Caudell CPA, PC

The unemployment rate was 4.2% in November. With today’s hiring challenges, the Work Opportunity Tax Credit (WOTC) may help employers. The WOTC is available to employers that hire workers from targeted groups who face significant barriers to employment. The credit is generally worth up to $2,400 for each eligible employee. The maximum credit amounts are different for some employees (certain veterans, long-term family assistance recipients and summer youth employees). The job applicant and the employer must complete a pre-screening notice on or before the day a job offer is made. https://lnkd.in/gmDjgP2k

You can itemize deductions if the total of your allowable itemized write-offs for the year exceeds your standard deduction allowance for the year. Otherwise, you must claim the standard deduction. The basic standard deduction allowances for 2024 are: $14,600 for single taxpayers, $29,200 for married joint filers and $21,900 for heads of households. Additional standard deduction allowances apply if you’re age 65 or older or blind. For 2025, the basic standard deduction allowances are $15,000, $30,000, and $22,500, respectively. Itemized deductions include charitable contributions, mortgage interest, state and local taxes, and medical expenses. Other rules and limits apply. https://lnkd.in/gMxTu77F

Compensation is no doubt a significant factor in employee retention. However, one recent survey revealed that many employers believe they’re not fulfilling the objectives of their compensation programs. If your organization has such concerns, first reevaluate your compensation philosophy. This is the mindset or framework your organization used to, whether consciously or not, design its compensation program. You may need to adjust your philosophy to account for the many changes that have affected the employment landscape in recent years. From there, look for adjustments you might make to the design of your compensation program to improve employee retention. Contact us for help. https://lnkd.in/gK4zKFDW

When deciding on the best business structure, one option is a C corporation. There are pros and cons to doing business this way. For example, a C corporation allows a business to be taxed separately from you as the owner. The corporate tax rate is currently 21%, which is lower than the highest 37% noncorporate tax rate. One potential disadvantage: Earnings can be subject to double tax, once at the corporate level and again when distributed to you. One big advantage is the liability protection a C corporation offers. Shareholders aren’t personally liable for the corporation’s debts and liabilities. So personal assets are generally protected if the corporation faces legal issues or bankruptcy. https://lnkd.in/gjQr9YCY

Getting ready to file your 2024 return and finding your tax bill is higher than you’d like? There may still be an opportunity to lower it. If you qualify, you can make a deductible contribution to a traditional IRA up until this year’s April 15 filing deadline and benefit on your 2024 return. An eligible taxpayer can make a 2024 IRA contribution of up to $7,000 ($8,000 if you’re 50 or older). You must meet income requirements to qualify. Business owners can also set up and contribute to SEP plans up until the filing due date, including extensions. For 2024, the most you can contribute to a SEP is $69,000. Contact us for more information about growing your nest egg on a tax-favored basis. https://lnkd.in/gVn4Y4wM

Health Savings Accounts (HSAs) have become popular employer-sponsored fringe benefits. These participant-owned, tax-advantaged accounts can be used to accumulate funds for eligible medical expenses so long as they’re offered with a high-deductible health plan. Employers can use various approaches to help HSA participants get more from their accounts. These include: 1) Providing basic education about account use and regular reminders throughout the year. 2) Considering matching strategies to incentivize participants to contribute more to their accounts. 3) Adding or updating investment options so participants can also use their HSAs as retirement funding vehicles. Contact us for more info. https://lnkd.in/ghFzN7mJ

President Trump has pledged to end taxes on tips. But so far, no law eliminating taxes on tips has been enacted. For now, employers must follow existing IRS rules. Here are some employer responsibilities: 1) Send each employee a W-2 that includes reported tips. 2) Keep employees’ tip reports. 3) Withhold taxes, including income taxes and the employee’s share of Social Security and Medicare taxes, based on wages and reported tip income. 4) Pay the employer share of Social Security and Medicare taxes based on the total wages and reported tip income. 5) Report this information to the IRS on Form 941. 6) Deposit withheld taxes according to federal deposit requirements. Contact us with questions. https://lnkd.in/g3ZT6_pv

The IRS will start the 2025 filing season for individual income tax returns on Jan. 27. Even if you usually don’t file until April, you may want to file early. It can potentially protect you from tax identity theft. In this crime, a thief uses your personal information to file a fraudulent return early in the filing season and claim a bogus refund. Another benefit of early filing is that if you’re getting a refund, you’ll get it faster. This year, the filing deadline to submit 2024 returns, file for an extension and pay tax owed is generally April 15. If you’re requesting an extension, you’ll have until Oct. 15 to file. Contact us for an appointment to prepare your return.

A new year usually brings inflation-based adjustments to various limits and thresholds for employer-sponsored retirement plans. So it goes for 2025, which will largely see increases to key amounts. For example, the contribution limit for 401(k), 403(b) and 457 plans will rise to $23,500 (up from $22,500). The annual limit on catch-up contributions for participants age 50 or over will remain at $7,500 for these plans. However, under SECURE 2.0, a higher catch-up contribution limit of $11,250 will apply to participants who are 60, 61, 62 or 63 in 2025. Carefully note applicable changes to your plan and, as needed, revise employee communications and plan procedures. Contact us for more info. https://lnkd.in/gKFRFjJi

Intangible assets, such as patents, trademarks and goodwill, play a key role in businesses. The tax implications of intangibles can be complex, but businesses should understand them. IRS regulations require the capitalization of costs to 1) acquire or create intangibles; 2) create or enhance a separate, distinct intangible; 3) create or enhance a future benefit identified in IRS guidance as capitalizable; or 4) facilitate the acquisition or creation of intangibles. Capitalized costs can’t be deducted in the year paid or incurred. They must generally be ratably deducted over the asset’s life if they’re deductible. However, there are exceptions. Contact us with questions about intangibles. https://lnkd.in/gBRcbX5E