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The Inflation Reduction Act offers the potential to save when you make energy-efficient upgrades to your home. Eligible improvements include features such as heat pumps, solar panels, and energy-efficient heating or cooling systems. In turn, with these credits, you could possibly save thousands of dollars.

Where does the Inflation Reduction Act stem from?
It’s part of the climate and tax laws designed to lower gas emissions that are actively heating up the planet and contributing to global warming. The law focuses on the major contributing factors of these gas emissions by prioritizing energy-efficient decisions. Plus, the goal is to lower how much it costs to make environmentally friendly decisions, as these tax credits offset some expenses.

When you make environmentally conscious renovations to your home in ways that save energy, you might qualify for a tax credit. Similarly, if you take measures to adjust your home so that the heating and cooling systems are more efficient, then that same tax credit could provide you with up to $3,200 within the same year of making said improvements.

What are qualified expenses with the Home Energy Tax Credits?
When you qualify for the Home Energy Tax Credit, you can expect a return of 30% of your expenses for the following:

Exterior doors, windows and skylights.
Insulation and air-sealing materials or systems.
Central air conditioners.
Natural gas, propane or oil water heaters.
Natural gas, propane or oil furnaces, and hot water boilers.
Heat pumps.
Water heaters.
Biomass stoves and boilers.
Home energy audits of your primary residence.

What is the maximum credit that you can claim per year?
The maximum amount of money you can claim in the form of the Home Energy Tax Credit is equal to $1,200 for costs associated with energy improvements on your property. There are limitations when it comes to doors, as each door amounts to $250 per door, up to $500 total. Windows are equal to $600, while home energy audits equate to $150.

Furthermore, you may receive $2,000 per year in exchange for the purchase of qualified heat pumps, biomass stoves or biomass boilers. The credit applies to existing homes, additions, renovations and newly constructed homes. It is nonrefundable, meaning it cannot exceed the taxes owed.

Excess credit cannot be carried forward either. Energy improvements to your primary home may qualify for an annual tax credit, and you might also be eligible for the credit on improvements made to a second home as long as the home is not rented out to tenants.

The credit can cover 30% of qualifying purchases, including permits and inspections. Also, note that the credit may gradually decrease to 26% in 2032 and 22% in 2034.

From there, the credit is set to phase out in 2035. Remember that the credit is equivalent to 30% of the costs for new clean energy features that are installed in U.S. homes between 2022 and 2033.

What counts as qualified expenses in terms of the Home Energy Tax Credits?
Here are expenses that qualify for the tax credits:

Solar electric panels.
Solar water heaters.
Wind turbines.
Geothermal heat pumps.
Fuel cells.
Battery storage technology.

What standards must energy equipment meet in order to qualify?
Solar water heaters need a Solar Rating Certification Corp. certification. If not that, then an endorsement from a comparable entity in the applicable state works as well. A geothermal heat pump is required to meet Energy Star requirements in effect when you purchase it. Battery storage technology requires a capacity of no less than three kilowatt hours.

Ultimately, what is the goal of the Inflation Reduction Act?
The Inflation Reduction Act is designed to combat climate change by extending expired and reduced tax provisions alike. These extensions are intended to offer greater financial benefits to those who actively contribute to environmental conservation efforts.

That’s because energy tax credits directly reduce the costs of being environmentally friendly, which incentivizes people to participate in the program for the sake of the savings. By investing in these priorities, individuals can save money while reducing their environmental impact.

To claim the credit, taxpayers should fill out Form 5695 Residential Energy Credits. The best time to do this is when you are filling out your tax return. Last but not least, don’t forget to claim the tax credit for the tax year when the efficient properties were installed.

Need Help with Your Home Energy Tax Credits?
Please give us a call in the coming weeks to discuss these ideas and others that may apply to your situation. At Layton Layton & Tobler we help our clients plan ahead so they won’t be caught unawares. Contact us today to schedule a consultation. We can also help you with payroll preparation and auditing.

