McSwain & Company, PS
Tax Planning 2024
December 1, 2024 · Blog, Tax and Financial News, Uncategorized
Disclaimer 
These articles provide general information on tax, accounting, and financial topics for small businesses and individuals. They are educational in nature and are not specific legal, accounting, financial, tax, or other professional advice, and should not be relied upon as such. This content was prepared by Service2Client and may have been reviewed or edited by the website owner for accuracy and compliance. Look for a trust mark below for verification details. No representation is made that any approach described will achieve a particular result, and no regulatory or professional body has reviewed or endorsed this content. Because each situation is different, readers should consult a qualified professional about their specific circumstances before acting. Images accompanying these articles are protected by copyright and may not be copied or reused.
December 1, 2024
Published by Service2Client on December 1, 2024
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đź–¨ Print⏱ 4 min read 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 […]
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November 1, 2024
Published by Service2Client on November 1, 2024
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đź–¨ Print⏱ 2 min read 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 the individual income tax rates and brackets for 2025. Individual Income Tax Brackets & Rates: Tax Year 2025 Single Taxpayers 10% 0 – $11,925 12% $11,926 – $48,475 22% […]
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October 1, 2024
Published by Service2Client on October 1, 2024
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đź–¨ Print⏱ 4 min read 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 […]
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September 1, 2024
Published by Service2Client on September 1, 2024
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🖨 Print⏱ 4 min read 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 […]
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August 1, 2024
Published by Service2Client on August 1, 2024
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🖨 Print⏱ 4 min read 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 […]
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July 1, 2024
Published by Service2Client on July 1, 2024
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đź–¨ Print⏱ 3 min read 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, EA, or Tax Professional 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 […]
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June 1, 2024
Published by Service2Client on June 1, 2024
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đź–¨ Print⏱ 4 min read 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 […]
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May 1, 2024
Published by Service2Client on May 1, 2024
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🖨 Print⏱ 3 min read 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 […]
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April 1, 2024
Published by Service2Client on April 1, 2024
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🖨 Print⏱ 5 min read 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 […]
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March 1, 2024
Published by Service2Client on March 1, 2024
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🖨 Print⏱ 4 min read 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 […]
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February 1, 2024
Published by Service2Client on February 1, 2024
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đź–¨ Print⏱ 4 min read 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 […]
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January 1, 2024
Published by Service2Client on January 1, 2024
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đź–¨ Print⏱ 3 min read 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 […]
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December 1, 2023
Published by Service2Client on December 1, 2023
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đź–¨ Print⏱ 5 min read 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 […]
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November 1, 2023
Published by Service2Client on November 1, 2023
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đź–¨ Print⏱ 3 min readNew 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 […]
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October 1, 2023
Published by Service2Client on October 1, 2023
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đź–¨ Print⏱ 4 min readRecently, 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 […]
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September 1, 2023
Published by Service2Client on September 1, 2023
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đź–¨ Print⏱ 3 min readYou wake up in the middle of the night. Heart racing, drenched in sweat, and breathing heavily. Thankfully, it was just a nightmare when the IRS showed up at your doorstep unannounced. Recently, however, this was the reality for some taxpayers – and not just a bad dream. The IRS just publicized a significant shift in policy, effectively ending the vast majority of surprise taxpayer visits. The change comes in an effort to create safer conditions for IRS officers as well as ease public concerns. Who’s Knocking at My Door? In order to understand the change in policy, you’ll need to understand the three categories of IRS employees that typically interact with taxpayers: Revenue Officers, Revenue […]
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August 1, 2023
Published by Service2Client on August 1, 2023
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đź–¨ Print⏱ 3 min readNow that we are heading into the backend of summer, it’s time for many states to host their annual sales tax holidays for returning to-school shopping. Numerous states with sales tax (remember, not all states have a sales tax) provide the reprieve to help families with the cost of annual school supplies and clothing. According to the National Retail Federation, nearly 80 percent of shoppers are expecting increased costs this year versus last year; so more than ever, consumers are looking for ways to save. Furthermore, about two-thirds of back-to-school shoppers take advantage of these tax-free shopping periods. The vast majority of states offer some type of tax-free shopping for a limited time period, frequently taking […]
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July 1, 2023
Published by Service2Client on July 1, 2023
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🖨 Print⏱ 3 min readPrivate 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 […]
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June 1, 2023
Published by Service2Client on June 1, 2023
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🖨 Print⏱ 3 min readThe 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 had 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. […]
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May 1, 2023
Published by Service2Client on May 1, 2023
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đź–¨ Print⏱ 3 min readSo, 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 […]
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