THE END OF 2024 IS ALMOST HERE. ARE YOU READY?
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Filing your taxes for 2024 can be made easier by getting ready now. Another year winds down and another tax return needs to be filed. So, as we move toward the end of the year, we would like to offer a few reminders to individuals that have business operations. First, make sure you have filed the newly required Beneficial Ownership Interest (BOI) form by December 31, 2024. With the growth of sales over the internet, you may need to track out of state sales totals for reporting.
Secondly, as year-end payroll reporting nears, don’t forget the following annual payroll reporting requirements. These include:
- Employee personal use of company vehicles,
- Employer paid health insurance for employees for W-2 purposes,
- Employer paid health savings account deposits for W-2 purposes
- Employer paid childcare expenses for W-2 purposes,
- Employer paid education plans and term life insurance for W-2 purposes,
- Employer contributions to employee pension plans.
As we go into 2025, we are all uncertain of what new tax rules will apply in 2025. So you may want to consider deferring major equipment purchases and building repairs or improvements until next year unless you are able to specifically discuss how this may affect your business. In addition, you may want to consider postponing new tax elections or setting up new entities until, with your CPA, have a better understanding of what new tax laws will be introduced in 2025.
Next are a few year-end tax credits that might be valuable:
1. There is a new credit for smaller businesses who set up their first pension plan in 2024. This credit can, in many instances, completely offset the costs of setting up the plan as well as offset some or all of the employer’s plan contributions.
2. Some businesses may greatly benefit from the fuel tax credit. The Fuel Tax Credit is allowed for Federal highway tax paid for fuel used off-highway in a business such as pumps, generators, compressors, tractors, trucks used in lots, landscapers, farmers, grass cutters, tree trimmers, helicopters, crop-dusting and many more business applications. At over 18 cents per gallon this can be a huge credit!
Start a Special File that updates your information to have ready: This includes:
1. Has there been a change in ownership this year? If so, provide new owner identification information, dates and percentages.
2. Have you opened or closed any locations this year-if so, please provide that information with the physical address.
3. Provide a list of information about your owners email addresses and cell phone numbers.
Finally, do you have a website? If so, what is your website address: ___________________.
Additionally, make sure you have considered sales and income tax registration, collection and filing requirements in other states.
Last thing for filing normal year end information needed for filing 2024:
1. __ Copies of any new bank loans obtained during the year
2. __ Copies of any new leases signed during the year
3. __ List by date, amount and individual of any new investments made into the company this year by the owners
4. __ Copies of any federal or state tax correspondence received during the year
5. __ Copies of any equipment purchase invoices over $1,000
6. __ Loan payoffs, by loan number, of all business loans at December 31
7. __ Copies of your year-end bank reconciliation(s) and bank statements
8. __ 12/31/24 Year End Balances of:
- Accounts Receivable $___________
- Cost of Inventory on Hand $________
- Accounts Payable $ ______________
- Unpaid 941 Deposit for December $__________
- Unpaid State(s) Withholding deposits for December $_______________
- Unpaid Sales tax for December $_____________
- Unpaid wages earned through 12/31/23 $__________
9. __ The enclosed engagement letter needs to be signed and returned
10. __ Year-end summary of business activity-back up, online access or hard copy (Accounting software back-up, trial balance, etc.)
11. __ Sales breakdown by state and city if applicable (Call us to determine)
12. __ Copies of all 4 quarters Form 941, and 2023 W-2’s issued to employees
13. __ All Forms 1099-K, 1099-NEC and 1099-Misc received
Filling in the amounts above represents your company’s amounts as requested and should be compiled prior to your first meeting with your CPA.
Have questions? Make your 2024 tax filings easier this year. Simply fill out the information above and have it ready. Have any questions? Give us a call at 812-883-6938 to set an appointment and bring in this information and start 2025 off ahead.