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Home Energy Tax Credits: Going Green for More Green The Inflation Reduction Act offers the potential to save when you make energy-efficient upgrades to your home. Here's what you need to know.

FICO credit scores range from 300 to 850, with most lenders considering a credit score of 800 or higher to be excellent.

What Makes Your FICO Score Fall?
The most important factor in determining your credit score is your payment history. Certain monthly payments — such as those for your mortgage; auto, student or personal loans; and your credit card payments — are reported to the three national credit bureaus of TransUnion, Experian and Equifax. If you make these payments on time, your score will steadily rise. But if you make even one of these payments 30 days or longer past your due date, your FICO score could fall by 100 points or more.

Your FICO score also varies depending on how much of your available credit you are using, the age of your credit accounts and the number of new credit accounts you open.

To build a strong credit score, you must make your monthly payments on time, pay off your credit card debt and keep old credit card accounts open, even if you don’t plan on using them again.

What’s not included in your credit score?
But what doesn’t impact your credit score? Quite a bit, including some financial factors that might surprise you.

Your income doesn’t matter. Earning more money will not improve your credit score. Your credit score won’t budge depending on your employment status. Losing your job won’t ding your three-digit score.

Your age has no impact on your credit score, either, and your score won’t rise or fall as you get older.

And certain payments don’t impact your score. That’s because many of your regular payments aren’t reported to the credit bureaus. Even if you pay your utility bill, cable bill or cellphone bill on time each month, your credit score won’t get a boost. These payments aren’t tracked by Experian, Equifax or TransUnion.

Also, medical bills don’t hurt or help your credit score. If you pay your doctor’s bill on time, your score won’t rise. If you pay for it late, it won’t fall. Be careful, though: If you don’t pay your medical bills and your health care provider sends your account to collection, that will hurt your credit score.

If you rent an apartment or house, paying your landlord on time doesn’t help your credit score in most cases. This is slowly starting to change as advocates for renters argue that paying rent on time each month should boost a credit score.

The credit bureaus are now accepting reports of on-time rent payments from landlords who submit them. And if your landlord does submit a record of your payments, it could help your credit score. The problem? Most landlords don’t participate in these rent-reporting programs, so most renters still don’t benefit from their on-time payments.

The key to a good credit score? Paying your bills on time
The most crucial step to building a good credit score remains simple: Pay your bills on time each month and keep your credit card debt low. If you do these two things, your score will steadily improve or remain high, no matter what else is or isn’t included in your FICO score.

Need Help with Your FICO Score in Las Vegas?
Please give us a call in the coming weeks to discuss these ideas and others that may apply to your situation. At Layton Layton & Tobler we help our clients plan ahead so they won’t be caught unawares. Contact us today to schedule a consultation. We can also help you with payroll preparation and auditing.

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What Doesn't Your Credit Score Take Into Account? | Las Vegas FICO credit scores range from 300 to 850, with most lenders considering a credit score of 800 or higher to be excellent.

When you make your mortgage payment each month, a portion of your dollars will go toward paying down your loan’s principal balance. But a good chunk of your payment will also go toward paying the interest your loan accrues. We’ll discuss the mortgage interest deduction, a method of recouping this interest payment.

During the earlier days of your mortgage, more of your payment will go toward interest and less will go toward paying down your loan’s balance.

The good news is that you can deduct from your taxes the interest you pay on the first $750,000 of mortgage debt. And if you bought your home before Dec. 16, 2017, you can deduct the interest you pay on the first $1 million of your mortgage debt.

How much will this deduction save you?
How much you save because of the mortgage interest deduction depends on the interest rate attached to your loan, your loan’s term and the size of your loan. It also depends on the age of your loan: You’ll pay less interest the longer you hold on to your loan. With a standard fixed-rate mortgage, you’ll save less on this deduction every year.

Say you take out a 30-year fixed-rate mortgage of $350,000 with an interest rate of 6.5%. During the first year of paying off this mortgage, the interest deduction would save you $8,102 on your taxes.

Your tax savings will fall after this first year. During the 30 years of your loan, your average tax savings would be $4,649 a year.

