December 2025 Newsletter

Year-End Individual Tax Planning Opportunities

Article Highlights:

• Not Needing to File a 2025 Return?
• Are Your Children Attending College?
• Did You Sell Your Home This Year?
• Do You Have an Employer Health Flexible Spending Account?
• Did You Become Eligible to Make Health Savings Account (HSA) Contributions This Year?
• Have You Funded Your Retirement Savings?
• Married and Spouse Does Not Work?
• Are You Age 60 to 64 This Year?
• Are You Expecting a Bonus This Year?
• Is Your Income Unusually Low This Year?
• Must You Take a Required Minimum Distribution (RMD)?
• Do You Have Stocks That Have Declined in Value?
• Do You Have Stocks That Have Appreciated in Value and Your Income Is Low This Year?
• Have You Considered Prepaying State Income and Property Taxes?
• Are You Planning Your Charitable Deductions?
• Do You Have Outstanding Medical or Dental Bills?
• Have You Forgotten the Annual Gift Tax Exclusion?
• Do You Think You May Have Under-Withheld Taxes This Year?
• Did You Suffer a Disaster Loss This Year?
• Divorced or Separated This Year?
• Do You Qualify for Energy or Environmental Tax Credits?
  oCredit for Energy Efficient Home Modifications
  oSolar Credit

Year-end is rapidly approaching, as are the holidays. So, before you become distracted with the seasonal celebrations, it may be in your best interest to consider year-end tax moves that can benefit you for your 2025 tax filing. Here are last-minute tax issues you might consider:

Not Needing to File a 2025 Return?–If your income and tax situation is such that you do not need to file for 2025, don’t overlook the opportunity to bring in some additional income, to the extent it will be tax-free. For instance, if you have appreciated stock that you can sell without incurring any tax, consider selling it, or perhaps take a tax-free IRA distribution if you are 59½ or older or if younger and qualify for an exception to the “early withdrawal” penalty.

Also, just because you are not required to file a tax return does not mean you shouldn’t. By not filing you may miss out on some substantial refundable tax credits.

Is Your Income Unusually Low This Year? If your income is unusually low this year, you may wish to consider converting some or all your traditional IRA into a Roth IRA. The lower income likely results in a lower tax rate, which provides you an opportunity to convert to a Roth IRA at a lower tax amount. Also, if you have stocks in your retirement account that have had a significant decline in value, it may be a good time to convert to a Roth.

Are Your Children Attending College? If you qualify for either the American Opportunity or Lifetime Learning education credits, check to see how much you will have paid in qualified tuition and related expenses during 2025. If it is not the maximum allowed for computing the credits, you can prepay 2026 tuition if it is for an academic period beginning in the first three months of 2026. That will allow you to increase the credit for 2025. This is especially effective for students just starting college who only have tuition expenses for part of the year.

Did You Sell Your Home This Year? If so, and if you meet the ownership and occupancy tests, the gain from selling your main home will not be taxed, up to $250,000 ($500,000 if you file a joint return with your spouse who also meets the occupancy test). But if you don’t meet the requirements of both owning and using your home for 2 years in the 5 years counting back from the sale date, you may still qualify for a partial home sale gain exclusion. For example, you may qualify for a reduced exclusion if you sold your home to relocate this year because of a change in employment or due to health. We can determine the amounts of excluded income and taxable gain, and project how your taxes will be impacted.

Do You Have an Employer Health Flexible Spending Account? If so, and if you contributed too little to cover expenses this year, you may wish to increase the amount you set aside for next year. The maximum contribution for 2025 is $3,300. The amount you haven’t used in 2025 that may be carried to 2026 is $660 and must be used in the first 2½ months of 2026.

Did You Become Eligible to Make Health Savings Account (HSA) Contributions This Year? If you become eligible to make health savings account (HSA) contributions late this year, you can make a full year’s worth of deductible HSA contributions even if you were not eligible to make HSA contributions for the entire year. This opportunity applies even if you first become eligible in December. In brief, if you qualify for an HSA, contributions to the account are deductible (within IRS-prescribed limits), earnings on the account are tax-deferred, and distributions are tax-free if made for qualifying medical expenses.

Have You Funded Your Retirement Savings? Be sure to maximize your retirement plan contributions before year-end. Once the year is gone, you have forever lost an opportunity to make this year’s annual tax-advantaged addition to your savings for future retirement, which won’t be all that pleasant without a substantial retirement nest egg. If your employer matches some of the amount you contribute to your 401(k) or another eligible retirement plan, be sure to contribute as much as you can to take full advantage of this perk. If the contributions are tax-deductible, such as to a traditional IRA, or made with pre-tax income, maximizing the contributions may also cut your tax bill.