I have heard many times; business owners say that making contributions to charitable organizations gets them a tax deduction. They can save more money in their business by doing this. Well, the true answer is not what they want to hear. For most of the businesses in the US, the answer is NO. Why not, you say? I gave money for business purposes to a charity. It should count for the same deduction as office supplies or wages. It does not. There are three main business entities in the US. Sole proprietorships (single owner), partnerships (two or more owners) and corporations (small and large). Of course, you have the LLC (limited liability company) which can be any of those three. The issue is that under sole proprietorships, partnerships and s-corporations (one of the two types of corporations), charitable contributions are considered pass-through items. Pass through items is not deducted to arrive at the net income or loss of the business. They are passed through or down from the business to its owners. The owners then take the deduction on their personal return just like if they had made the contribution themselves. For a c-corporation (the other type of corporation), the charitable contribution is deductible to a point but that is because a c-corporation is a standalone, tax paying business. Ok, so I will take the pass-through contribution off my personal taxes then, you say. Well maybe and maybe not. In 2018 we had a major tax change which doubled the standard deduction and eliminated personal deductions. When doing a tax return, you reach a certain point in preparation where you can deduct the HIGHER of your standard deduction or the total itemized deductions you have. Itemized deductions include out of pocket medical expenses above certain amounts, personal taxes paid, mortgage interest and charitable contributions. The problem is the standard deductions more than doubled in 2018 to almost $25,000 for a family ($12,500 for single) and have been going up each year since. Most people who did have higher itemized deductions under the prior to 2018 rules found out they did not itemize in 2018 and after. With the low interest rates, it is very hard for taxpayers to qualify for itemized deductions. So those pass through charitable contributions do not effect your return if you do not itemize. What can you do? First off, pick one or two organizations to support locally. Talk to them about sponsorships of programs, events, etc. and what “advertising” opportunities your business can have. I am not talking about your company name on a giving board in the lobby. Here is an example from me. I buy a sponsorship package each year for an organization for a large dinner and auction fundraiser. In return I do receive a dinner ticket and merchandise, which I reduce my cost by. What I get is that the organization places my company name in the program brochure, with my logo. They also have a continuous, rolling slide presentation of all sponsors going all night for the businesses who bought sponsorships. Now do I take 100% of the remaining cost as advertising? No, more like 80% which I classify as Advertising! The remaining 20% goes to charitable contributions. So that 80% of the remaining cost is advertising, which is now deducted as a business expense to determine net income or loss. So, I went from a nondeductible charity expense to a partially deductible business expense. As always you need to discuss things like this with your tax advisor or preparer. If you do not have one, please call our office for an in-office, ZOOM or phone meeting to discuss your entire tax situation.
With the advent of one natural disaster, we now have another one coming. As human beings we want to help those in need. When we see the tragedies in North Carolina and hear what will probably happen in Florida, we want to help. Many times, we do this through the giving of money to organizations which are working in the areas. One method people use for this is GoFundMe. This is a crowdfunding method to raise money for purposes. People believe that by giving to GoFundMe it is a tax deductible donation like giving to the Red Cross, Salvation Army or church. The issue is it is not. To be a tax-deductible donation, the organization you are given to must be recognized by the IRS as a Section 501c (3) organization. The organization has met certain IRS standards and maintains them. Just because money is being raised to help someone does not mean it is deductible. The IRS maintains a list of the approved organizations on its website. You can find it here at Search for tax exempt organizations | Internal Revenue Service (irs.gov). If the organization is listed here, the IRS will allow you to consider your donation to be a tax-deductible donation. If it is not, then it is not allowed. So, consider using organizations you know about such as Red Cross, Salvation Army, etc for giving. If not, realize at tax time, those donations given to GoFundMe, individuals, etc. are not going to be deductible. As always, you should check with your tax advisor before doing any major transactions that could affect your income or tax filings.
By: Steven Brewer, CPA We hear every day that another cyberattack has exposed thousands of pieces of personal data. Just recently, it has come to light that millions of us have had our personal data, including social security numbers, exposed by a cyberattack on National Public Data. Identity theft takes many different forms. One of the most troubling is when someone uses your personal data to file a tax return. They will file false information using your name and social security number to obtain credits and refunds that are sent to them. There is a way for you to prevent this from happening. The Internal Revenue Service instituted a program for Identity Protection PINs. These are a series of six-digit numbers assigned to you each year. Each year, you will receive a new PIN so you must give this to your preparer to be able to file your return. You must include this PIN when you e-file your tax return to identify that YOU are filing the return. If a return is filed without the PIN, then the return is rejected. When you set up the PIN program with the IRS, you also will set up an online account with the IRS. That account will allow you to see your records with the IRS, what has been filed, what the results are, etc. This is very helpful if you ever have a question about what the IRS has. It also will help your tax preparer. When you have an online account, the tax preparer can send you a Power of Attorney form to the account for you to e-sign. The Power of Attorney form is needed for the tax preparer to receive information from the IRS on you if there is ever a problem that you ask the preparer to help you with. To obtain information on the Identity Theft PIN, go wot https://www.irs.gov/identity-theft-fraud-scams/get-an-identity-protection-pin. Only you can obtain the PIN. No preparer or other third party can do this so if someone is telling you they can get one for “turn and run the other direction”. You do have the option to opt out of the program unless you are a confirmed victim of identity theft. If so, you cannot opt out. So, for your piece of mind and to stop the “bad guys” from getting into your taxes, get your PIN today.