Is it worth claiming the mortgage interest deduction?
You can only claim this deduction if you itemize on your taxes. This means that you’ll need to determine whether you’ll save more money by itemizing your taxes or by claiming the standard deduction.

For 2023, the standard income tax deduction will rise to $13,850 for single filers and those married who are filing separately. It will increase to $27,700 for joint filers and $20,800 for those filing as head of household.

It only makes sense to itemize on your income taxes if your itemized deductions will equal more than your standard deduction. This might be the case if you run your own business, own rental real estate or are paid as a consultant. But if you are a salaried employee, the odds are high that the standard deduction will net you more money back on your taxes than itemizing your taxes will, even with the mortgage interest deduction.

If you do take the standard deduction, you can’t also deduct the interest you paid on your mortgage during the year.

How do you claim the mortgage interest deduction?
If you do itemize deductions, claiming your mortgage interest deduction is a simple process.

Your lender will send you a Form 1098 in January or early February. This form lists how much you paid in mortgage interest during the year. You’ll get this form if you pay more than $600 in mortgage interest during the year.

The form will list the mortgage interest you paid in Box 1. You’ll enter that figure on Schedule A of Form 1040.

Of course, the numbers tend to change every year and your particular situation may be different. Be sure to work with a financial professional to make sure you are aligned with the latest limits and rules.

Have questions about the this or other tax issues?
Please give us a call in the coming weeks to discuss these ideas and others that may apply to your situation. At Layton Layton & Tobler we help our clients plan ahead so they won’t be caught unawares. Contact us today to schedule a consultation. We can also help you with payroll preparation and auditing.

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How Do You Claim the Mortgage Interest Deduction? | Las Vegas A good chunk of your mortgage payment goes toward paying the interest your loan accrues. We'll discuss the mortgage interest tax deduction.

As an employer, one of your main goals should be keeping your employees happy. And you can keep your employees happy without losing favorable 401(k) tax benefits, paying penalties or facing liabilities.

In the process, don’t forget to take the changes caused by the SECURE 2.0 Act into consideration, namely in terms of retirement savings plans. SECURE 2.0 might mean you have to make amendments to any of your company’s existing plans or retirement account offerings.

When you’re looking to avoid costly mistakes while keeping everyone satisfied, keep the following 401(k) compliance requirements in mind.

Amend all retirement plans
Amend all retirement plans in line with changes that are made to the law. These changes can either be statutory, regulatory or government mandated, so stay in the know and pay attention to all the possibilities.

More specifically, take a moment to revise the changes caused by SECURE 2.0, especially because over 90 changes have been enacted. There are also differences between discretionary and optional plan adjustments.

Define the details of the plans
It’s important to make sure the 401(k) plan operates in alignment with the terms associated with it. If this is not the case, negative tax consequences or a breach of fiduciary duty, if not both, may result. Properly define the meaning behind compensation and then use that definition to determine allocations for each employee’s 401(k) plan.

Confirm your employees are eligible for the plans
Always ensure that applicable employer-matching contributions as well as nonelective contributions are distributed in a timely fashion. Making sure the proper allocations are distributed to each employee is essential as well. Double-check the eligibility of your employees and whether they can reap the benefits of your 401(k) plans.

Pay attention to the administrative side of the plans
As an employer, it is important that you ensure all of your employees’ 401(k) plans are properly managed and handled. Employees who participate in work-related 401(k) plans can borrow from their 401(k) plan if that is an option you make available to them.

However, if employees choose to withdraw from their 401(k) plans, legal compliance must be intact. Ensure your employees understand that the money they borrow must be repaid in a timely fashion in order to avoid interest fees or additional taxes.

Stay on top of tax-related matters
When offering 401(k) plans to your employees, you must file Form 5500, which details your annual returns-related information. This form must be submitted to the Department of Labor so that you can avoid having to pay significant late fees or deal with associated penalties.

