year-end - Linkenheimer LLP CPAs & Advisors

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 deduction amounts ($29,200 for joint filers, $14,600 for singles and married couples filing separately, and $21,900 for heads of household). Also, many itemized deductions have been reduced or suspended under current law.

If you do itemize, you can deduct medical expenses that exceed 7.5% of adjusted gross income (AGI), state and local taxes up to $10,000, charitable contributions, and mortgage interest on a restricted amount of debt, but these deductions won’t save taxes unless they’re more than your standard deduction.

The benefits of bunching

You may be able to work around these deduction restrictions by applying a “bunching” strategy to pull or push discretionary medical expenses and charitable contributions into the year where they’ll do some tax good. For example, if you can itemize deductions for this year but not next, you may want to make two years’ worth of charitable […]

By Linkenheimer LLP|2024-10-02T14:57:27+00:00October 2nd, 2024|tax planning, year-end|0 Comments

It’s Time for Your Small Business to Think About Year-End Tax Planning

With Labor Day in the rearview mirror, it’s time to take proactive steps that may help lower your small business’s taxes for this year and next. The strategy of deferring income and accelerating deductions to minimize taxes can be effective for most businesses, as is the approach of bunching deductible expenses into this year or next to maximize their tax value.

Do you expect to be in a higher tax bracket next year? If so, then opposite strategies may produce better results. For example, you could pull income into 2024 to be taxed at lower rates, and defer deductible expenses until 2025, when they can be claimed to offset higher-taxed income.

Here are some other ideas that may help you save tax dollars if you act soon.

Estimated taxes

Make sure you make the last two estimated tax payments to avoid penalties. The third quarter payment for 2024 is due on September 16, 2024, and the fourth quarter payment is due on January 15, 2025.

QBI deduction

Taxpayers other than corporations may be entitled to a deduction of up to 20% of their qualified business income (QBI). For 2024, if taxable income exceeds $383,900 for married couples filing jointly (half […]

By Linkenheimer LLP|2024-09-11T14:22:17+00:00September 11th, 2024|tax planning, year-end|0 Comments

Don’t Forget to Empty Out Your Flexible Spending Account

If you have a tax-saving flexible spending account (FSA) with your employer to help pay for health or dependent care expenses, there’s an important date coming up. You may have to use the money in the account by year-end or you’ll lose it (unless your employer has a grace period).

As the end of 2023 gets closer, here are some rules and reminders to keep in mind.

Health FSA

A pre-tax contribution of $3,050 to a health FSA is permitted in 2023. This amount will be increasing to $3,200 in 2024. You save taxes in these accounts because you use pre-tax dollars to pay for medical expenses that might not be deductible. For example, expenses won’t be deductible if you don’t itemize deductions on your tax return. Even if you do itemize, medical expenses must exceed a certain percentage of your adjusted gross income in order to be deductible. Additionally, the amounts that you contribute to a health FSA aren’t subject to FICA taxes.

Your employer’s plan should have a list of qualifying items and any documentation from a medical provider that may be needed to get reimbursed for these expenses.

FSAs generally have a “use-it-or-lose-it” rule, […]

By Linkenheimer LLP|2023-12-05T17:30:27+00:00December 5th, 2023|Health care, hsa, year-end|0 Comments

Proactive Year-End Tax Planning: Navigating 2023’s Tax Landscape with Linkenheimer LLP

As the year winds down, businesses are presented with the critical task of year-end tax planning — a complex endeavor, especially with the ever-evolving tax regulations and economic climate of 2023. For savvy business owners, this period is not just about compliance, but an opportunity for tax optimization. Linkenheimer, with its deep understanding of current tax laws and dedication to client success, stands ready to guide businesses through the maze of tax planning strategies.

Strategies for Year-End Tax Planning

Maximize Deductions and Credits

Businesses should review their expenditures throughout the year to ensure they capitalize on all available deductions and credits. This could include investments in energy-efficient equipment, research and development expenses, and charitable contributions.

Defer Income and Accelerate Expenses

If your business anticipates a lower tax rate in the next year, it may be beneficial to defer income to the following year and accelerate expenses into the current year, thereby reducing taxable income.

Consider Equipment Purchases

Section 179 and Bonus Depreciation are potent tools for businesses. Evaluate your need for new equipment or technology upgrades — purchasing before year-end can result in substantial tax savings.

Assess Inventory Strategy

Review your inventory management strategies. If you use the accrual method, consider […]

By Linkenheimer LLP|2023-11-15T19:05:19+00:00November 15th, 2023|tax planning, year-end|0 Comments

Year-End Checklist Guide for 2023

Year-End Close Reminders/Considerations

As we wrap up the year, it is crucial to address several key financial and administrative tasks to ensure our records are accurate and complete. Below is our comprehensive checklist to guide you through the year-end close process.

General Cleanup and Tax Documents:

Record prior year’s adjusted journal entries, if any.
Review financial statements and perform any general accounting cleanup.
As tax documents are received, ensure financial statements agree to the documents (when applicable) and compile them to submit to CPA for income tax preparation.
Normalize Shareholder Distributions or make sure the partner/member distribution method is consistent with the entity agreement, if applicable.
Reconcile liability/loan balances.
Identify and reclassify any personal expenses that have been paid by the company not included in the shareholder/partner’s distribution/draws accounts. Including:
- Travel expenses
- Meal & entertainment
- Etc.

Fixed Assets:

Keeping in mind your capitalization policy:
- Review fixed assets account detail and verify that fixed assets are properly reflected on the Balance Sheet, including:
- Make sure the new assets description is clear.
- Review construction in progress asset account, if any, and reclass all of the applicable assets to corresponding asset accounts if placed in service during the […]

By Linkenheimer LLP|2023-11-15T17:17:15+00:00November 15th, 2023|year-end|0 Comments