Married and Spouse Does Not Work? If one spouse works and the other does not, tax law allows the non-working spouse to base his or her contribution to an IRA on the working spouse’s income. This tax benefit is frequently overlooked when spouses have been working and basing their individual contributions on their own income for years and then one of the spouses retires. Even if the working spouse has a retirement plan at work and his or her income precludes making an IRA contribution, the non-working retired spouse can still contribute based on the working spouse’s income.

Are You Age 60 to 64 This Year? Starting in 2025, individuals are eligible for increased retirement plan catch-up contribution limits, set at 150% of the standard catch-up limit, which translates to $11,250 for employer plans and $5,250 for SIMPLE plans. These catch-up contributions are designed to boost retirement savings during the final working years and are subject to cost-of-living adjustments to ensure they remain beneficial relative to inflation. This provision specifically targets SIMPLE, 401(k), 403(b), and other qualified employer plans, offering a strategic advantage to older employees seeking to maximize their retirement savings in a relatively short timeframe before retirement. These enhanced amounts do not apply to IRAs.

Are You Expecting a Bonus This Year? If a job-related bonus is expected to be paid around the end of the year, you might be able to defer that income into next year if that is appropriate in your situation, such as when you expect less ‘other’ income next year. See if your employer is willing to put off payment until just after the first of the year.

Do You Need to Take a Required Minimum Distribution (RMD)?Once U.S. taxpayers reach the age of 73, they are required to take what is known as a “required minimum distribution” from their qualified retirement plan or traditional IRA every year. If this is the first year that this rule applies to you and you haven’t withdrawn the required amount yet, there’s no need to panic – you don’t have to do so until sometime during the first quarter of next year. Of course, if you wait until 2026 to take your 2025 distribution, you’re going to end up having to take two distributions in one year – one for 2025 and one for 2026.

If you have been required to take an RMD before 2025, you only have until December 31st to take the required distribution for 2025 if you want to avoid penalties.

For those who inherited a retirement account and are required to distribute the entire account within 10 years, be aware RMD from those accounts is also required beginning for 2025.

Do You Have Stocks That Have Declined in Value? While most stocks have trended up this year, you should still review your stock portfolio to identify any losers and consider selling those under-water stocks to offset capital gains that would otherwise be subject to the 15% or 20% long-term capital gains tax rate. Capital losses can also offset up to $3,000 ($1,500 in the case of a married taxpayer filing a separate return) of ordinary income if capital losses exceed capital gains by at least that amount. Recognizing capital losses to offset capital gains can also reduce the amount of income subject to the net investment income surtax. Be aware of the wash sale rules that don’t allow you to deduct a loss if you repurchase those loser stocks within 30 days before or after the sale date.

Do You Have Stocks That Have Appreciated in Value and Your Income Is Low This Year? There is a zero long-term capital gains rate for taxpayers whose taxable income is below the 15% capital gains tax threshold. This may allow you to sell some appreciated securities that aren’t in an IRA or retirement account that you have owned for more than a year and pay no or very little tax on the gain. The 2025 15% capital gains tax bracket starts at a taxable income of $96,701 for married joint filers, $64,751 for those filing as head of household, and $48,351 for all other filers.

Have You Considered Prepaying State Income and Property Taxes? The One Big Beautiful Bill Act (OBBBA) increased the deduction limit for state and local taxes (SALT) starting in 2025.If you are not subject to the alternative minimum tax and you itemize your deductions, you are eligible to deduct both your property taxes and state income (or sales) tax up to a maximum of $40,000 for 2025, up from $10,000 in 2024. Did you know that in some cases, and of course if you haven’t exceeded the cap, you can increase the amount that you deduct on your 2025 return by prepaying some of the taxes by December 31, 2025? You can ask your employer to boost the amount of your state withholding by a reasonable amount; or, if you are self-employed, pay your 4th-quarter state estimated tax installment in December (otherwise due in January) and increase your deduction. The same is true for your real estate taxes: if you pay your first 2026 installment in 2025, you can take it as part of your 2025 deduction.