Also, it’s your responsibility to deposit elective deferrals on behalf of your employees. Provisions implemented by SECURE 2.0 yield a lot of new benefits that are intentionally designed to make offering retirement plans to your employees more attractive for you as an employer.

Furthermore, the Consolidated Appropriations Act of 2023 adds to SECURE 2.0. Ultimately, SECURE 2.0 addresses a number of issues that deterred employees from participating in employer-backed 401(k) plans in the past.

Always make sure you adhere to the rules of contributing and withdrawing from retirement accounts. For example, you have to let your employees make automatic withdrawals or contributions without being subject to the 10% penalty resulting from early withdrawals.

Also, SECURE 2.0 has expanded the Employee Plans Compliance Resolution System, allowing for more leeway when it comes to the correction of internal errors. New rules have been added in terms of handling overpayments as well. To see the specifics of the rules surrounding 401(k) compliance, visit the DOL and Treasury Department websites.

Need Help Avoiding 401(k) Compliance Mistakes?
Please give us a call in the coming weeks to discuss these ideas and others that may apply to your situation. At Layton Layton & Tobler we help our clients plan ahead so they won’t be caught unawares. Contact us today to schedule a consultation. We can also help you with payroll preparation and auditing.

Experts at Year-Round Tax Planning Serving Las Vegas Area Businesses
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Avoid 401(k) Compliance Mistakes in Las Vegas Keep your employees happy without losing favorable 401(k) tax benefits, paying penalties or facing liabilities.

Tax planning is a 12-month activity. It’s not something you try to fix fast as Dec. 31 approaches or a task to panic about right before April 15. Below are some items you can address throughout the year, in conjunction with your tax adviser.

Personal tax issues
The individual income tax rates have remained constant for the past several years, while the sizes of the tax brackets have been increased modestly.

Delay Taxation Where Appropriate
If you expect that your marginal income tax rate will be lower in future years, it may be beneficial to delay income (such as discretionary bonuses) where possible. Conversely, if you expect your marginal rate to increase in future years, it may be beneficial to accelerate taxable income into a year when your marginal rate is lower. In all cases, you should consider the timing implications of when you’ll pay the tax.

Review your Capital Gains and Losses
Be sure to examine your transactions to see if you have any net gains. If you do, consider selling some losing positions to offset them — you are allowed to use up to $3,000 of net capital losses to reduce your taxable income. Unused realized losses can be carried forward.

Contributions
If year-end charitable contributions are in your plans, consider contributing appreciated stock instead of cash. You get the deduction for the full fair market value and avoid paying tax on the gain.

Individuals aged 50 and over can make “catch-up” contributions to IRAs and 401(k) plans. Be sure to take as much advantage as you can to secure your retirement years.

Beware of the Alternative Minimum Tax
Originally enacted to force high-income taxpayers to pay tax, this complicated additional tax is catching many people unaware. If your income is relatively high or if you have high levels of itemized deductions (especially income or property taxes), you will need to discuss this with your tax adviser. The AMT can also apply to individuals with incentive stock options.

Business tax issues
Qualified retirement plans. Be sure to get the maximum tax benefits from any retirement plan you participate in. Consider making contributions to an IRA, even if the contribution will not be deductible. Getting funds into an IRA where the earnings are tax deferred will save you money.
Control your wages. Many business owners can control when they pay themselves, especially year-end bonuses. Be sure to understand the interplay between your business’s and your personal tax situation to get the best solution.
Maximize your deductions. Be sure to take all the deductions to which you are entitled. If you use your personal automobile for business or have a home office, review the rules to get the maximum benefit. The IRS also notes that taxpayers may elect to expense the cost of any Section 179 property and deduct it in the year the property is placed in service. Be sure your records support any travel and entertainment expenses.
Need Help with Tax Planning in Las Vegas?
Please give us a call in the coming weeks to discuss these ideas and others that may apply to your situation. At Layton Layton & Tobler we help our clients plan ahead so they won’t be caught unawares. Contact us today to schedule a consultation. We can also help you with payroll preparation and auditing.