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P.O. Box 225
Salem, Indiana 47167
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I have heard many times; business owners say that making contributions to charitable organizations gets them a tax deduction. They can save more money in their business by doing this. Well, the true answer is not what they want to hear. For most of the businesses in the US, the answer is NO. Why not, you say? I gave money for business purposes to a charity. It should count for the same deduction as office supplies or wages. It does not. There are three main business entities in the US. Sole proprietorships (single owner), partnerships (two or more owners) and corporations (small and large). Of course, you have the LLC (limited liability company) which can be any of those three. The issue is that under sole proprietorships, partnerships and s-corporations (one of the two types of corporations), charitable contributions are considered pass-through items. Pass through items is not deducted to arrive at the net income or loss of the business. They are passed through or down from the business to its owners. The owners then take the deduction on their personal return just like if they had made the contribution themselves. For a c-corporation (the other type of corporation), the charitable contribution is deductible to a point but that is because a c-corporation is a standalone, tax paying business. Ok, so I will take the pass-through contribution off my personal taxes then, you say. Well maybe and maybe not. In 2018 we had a major tax change which doubled the standard deduction and eliminated personal deductions. When doing a tax return, you reach a certain point in preparation where you can deduct the HIGHER of your standard deduction or the total itemized deductions you have. Itemized deductions include out of pocket medical expenses above certain amounts, personal taxes paid, mortgage interest and charitable contributions. The problem is the standard deductions more than doubled in 2018 to almost $25,000 for a family ($12,500 for single) and have been going up each year since. Most people who did have higher itemized deductions under the prior to 2018 rules found out they did not itemize in 2018 and after. With the low interest rates, it is very hard for taxpayers to qualify for itemized deductions. So those pass through charitable contributions do not effect your return if you do not itemize. What can you do? First off, pick one or two organizations to support locally. Talk to them about sponsorships of programs, events, etc. and what “advertising” opportunities your business can have. I am not talking about your company name on a giving board in the lobby. Here is an example from me. I buy a sponsorship package each year for an organization for a large dinner and auction fundraiser. In return I do receive a dinner ticket and merchandise, which I reduce my cost by. What I get is that the organization places my company name in the program brochure, with my logo. They also have a continuous, rolling slide presentation of all sponsors going all night for the businesses who bought sponsorships. Now do I take 100% of the remaining cost as advertising? No, more like 80% which I classify as Advertising! The remaining 20% goes to charitable contributions. So that 80% of the remaining cost is advertising, which is now deducted as a business expense to determine net income or loss. So, I went from a nondeductible charity expense to a partially deductible business expense. As always you need to discuss things like this with your tax advisor or preparer. If you do not have one, please call our office for an in-office, ZOOM or phone meeting to discuss your entire tax situation.
With the advent of one natural disaster, we now have another one coming. As human beings we want to help those in need. When we see the tragedies in North Carolina and hear what will probably happen in Florida, we want to help. Many times, we do this through the giving of money to organizations which are working in the areas. One method people use for this is GoFundMe. This is a crowdfunding method to raise money for purposes. People believe that by giving to GoFundMe it is a tax deductible donation like giving to the Red Cross, Salvation Army or church. The issue is it is not. To be a tax-deductible donation, the organization you are given to must be recognized by the IRS as a Section 501c (3) organization. The organization has met certain IRS standards and maintains them. Just because money is being raised to help someone does not mean it is deductible. The IRS maintains a list of the approved organizations on its website. You can find it here at Search for tax exempt organizations | Internal Revenue Service (irs.gov). If the organization is listed here, the IRS will allow you to consider your donation to be a tax-deductible donation. If it is not, then it is not allowed. So, consider using organizations you know about such as Red Cross, Salvation Army, etc for giving. If not, realize at tax time, those donations given to GoFundMe, individuals, etc. are not going to be deductible. As always, you should check with your tax advisor before doing any major transactions that could affect your income or tax filings.