Are You Planning Your Charitable Deductions? Many people who itemize take advantage of the ability to take a deduction for their donations to their favorite charities or house of worship. Did you know that you can choose to pay all or part of your 2026 planned giving in 2025 to increase the amount you deduct in 2025? Though this may not be appealing to those who itemize every year, if you alternate between taking the standard deduction one year and itemizing the next, this can give you a big boost.

If you itemize deductions, there is another reason you might consider increasing your 2025 contributions in lieu of making the donations in 2026. Starting in 2026, there isa 0.5% floor on charitable deductions for individuals who itemize, meaning the amount of charitable contributions for the year is reduced by 0.5% of the taxpayer’s adjusted gross income. This is like the way the medical deduction works, where medical expenses are reduced by 7.5% of AGI.

Charitable contributions are deductible in the year in which you make them. If you charge a donation to a credit card before the end of the year, it will count for 2025. This is true even if you don’t pay the credit card bill until 2026. In addition, a check will count for 2025 if you mail it in 2025. For last-minute mailings, it may be appropriate to obtain proof of mailing from the USPS. And don’t forget to get an acknowledgment letter or document from each qualified organization that clearly states the donated amount and whether the charity gave you goods or services (other than certain token items and membership benefits) because of the contribution.

Did You Know You Can Make Charitable Deductions from Your IRA Account? Those who are age 70½ or older are allowed to transfer funds (up to $108,000 for 2025) from their IRA to qualified charities without the transferred funds being taxable, provided the transfer is made directly by the IRA trustee to a qualified charitable organization. If you are required to make an IRA distribution (i.e., you are age 73 or older), you may have the distribution sent directly to a qualified charity, and this amount will count toward your RMD for the year.

Although you won’t get a tax deduction for the transferred amount, this qualified charitable distribution (QCD) will be excluded from your income, with the result that you may get the added benefit of cutting the amount of your Social Security benefits that are taxed. Also, since your adjusted gross income will be lower, tax credits and certain deductions that you claim with phase-outs or limitations based on AGI could also be favorably impacted.

If you plan to make a QCD, be sure to let your IRA trustee or custodian know well in advance of December 31 so that they have time to complete the transfer to the charity. If you have contributed to your traditional IRA since turning 70½, the amount of the QCD that isn’t taxable may be limited, so it is a good idea to check with this office to see how your tax would be impacted. You should be sure to obtain an acknowledgement from the charity as described in the “Are You Planning Your Charitable Deductions?” above.

One cautionary note: if you have made traditional IRA contributions after reaching age 70½, they will reduce this benefit.

Have Outstanding Medical or Dental Bills? Taxpayers who itemize their deductions can deduct qualified medical and dental expenses that exceed 7.5% of their adjusted gross income. If you have reached that threshold or are close, then it may make sense for you to pay off any of those types of bills that are still outstanding rather than paying them over time. If you are near or above the limit, it may also make sense to look at what your medical and dental expenses will likely be for the next year and move those that you can into 2025 to increase the deduction. These expenses could include dental work or eyeglasses. An additional important issue: if you are thinking of doing this by using a credit card to make the payment, and you’re not going to pay the card balance immediately, make sure that you’re not paying more in interest than you’re saving with the increased tax deduction.

Have You Forgotten the Annual Gift Tax Exclusion? Though gifts to individuals are not tax deductible, each year, you are allowed to make gifts to individuals up to an annual maximum amount without incurring any gift tax or gift tax return filing requirement. For the tax year 2025, you can give $19,000 (up from $18,000 in 2024) each to as many people as you want without having to pay a gift tax. If this is something that you want to do, make sure that you do so by the end of the year, as you are not able to carry the $19,000, or any unused part of it, over into 2026. Such gifts need not be in cash, and the recipient need not be a relative. If you are married, you and your spouse can each give the same person up to $19,000 (for a total of $38,000) and still avoid having to file a gift tax return or pay any gift tax. Speaking of spouses, there’s no limit on the excluded amount a spouse can gift to their wife or husband.

Do You Think You May Have Under-Withheld Taxes This Year? Should your liability be greater than your prepayments by $1,000 or more, you may also be subject to underpayment penalties. This could simply be the result of under-withholding on your wages or underpaying estimated tax if you are self-employed, or of out-of-the-ordinary income, such as stock gains, sale of a business or rental or even winning big from the lottery. There are safe harbor prepayments to avoid a penalty, which require prepaying:

• 90% of the current year’s tax liability,
• 100% of the prior year’s tax liability, or
• 110% of the prior year’s tax liability, if the prior year’s AGI was over $150,000.

