Gordon Keeter & Ford CPAs

If your business is closing, taxes are probably not on your mind but there are a number of tax responsibilities that must be met. Here’s a rundown of the basic rules: bit.ly/3SeBOLq

If you own Series EE bonds, take a look at the issue dates to see if the bonds are no longer earning interest. Here’s how bond interest is taxed: bit.ly/4du4rfN

If you requested an extension to file your tax return after the April 15, 2024, due date, the new deadline is coming up soon on Oct. 15. If you have the information you need, you may want to file now. There’s no advantage to waiting, and last-minute filing may lead to worry. If you’re concerned about paying any tax owed, the IRS offers short- and long-term payment plans, as well as installment agreements, to taxpayers who qualify. It’s important to act quickly if you owe because any amount that was due April 15 accrues interest until the balance is paid. As soon as possible, gather your 2023 tax year records and contact us for a tax preparation appointment or to ask questions you may have.

Disability income may or may not be taxable by the federal government. Here are the basic rules: bit.ly/3LNDszP

Infographic Friday: Do you have to report bartering transactions to tax authorities? Learn the answer here: bit.ly/4cd9Syy

When developing your business’s website, how do you handle the expenses for tax purposes? Here are the basic rules: bit.ly/3YufhxY

Ignoring the IRS doesn’t make it go away. While the tax agency is generally willing to work with taxpayers who dispute their tax bills or need more time to pay, cooperation is key. In one case, the owner of a boat and RV storage facility owed unpaid federal income and self-employment taxes, as well as penalties and interest, for two tax years. It amounted to $1,314,804. After a federal lien was issued, the taxpayer sold business property to pay the taxes but the proceeds didn’t cover the debt entirely. The taxpayer then ignored further attempts by the IRS to contact her. Deeming the tax bill “undisputed,” a U.S. District Court ordered her to pay $802,308. (Wonka, DC Tex., 7/2/24)

Getting a divorce can be an agonizing process. You don’t want to make it worse by making decisions that will cost you more in taxes. Here are six issues to consider if you’re getting a divorce: bit.ly/4fefYBh

If you’ve hired household employees this year, you may need to account for them in your tax planning. For tax purposes, household employees are individuals who you pay more than $2,700 in 2024 in return for providing services in your home. A worker is considered an “employee” if you control what work is performed by the worker and how it’s done. Examples of household employees include housekeepers, nannies, private nurses and landscapers. (They don’t include independent contractors or workers employed by an agency.) If you have a household employee, you may need to withhold and pay Social Security and Medicare taxes, pay federal unemployment tax, or both. Contact us for to learn more.

Certain taxpayers generally must make quarterly estimated tax payments to avoid a penalty. Here are the rules, along with when the next payment is due: https://bit.ly/3M2RWvX

With the year more than half over, now’s the time to consider ways to lower your 2024 tax bill. If you own or are a beneficiary of an IRA and you’re at least 70½, here’s one option: Make donations of up to $100,000 to IRS-approved charities directly from your IRA (or $200,000 for a married couple where both spouses meet the age requirement). These qualified charitable distributions (QCDs) can fulfill your annual required minimum distribution if applicable. You can’t take a charitable deduction for a QCD, but the donated amount is removed from your taxable income, which may preserve your eligibility for other tax breaks. QCDs also offer other tax advantages. Contact us to learn more.

You’ve probably never heard of the "Self Employment Tax Credit." That’s because it doesn’t exist! However, unscrupulous promoters on social media are peddling the nonexistent credit as a way for self-employed people and gig workers to receive big payments related to the COVID-19 pandemic. In reality, the underlying limited and technical credits referenced in these bogus claims are called the Credits for Sick Leave and Family Leave for Certain Self-Employed Individuals. The IRS is warning taxpayers that many people don’t qualify for these credits and that the tax agency is closely reviewing claims for them. For additional information from the IRS on this scam: https://bit.ly/3Wn9M2J

Summer is winding down and a new school year is ramping up. Teachers and other educators have been working hard to prepare their classrooms before the new year begins. Qualified educators can deduct up to $300 of unreimbursed expenses on their 2024 tax returns. Married educators who file joint returns can deduct up to $600, but no more than $300 each. Qualified expenses include books, classroom supplies, computer equipment and professional development tuition costs. To qualify for the deduction, a taxpayer must be a teacher or other educator of kindergarten through 12th grade and work at least 900 hours during the school year, in a public or private school.

If your summer chore list includes cleaning out the garage and closets, you might have items to donate to a local charity. That’s not only generous, it might lead to tax savings (if you itemize deductions on your tax return). You’ll need to secure proper documentation from the qualified charities you donate to. Noncash donations of less than $250 must be supported by a receipt, showing your name, address, date of donation and detailed descriptions of the items. For donations valued at $250 to $500 you must also obtain a “contemporaneous written acknowledgement” from the charity. Click here for more details, including documentation needed for higher value donations: https://bit.ly/3yvZKD4

Infographic Friday: If you’re age 50 or older, you have a special opportunity to fund your retirement account. Learn more: bit.ly/4cLbC3b

Students will soon be heading off to college or trade school. Higher education is expensive, but taxpayers who take post-high school coursework in 2024 (or who have dependents taking such courses) may qualify for one of two tax credits that can reduce their tax bills. The Lifetime Learning Credit tops out at $2,000 per tax return for any number of years. The American Opportunity Tax Credit is worth up to $2,500 per eligible student for the first four years at an eligible school in pursuit of a degree or other recognized education credential. But an income-based phaseout could reduce or eliminate your tax benefit. Additional limits and rules apply. For more information: bit.ly/3QoUiJ2

Through an expanded enforcement initiative launched last year, the IRS reports it has collected more than $1 billion in past-due taxes from “high-income, high-wealth” individuals. As part of larger efforts taking place, the tax agency stepped up activity on 1,600 individuals whose incomes were more than $1 million per year and who each owed more than $250,000 in recognized tax debt. This is just one of several ongoing IRS compliance enforcement initiatives funded by the Inflation Reduction Act. Other activities include those targeting corporate jet abuse, high-income nonfilers, and large corporations and partnerships with average assets of $24 billion and $10 billion, respectively.