Experts at Year-Round Tax Planning Serving Las Vegas Area Businesses
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Tax Planning: A Year-Round Task for Las Vegas Businesses Tax planning is a 12-month activity. Below are some items you can address throughout the year, in conjunction with your tax adviser.

Agencies typically apply different taxes to various situations based on each individual agency’s rules, regulations and payment methods. Contrary to what people often say, what you don’t know actually can hurt you, so becoming more knowledgeable about tax issues that businesses often face is key.

3 Tax Issues That Can Affect Your Bottom Line
Here are three common tax issues that can ultimately affect your bottom line in the long run.

1. Underpaying taxes and keeping records poorly

The first common tax issue to be mindful of is accidentally underpaying your taxes as a result of incorrectly or negligently storing records. As a business owner, you will collect sales tax from your customers. Let’s say you fail to pay that sales tax to the state in which your business operates. As a result, you will inevitably end up underpaying your sales and use taxes, both of which you are obliged to pay.

Another example is a situation in which you operate a cash-based business and find yourself needing to prove your personal income. You may end up paying too little toward your income tax, thinking that your estimated quarterly tax is optional — but it is not.

In all actuality, paying quarterly taxes is mandatory, and you absolutely must pay your income taxes in full and on time. Otherwise, you will be subject to undesirable outcomes, such as costly penalties and high APR interest that will be applied toward your unpaid taxes.

Last but not least, failing to take care of your records and maintain accurate copies of them could result in many different problems when tax-filing season rolls around. This is particularly true if you end up being audited by the IRS.

Keep in mind that sometimes people underpay their taxes merely because taxes are very complicated and the complexity of it all can confuse taxpayers. While it can be rather costly to hire a professional to help you with your tax-related matters, the consequences of inaccurately paying your taxes can be even more expensive. Being proactive can help you in the long run.

2. Misclassifying your business or business-related matters

As a business owner, you already have a lot of responsibilities to handle, but the classification of your business is not a matter you should take lightly. Pay attention to even the smallest of details. For instance, look into whether a franchise tax exists in your state. If it does, you’ll need to determine which forms you have to fill out and how much tax you will owe based on your company’s business entity classification.

3. Incorrectly classifying your employees

When hiring people to work for your business, you will have to decide whether you’ll onboard workers as employees or contractors. Take your time with this decision, as misclassifying an employee as an independent contractor or vice versa will impact how much you’ll need to withhold in taxes.

Avoidance is Not the Answer

Some business owners avoid filing their taxes on time because they cannot afford the final tax balance they owe for the previous tax year. However, avoidance is not the answer, especially because failing to file your taxes can result in a number of negative consequences, ranging from sky-high interest rates and unwanted penalties to a 25% failure-to-file fee, which will be added on to your overall bill if at least five months have passed since the date your taxes were due.

Thankfully, many of these issues are preventable when you know what to look out for and how to manage your taxes come tax time. It never hurts to hire a professional who understands business taxes, as they can help you adhere to regulations in a timely fashion.

Maintain Accurate Records

Another way to make paying your business taxes a lot easier is to maintain accurate records throughout each tax year. Stay on top of the receipts associated with the deductions you plan to make, as deductions can sometimes yield additional proof that the money you spent was truly business related. Always save any tax files or workbooks that you used as you calculated your taxes as well.

Keep Good Records

Hold on to your tax records for four years at a minimum. Some people will even encourage you to maintain your records for no fewer than 12 years! Either way, make it a point to keep the records associated with the taxes you collected from customers in a distinctly separate account that is easy for you to access should you ever need to.

Stay Current on Changing Tax Laws

The best plan of action is to stay updated on current and ever-changing tax laws so you can be prepared to pay the amount you owe every year. And remember that not every company underestimates what it owes.

Rather, some businesses overpay their taxes, which typically results from their failing to claim all the tax deductions they are eligible for and take advantage of the credits available to them. Either way, sometimes the most common tax mistakes can have a significant impact on your company’s bottom line.

