, for instance. Given these circumstances, Congress realized it does not make sense to tax rental income for very short-term periods the same way that long-term rentals are taxed. In response, the government […]

Most people know the basic concept that certain types of investment accounts are tax sheltered while others are not. Think 401(k), 403(b), IRA and Roth IRA accounts, for example. What most people are not aware of is how you split your investment positions between your taxable and non-taxable accounts can result in major tax savings. Asset Allocation and Location One of the core principles of investing is to have an appropriate asset allocation that aligns with your risk tolerance and goals. In other words, how much of your investable net worth is in cash, stocks, bonds, precious metals, real estate, alternative assets, private investments, etc? Once you have this determined, the next consideration should be the location of these assets, […]

The U.S. Treasury recently enacted a new reporting requirement aimed at quashing illicit financial transactions. The agency believes that corporate anonymity is enabling money laundering, terrorism, and drug trafficking. As part of the 2021 Corporate Transparency Act (CTA), certain companies are now required to report information about their beneficial owners. The goal of the new registration requirements is to create a centralized database of beneficial ownership information. There has been push-back from some lawmakers and small business organizations, citing this as an erroneous regulatory process that just makes life harder for small businesses. Efforts to carve out exceptions or delay the implementation failed. As a result, the Treasury Department officially opened beneficial ownership information reporting on Jan. 1, 2024. Who is […]

Why on earth, you may ask yourself, would I care about being a good client to my tax prep professional? I mean, you are a paying client, and aside from treating them with the same decency and respect that you would show any other random person, who cares – right? Wrong! What’s in it for me? Honestly, it’s simply in your own best interest to be a good client. Maintaining a positive relationship with your tax professional can benefit you in numerous ways. Your tax preparer bills you in one of three ways: a flat fee (guaranteed); hourly; or a hybrid with a basic flat fee that they’ll only add to if out-of-scope issues/problems come up. Let’s look at each […]

The top leadership in the IRS is set to change. IRS Commissioner Daniel Werfel believes the changes are needed for the agency to meet its new goals. He aims to create greater flexibility and efficiency over the agency by streamlining internal processes. The changes also are needed, in his view, to adapt to the evolving landscape around tax administration – which has undergone changes due to new tax laws and technology. What Are the Changes? Changes to the organizational structure include reducing the Deputy Commissioner post to a single position (there are currently two); as well as creating four new positions with an IRS chief of taxpayer services, IT, compliance, and operations. Long Time No Changes While these changes are […]

It’s that time of year again: time for year-end tax planning. With the end of 2023 coming fast, the time to act is now. In this article, we’ll look at the moves you can make to optimize your tax situation in 2023 as an individual taxpayer. Itemized Deductions Flexing your timing on itemized deductions is a solid strategic move. It can help you shift to a bigger itemized deduction in 2023 versus 2024 (but not both). This can be advantageous if you expect to be in a higher tax bracket in one year compared to the other. Key itemized deductions to consider are home interest, state and local taxes, charitable deductions and medical expenses. Electric Vehicles If you are in […]

New per diem rates were recently announced by the IRS and are effective for per diem allowances on or after Oct. 1, 2023. These updated rates include changes for the transportation industry, incidental expenses as well as the high-low substantiation method. Before we dive into the detailed changes impacting per diem rates, let’s revisit the concept of the per diem in general. To Per Diem or Not to Per Diem There are two basic ways that employees can be reimbursed for business travel expenses. The first is a direct reimbursement of the actual expenses. The second is the per diem method. Direct actual expense reimbursement is exactly what it sounds like. For example, a sales employee pays for a plane […]

Recently, IRS Commissioner Danny Werfel spoke of changes within the IRS, announcing several initiatives focusing on high-income earners and partnerships, as well as integrating the use of AI within the agency’s work. According to the commissioner, the initiatives were made possible by additional IRS funding provided by the Inflation Reduction Act. Without the funding from this bill, the agency would not have the budget to implement these ramp-ups in enforcement. Millionaires with Tax Debt The new initiative on millionaires is not just because they are high-earning taxpayers; it will focus on those with open tax debt. Currently, the IRS has identified approximately 1,600 millionaires who are in debt to the IRS for $250,000 or more. The agency plans to designate […]

Private companies both large and small are feeling the tax pinch due to changes in the law. With rampant inflation, labor shortages, lingering supply chain issues and increased borrowing costs due to rising interest rates, tax problems are the last thing struggling companies need to face. While tax rates themselves remain largely unchanged, business’ taxable income is increasing due to changes in three main deduction areas: research and experimental (R&E) capitalization; interest expense deduction calculations; and a reduction in bonus depreciation. All of these provisions were made more liberal in the Tax Cuts and Jobs Act (TCJA) of 2018, but with a wind-down over a 10-year period. Part of the problem is that these tax law changes can increase a […]

The end of the federal emergency declaration for Covid-19 came on May 11. As a result, there are various public health policy changes. For example, vaccines and treatments will remain available, but at-home tests may no longer be covered by insurance and national CDC data reporting is subject to change. Administratively, there are also changes to regulatory measures temporarily put in place by the emergency status that will have tax consequences. As employers struggled during the pandemic, some even to meet payroll, issues around expense reimbursements, stipends and how these are considered fringe benefits or compensation came into light. History of Section 139 Section 139 came into being over 20 years ago after the Sept. 11 terrorist attacks. Then President […]

So, you filed and paid all your taxes on the money you earned in 2021. Now, the company you work for finds itself in trouble, and you are forced to pay back part of your compensation. The big question is, will the IRS refund you for the taxes you already paid related to this compensation? While this seems like a bizarre scenario at first glance, it is more common than you might think. Reducing or holding back compensation that hasn’t been earned yet is easy. Simply pay an executive or employee less, or don’t grant the stock option or bonus. Just don’t pay it. Things get tricky in a situation where compensation has already been paid and needs to be […]