The IRS continues to warn the public about tax-related scams and myths making the rounds on social media. The scams involve the Fuel Tax Credit, a COVID-19-related employer credit for employees taking sick and family leave during the pandemic, household employment taxes and overstated withholding. These scams are aimed at helping taxpayers use false and questionable information to obtain huge refunds. The IRS said thousands of inflated refund claims have been filed. Those who filed such claims may receive an IRS letter requiring authentication or stating a tax return is frivolous. Here’s a list of FAQs with more information: bit.ly/45Wm98S

The International Monetary Fund (IMF) issued a report addressing the U.S. economic outlook. Topline: the IMF said the Federal Reserve shouldn’t cut interest rates until “late 2024.” IMF chief economist Pierre-Olivier Gourinchas said that due to a strong labor market, the Fed “could afford to wait” longer before cutting rates. The IMF added that to slow the growing federal deficit, the government should raise taxes in the future, including on households earning less than President Biden’s $400,000-a-year threshold. The IMF has been urging the need for greater fiscal responsibility as federal deficits continue to grow despite robust economic growth. Download the report: https://bit.ly/3YaaAct

Quiz: Some meals that employers provide to employees are 100% deductible. Which ones? bit.ly/466ZGX1

Recently, there was a ransomware attack aimed at car dealers. As a result, the IRS is warning individuals and businesses selling cars about evolving phishing and smishing scams. Scammers relentlessly pursue the sensitive financial and personal data of individuals, which they may use to steal identities or assets or install malicious software on victims’ computers. Phishers send emails that appear to be from legitimate sources to lure victims into clicking links and providing sensitive data. Smishers send messages by phone that may state the victim’s account is (or may be) impaired. Never respond or click on suspicious links. For more from the IRS: bit.ly/3Wh9bQ2

In the U.S. House of Representatives, a bill was recently introduced that would extend and enhance the Paid Family and Medical Leave Credit (under IRC Section 45S). The bill proposes, among other things, to expand eligibility by reducing the minimum employment period for qualifying employees from one year to six months. The bill has broad bipartisan support and aligns with a Senate bill introduced earlier this year. However, passage is uncertain. The current credit is scheduled to expire at the end of next year. For additional information from the IRS on the credit in its current form: bit.ly/3y0ncrS

For most business co-owners, the value of their business shares comprises a big percentage of their estates. Having a buy-sell agreement protects co-owners and their heirs and helps avoid hassles with the IRS. Learn more: bit.ly/4cL79xt

Summer is a good time for some tax planning that could lower your 2024 tax bill. Since the passage of the Tax Cuts and Jobs Act, which increased the standard deduction, fewer people benefit by itemizing deductions. If it’s a toss-up between taking the standard deduction and itemizing, here are some ways to increase your itemized deductions and possibly lower your tax bill: Accelerate elective medical, dental, and vision care expenses into 2024. Beef up charitable donations to IRS-approved charities. With some exceptions, you can prepay state and local income tax and property taxes that are due in early 2025, and make your Jan. 1, 2025, mortgage payment in 2024. Contact us with questions.

Closely held corporation owners: If you need money for personal expenses like a new car or home improvements, consider borrowing from the business. But follow these tips to avoid adverse tax consequences: bit.ly/3VXvGZ1

Before long, school bells will be ringing again. If you’ve set up Section 529 college savings plans for your kids or grandkids, you know these plans bring federal (and possibly state) tax advantages. For example, qualified withdrawals are free from federal income tax, subject to limitations. But 529 accounts aren’t just for college. The funds can generally also be used to pay for K-12 tuition costs at a public, private or religious school, or to purchase required materials for a beneficiary to be part of a qualified apprenticeship program. Eligible withdrawals can also be used to pay a beneficiary’s college loans, up to $10,000, once in a lifetime. Questions? Contact us.

Here’s a strategy for older taxpayers who are charitably minded and also must take required minimum distributions from their traditional IRAs: bit.ly/4bK0YbK

Summer isn’t tax season but it’s a season when some common activities have tax implications. If you get married, you should notify the IRS and Social Security Admin. about any name or address changes. If you’re sending your kids to day camp, depending on the details, you may qualify for the Child and Dependent Care Credit. If you’re spending the warm days fixing up your home, the Energy Efficient Home Improvement Credit can help cover the costs of replacing windows, doors and heating and air conditioning systems. And the Residential Clean Energy Credit may be available for solar, wind and other sustainable energy projects. To learn more: https://bit.ly/3xTIGXE or contact us with questions.

Infographic Friday: Military service confers certain tax benefits. Learn more: bit.ly/3VZW306

If you expect the tax rates you pay to rise, you may be able to proactively avoid higher taxes on retirement funds by converting a traditional IRA to a Roth account. This may be a smart tax move but be aware that there’s a current cost. That is, a conversion is treated as a taxable liquidation of your traditional IRA, so the amount you convert will be taxed at current tax rates. The good news is, after the completed conversion, all qualified withdrawals are free from federal tax. To be qualified, withdrawals must be taken after the Roth account has been open for more than five years, and after you reach age 59½ or become disabled or die. Contact us with questions.