When you make it a point to always keep your business taxes in mind, you can turn the tax-planning process into a year-round activity. This can set you up for success; do not ignore all your tax-related matters until April. If you need additional assistance managing your business taxes, contact a professional today!

Need Help Dealing with Tax Issues in Henderson?

Becoming more knowledgeable about tax issues that businesses often face is key in preparing for tax filing each year. At Layton Layton & Tobler we help our clients do just that. Contact us today to schedule a consultation. We can also help you with payroll preparation and auditing.

Experts at Key Tax Issues Serving Henderson Area Businesses
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Top Tax Issues for Businesses in Henderson What you don't know actually can hurt you, so becoming more knowledgeable about tax issues that businesses often face is key.

Employers generally must withhold income tax from employees’ wages. To figure out how much tax to withhold, you need to use the employee’s Form W-4, the appropriate method and the appropriate withholding table described in Publication 15-T, Federal Income Tax Withholding Methods. You’ll deposit your withholdings based on your business and the amount you withhold. In this article we’ll discuss business owners’ responsibilities regarding employee taxes.

File returns four times a year, and at the end of the year, prepare and file Form W-2, Wage and Tax Statement, to report wages, tips and other compensation paid to employees. Each employee needs a completed copy. You will use Form W-3, Transmittal of Wage and Tax Statements, to transmit Form W-2 to the Social Security Administration.

Other key responsibilities
You must withhold Social Security and Medicare taxes from employees’ wages and make sure they submit the matching amounts. (Something else to budget for!) To figure out how much tax to withhold, use the employee’s Form W-4 and the methods described in Publication 15, Employer’s Tax Guide, and Publication 15-A, Employer’s Supplemental Tax Guide. Deposit the taxes you withhold. You can find the detailed requirements for depositing on the IRS.gov website.

The current tax rate for Social Security is 6.2% for you and 6.2% for the employee. For Medicare, the current rate is 1.45% for you and 1.45% for the employee, or 2.9% total. Also, an Additional Medicare Tax applies to an individual’s Medicare wages that exceed a threshold amount based on the taxpayer’s filing status. You’ll withhold an Additional Medicare Tax of 0.9% for single filers who make more than $200,000. For married couples filing jointly, the threshold is $250,000, but if filing separately, $125,000. You don’t have to match this additional portion.

The government generally adjusts the earnings subject to Social Security each year. For 2023, the maximum earnings were $160,200.

Employers report and pay taxes under the Federal Unemployment Tax Act. The FUTA tax rate is 6.0%. The tax applies to the first $7,000 you pay to each employee as wages during the year. The $7,000 is often referred to as the federal or FUTA wage base. Your state wage base may be different based on the respective state’s rules.

Key dates to remember
Mark your calendar with key dates. The IRS has an Employment Tax Due Dates page with information on what you need to do and when you need to do it. The matching share of the Social Security and Medicare payroll taxes are collected as the Federal Insurance Contributions Act taxes and your part is considered a business expense, not a liability. Because it’s a business expense, it can be written off at tax time.

Don’t forget the states
This is just the beginning of an employer’s responsibilities. You are likely subject to state withholding rules as well. It’s essential that employers be on top of the general rules and any annual rate changes. Understanding these tax issues is important, since you bear the responsibility of fulfilling your tax obligations relating to your employees. It’s important to send out payments on time to avoid penalties and late fees. Be sure to work closely with financial professionals to make sure you stay compliant.

Need Help Dealing with Employee Taxes in Las Vegas?
Approximately 2.5% of all U.S. small-business owners are audited by the IRS. To adequately prepare for the possibility of being audited someday, keep meticulous records of all tax-related transactions and work with a professional who has experience handling IRS audits when they arise. At Layton Layton & Tobler we help our clients do just that. Contact us today to schedule a consultation. We can also help you with payroll preparation and auditing.

Experts at Employee Taxes Serving Las Vegas Area Businesses
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How To Deal With Employee Taxes in Las Vegas Employers generally must withhold income tax from employees' wages.In this article we'll discuss business owners' responsibilities regarding employee taxes.