Summit West CPA Group, P.C.

As the year comes to a close, it's time to make sure your business’ financials are in order! Swipe for some key questions to consider for a smooth year-end process ?? Taking the time now to review your financials can save you stress later. If you need help with tax planning or have other questions, our team is here to support you! Give us a call anytime.

With the end of the year approaching, it’s time to think about your taxes. If you're concerned about your tax bill next year, there's still time to plan and potentially save money. Swipe for some year-end tax prep strategies to consider ?? Want to explore these strategies further or have questions? Our team is here to help — reach out today!

Business owners may travel to visit customers, attend conferences, check on vendors and for other purposes. Managing tax-deductible travel costs can help ensure compliance and maximize tax savings. Assuming you meet the tax law requirements, there are a number of deductible business travel expenses. They include: air, train or bus fare to the destination; baggage fees; car rental expenses or the cost of using your vehicle; tolls; parking; transportation at the destination (such as taxis); lodging; tips and dry cleaning. Meal expenses are generally 50% deductible. The business travel deduction rules can be complicated. If you’re uncertain about the tax treatment of your expenses, contact us.

If you own a small business with no employees (other than your spouse) and want to set up a retirement plan, consider a solo 401(k) plan. This is also an option for self-employed individuals or business owners who wish to upgrade from a SIMPLE IRA or SEP plan. For 2024, you can make an elective deferral contribution of up to $23,000 of your net self-employment (SE) income ($30,500 if you’ll be 50 or older as of Dec. 31, 2024). On top of the elective amount, an extra contribution of up to 20% of your net SE income is allowed for solo 401(k)s. For 2024, the combined elective and extra contributions can’t exceed $69,000 ($76,500 for 50 or older) or 100% of net SE income. Questions? Contact us.

As year end approaches, you may be thinking about tax strategies. One way to reduce potential estate taxes and show generosity to loved ones is to give cash gifts before Dec. 31. Taxpayers can transfer large amounts using the annual exclusion. In 2024, the exclusion amount is $18,000. It covers gifts you make to each recipient. That means if you have three children, you can transfer $54,000 to them in 2024, free of federal gift taxes. Married couples can consent to give each recipient up to $36,000 a year. Other rules may apply, and you need to file a gift tax return if you give more than $18,000 or consent to give gifts with your spouse. We can prepare a gift tax return for you.

If you have a child or grandchild planning to attend college, you may wonder about investing in a qualified tuition program or 529 plan. You don’t get a federal tax deduction for contributions, but the earnings aren’t taxed while the funds are in the program. (There may be a state deduction in your state.) You can change the beneficiary without income tax consequences. Distributions are tax-free up to the amount of the qualified higher education expenses. These include tuition (up to $10,000 for an elementary or secondary public school), fees, books, supplies and required equipment. Room and board are also qualified expenses if enrolled at least half time. Contact us to learn more.

The recent drop in interest rates created a buzz in the real estate market. Potential homebuyers may now have an opportunity to attain their dreams of purchasing property. If you’re a homebuyer, you may wonder if you can deduct mortgage points paid on your behalf by the seller. The answer is “yes,” subject to some limits. For example, the rule allowing a deduction for seller-paid points doesn’t apply to points allocated to the part of a mortgage above $750,000 ($375,000 for marrieds filing separately) for tax years 2018 through 2025 (above $1 million for tax years before 2018 and after 2025). It also doesn’t apply to points on a loan used to improve a home or in certain other situations.

When drafting partnership agreements, various tax issues must be addressed. This is also true for operating agreements for multi-member LLCs that are treated as partnerships for tax purposes. For example, you should identify and describe guaranteed payments to partners because special tax rules apply to them. For income tax purposes, a guaranteed payment is one that’s: 1) made to a partner acting in the capacity of a partner, 2) made in exchange for services performed for the entity or for the use of capital by the partnership, and 3) not dependent on partnership income. Contact us to be involved in launching an entity and addressing tax issues in the partnership or LLC operating agreement.

In case you’re in need of a little inspiration, we wanted to share this powerful, timeless reminder from Winston Churchill.

There are ways to collect income and gains free from federal income tax. For example, if you receive a gift or inheritance, the amount generally isn’t taxable. And unlike withdrawals from traditional IRAs, qualified Roth IRA withdrawals are free from federal income tax. A qualified withdrawal is one taken after you reach age 59? and have had a Roth IRA open for over five years, or you are disabled or deceased. Also, you can have a decent income and still owe 0% for long-term gains and dividends. In 2024, single taxpayers can have up to $47,025 in taxable income ($94,050 for married couples filing jointly) and be in the 0% bracket. Contact us. Advance planning may lead to better tax results.