Reminder: Getting your books up to date, providing a completed tax organizer and all your tax documents as early as possible is critical to an on-time filing. In many cases an extension is needed or preferred in order to facilitate an accurate filing. We are happy to assist with an extension where required or requested, but if you prefer to file before the initial deadline it is critical to provide your completed information at least three weeks in advance of the deadline.

Before we go any further: have you filed your Beneficial Ownership Information (BOI) Report?

On Dec. 3, 2024 a federal judge in the U.S. District Court for the Eastern District of Texas issued a nationwide preliminary injunction against enforcement of the Corporate Transparency Act’s beneficial ownership information reporting requirements ahead of the impending January 1, 2025 filing deadline. This case is likely to go to the Supreme Court, that said, we do not know where this will ultimately go and we would advise that you do follow through on the reporting. Please familiarize yourself with this requirement and how to get compliant.

As stated in our Individuals section, with a new administration on the horizon and many provisions of the Tax Cuts and Jobs act (TCJA) set to expire soon, some form of change is likely. We will continue to closely monitor any potential tax legislation and will update you accordingly.

If the TCJA sunset occurs as set, the 20% deduction on qualified small business income will be eliminated beginning with the 2026 tax year. That, coupled with the changes in the individual income tax rates, may have a large impact on your tax obligation. Therefore, assessing your business’s income and deductions in 2024 and 2025 could be crucial to capitalizing on existing tax benefits.

Now is the time to take a look at where your business is positioned with income and expenses to close out the tax year. For some, this includes getting caught up on your bookkeeping to have a better picture of where your tax situation stands. If you need help getting caught up, our accounting services team is here to help. In addition, we can help you analyze your financial statements for tax savings and planning opportunities.

All business owners should consider strategies to reduce taxable income and maximize tax savings. Here are some key considerations for business tax planning:

1. Consider a SALT workaround, the single most important new business tax deduction in years. Read more about the workaround here, which allows pass-through entities to deduct state and local taxes for federal purposes.
2. Write off asset additions and vehicles, especially for businesses with higher revenue in 2024.
3. Evaluate income deferral and expense acceleration based on your expected tax bracket.
4. Understand the qualified business income (QBI) deduction for pass-through entities and its impact on your taxable income.
5. Consider establishing a retirement plan or revisit your current plan. Recent legislation has provided new opportunities to consider that may provide tax deductions for your business while providing ways for employees (and owners) to save for retirement.
6. Have a schedule C business? Consider if a Section 105 employer-sponsored health plan is right for your business.

We’re here to help you understand your tax and financial situation and assist in finding ways to reduce your tax burden. Feel free to contact us anytime to get more individualized tax planning advice.

Additional Business Tax Matters:

If a person passes away without a will, it often can lead to family disputes and costly legal battles. Ideally, you have a will in place and have named a power of attorney for both finances and healthcare. However, if you don’t regularly update these documents and your beneficiary designations, your heirs could still face unnecessary legal complications, higher taxes, or even the possibility of assets going to the wrong people. Estate planning is essential, and it doesn’t have to be expensive—it’s an important step to ensure your wishes are carried out and your loved ones are protected.

Essential Estate Planning Documents
A basic estate plan includes a will, trusts, powers of attorney (POAs), and a living will. Here’s a breakdown:

1. A Will: This outlines your assets and specifies how you want them distributed after your death. It’s important to know what to include and leave out in a will to avoid complications.
2. A Living Trust: A living or revocable trust allows assets like real estate, stocks, and jewelry to be distributed according to your wishes without going through the probate process. This can save your beneficiaries time and money.
3. A Living Will: Also called an “advance health care directive” in some states, this document outlines your health care wishes if you’re incapacitated or for end-of-life care decisions.
4. Powers of Attorney (POA): These designations allow someone you trust to make financial or medical decisions for you if you’re unable to. You can also create a digital POA to manage online accounts.
5. Review Regularly: Whether your estate is simple or complex, it’s crucial to review these documents every 3-5 years or after major life changes to ensure they reflect your current wishes

Beneficiaries

Certain assets, such as your retirement accounts and insurance policies, require you to name a beneficiary who will inherit the account when you die. That ensures those assets will go directly to your beneficiaries after you die, outside of probate.

Beneficiary designations usually supersede instructions in your will or living trust, so it’s critical to get them right. You should also name contingent beneficiaries in case you and the primary beneficiary — usually your spouse — die simultaneously or within a short period of time. Although 401(k) plans routinely remind participants to review their beneficiaries, they rarely advise them to name a contingent beneficiary.

If you don’t name a beneficiary — or the primary beneficiary predeceases you and you don’t designate a new beneficiary — the proceeds will be paid to the estate, which means they’ll go through probate. This could significantly delay the process of distributing assets in your estate, creating headaches and costs for your heirs.

Federal and State Estate Tax:

Although beneficiary designations, along with a living trust, will keep your assets out of probate, those measures won’t shield your heirs from federal or state estate taxes.

In 2024, estates valued at up to $13.61 million ($27.22 million for a married couple) are excluded from federal estate taxes. However, it will drop to about $6 million in 2025 unless Congress extends the estate tax provision of the Tax Cuts and Jobs Act. In addition, 12 states and the District of Columbia have much lower estate tax exemptions. Oregon’s kicks in for estates valued at $1 million or more.

You can reduce or avoid federal and state estate taxes by giving money away while you’re alive. In 2024, you can give up to $18,000 to as many people as you want without reducing your estate tax exclusion, and your spouse can give up to the same amount.

To read more about estate tax, click here

We recommend working with an experienced estate planning attorney to tailor a strategy that aligns with your unique situation and goals, and we would be happy to assist you in ensuring that you maximize the tax efficiency of these plans.