Koski Professional Group, P.C.

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. For more information, please visit our website at https://bit.ly/tax-briefs

You can’t keep funds in your traditional IRA indefinitely. You must start taking withdrawals from a traditional IRA (including a SIMPLE IRA or SEP IRA) when you reach age 73. You must take your first RMD by April 1 of the year following the year in which you turn 73, regardless of whether you’re still employed. The RMD for any year is the account balance as of the end of the immediately preceding calendar year divided by a distribution period from the IRS’s “Uniform Lifetime Table.” If you take money out of a traditional IRA before age 59½, you may be subject to a 10% penalty tax and income tax on the distribution. Contact us with any questions. For more information, please visit our website at https://bit.ly/tax-briefs

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. For more information, please visit our website at https://bit.ly/tax-briefs

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. For more information, please visit our website at https://bit.ly/tax-briefs

The IRS recently announced next year’s inflation-adjusted tax amounts. The 2025 standard deduction will increase to $15,000 for single taxpayers, $30,000 for married couples filing jointly and $22,500 for heads of household. This is up from the 2024 amounts of $14,600 for singles, $29,200 for joint filers and $21,900 for heads of household. For 2025, the highest tax rate of 37% will affect singles and heads of households with income exceeding $626,350 ($751,600 for joint filers). This is up from 2024 when the 37% rate affects single taxpayers and heads of households with income exceeding $609,350 ($731,200 for joint filers). The 2025 gift tax exclusion is $19,000, up from $18,000 in 2024. For more information, please visit our website at https://bit.ly/tax-briefs

As a small business owner, managing health care costs for yourself and your employees is challenging. So you may want to provide some benefits through an employer-sponsored Health Savings Account (HSA). For eligible individuals, HSAs are a tax-advantaged way to set aside funds (or have their employers do so) to meet medical needs. An eligible employee must be covered by a “high deductible health plan.” For 2025, a high-deductible health plan has an annual deductible of at least $1,650 for self-only coverage, or $3,300 for family coverage. For self-only coverage, the 2025 limit on deductible contributions is $4,300. For family coverage, the 2025 limit on deductible contributions is $8,550. For more information, please visit our website at https://bit.ly/tax-briefs

Important Update: BOI filing deadline is back on for January 1, 2025! #BOI #CorporateTransparencyAct #CTA https://conta.cc/41NFTvF

Are you age 70½ or older and want to give to charity? You can make cash donations directly from your IRA to IRS-approved charities free of federal income tax. These are called qualified charitable distributions (QCDs). In contrast, other traditional IRA distributions are wholly or partially taxable. Unlike regular charitable donations, you can’t claim itemized deductions for QCDs. But they aren’t included in your adjusted gross income (AGI). That lowers the odds that you’ll be affected by unfavorable AGI-based rules or hit with the 3.8% net investment income tax. The annual QCD limit is now adjusted for inflation. In 2024, the limit is $105,000. In 2025, it will increase to $108,000. For more information, please visit our website at https://bit.ly/tax-briefs

Let’s say you have a sideline activity that you consider a business. Perhaps you offer photography services or sell handmade items online. Will the IRS agree that your venture is a business, not a hobby? It’s an essential question for tax purposes. If the expenses from an activity exceed the revenues, you have a net loss. You can’t necessarily deduct that loss on your federal income tax return. The IRS often claims that money-losing sidelines are hobbies rather than businesses, and the tax rules for hobbies aren’t favorable. However, we may be able to help you prove your money-losing activity is really a for-profit business that hasn’t paid off yet. That way, you can deduct the losses. For more information, please visit our website at https://bit.ly/tax-briefs

Business driving may come to mind when you think about tax deductions for vehicle-related expenses. However, businesses aren’t the only taxpayers that can deduct driving expenses. Individuals may also be able to deduct them in certain circumstances. Unfortunately, under current law, you may be unable to deduct as much as you could years ago. For 2018 through 2025, miles may only be deductible in limited circumstances. The 2024, the per-mile rate varies depending on the purpose. For business, it’s 67 cents; for medical driving for eligible itemizing taxpayers, it’s 21 cents; for active-duty military moving, it’s 21 cents; and for charitable itemizers, it’s 14 cents. For more information, please visit our website at https://bit.ly/tax-briefs