If you think there’s a chance that the income taxes you’ve paid to date for 2025 are insufficient, it’s a good idea to increase your withholding in the time that’s left before year-end to make up for it. Underpaying taxes makes you vulnerable to an underpayment penalty that is assessed quarterly. The good news is that even if you have underpaid for any or all the first three quarters of the year and will owe taxes when you file your 2025 return, you can catch up by boosting your year-end withholding, since federal withholding is deemed paid ratably throughout the year. Plus, increased withholding and possible payment of estimated taxes can also reduce the fourth quarter underpayment penalty.

Did You Suffer a Disaster Loss This Year?2025 has had some significant disasters, including wildfires, severe storms, and flooding throughout the U.S. Any unreimbursed property losses incurred because of a federally declared disaster can be claimed on the current year’s tax return or, at the election of the taxpayer, on the prior year’s return (2024 for 2025 disasters), generally providing quicker access to a tax refund. However, care must be exercised to ensure a disaster loss is claimed on the return of the year that will provide the greater benefit. In addition, after insurance reimbursement is accounted for, the result may not be as expected and should be determined before making the decision of which year to claim a loss.

Did You Get Scammed This Year? Generally, casualty losses are only allowed when related to a declared disaster. However, there is an exception for thefts or scam losses if the loss is related to a transaction entered for profit such as investments and retirement funds. Divorced or Separated This Year? A divorce or separation can have a significant impact on a couple’s tax filings. Filing joint or separate returns, who claims the children, the tax rules related to whether to take the standard deduction or itemize, how income and tax prepayments are allocated, and more issues need to be considered. Best to figure that all out in advance.

Energy & Environmental Tax Credits? BBBA terminated the electric vehicle credit for purchases after September 30, 2025. Although the time is short, the credit for energy efficient home modifications and the home solar credit are still available through the end of 2025.

Have questions related to any of the above? Give this office a call.

 

Last-Minute Year-End Tax Tactics: Maximize Your Business Savings Now!

Article Highlights:

• Tax Strategy Optimization
• Buy Equipment and Other Fixed Assets
  o Section 179 Expensing
  o Bonus Depreciation
  o DeMinimisSafeHarbor
• Year-end Inventory Management
• Contributing to a Retirement Plan
• Maximize the Qualified Business Income (QBI) Deduction
• Review Accounts Receivable for Bad Debts
• Pre-Pay Expenses
• Deferring Income
• First Year in Business
• Avoid Underpayment Penalties
• Are You a Working Shareholder in an S Corporation?
• Planning on Paying Your Employees a Bonus?
• Reassess Your Business Entity
• Conclusion

As the year draws to a close, small business owners find themselves in a crucial period for financial organization and tax strategy optimization. With the potential to significantly reduce your 2025 tax bill, implementing effective tax strategies now becomes imperative. By maximizing savings, managing cash flow, and ensuring compliance with tax deadlines, you can position your business more robustly for the upcoming year. Taking decisive action before December 31 is essential. To assist you in this critical period, here’s a year-end tax planning checklist to help small businesses take control and uncover valuable tax-saving opportunities.

Buy Equipment and Other Fixed Assets: One of the most effective ways to generate tax deductions is to buy equipment, machinery and other fixed assets needed for the business and place them in service by Dec. 31. Ordinarily these assets are capitalized and depreciated over several years, but there are a few options for deducting some or all these expenses immediately, including:

• Section 179 Expensing– This break allows you to deduct up to $2.5 million ($1.25 million if filing married separate) in expenses for qualifying tangible property and certain computer software placed in service in 2025. It’s phased out on a dollar-for-dollar basis to the extent Sec. 179 expenditures exceed $4 million. Section 179 expensing allows businesses to immediately deduct the cost of certain qualifying property, rather than depreciating it over time. This includes tangible personal property purchased for use in an active trade or business, such as machinery, equipment, and off-the-shelf software. Certain improvements to nonresidential real property, like roofs, HVAC systems, and fire protection systems, also qualify. However, buildings and structural components generally do not qualify unless they fall under the category of “qualified real property,” which includes specific leasehold, restaurant, and retail improvements. The property must be used more than 50% for business purposes and placed in service during the tax year the deduction is claimed.
• Bonus Depreciation– Bonus depreciation saw a significant enhancement due to legislative changes made by the OBBBA, which increased the depreciation rate to a full 100% for qualifying property purchased after January 19, 2025. Previously set at 40% for 2025, this change, which OBBBA made permanent, enables businesses to immediately deduct the entirety of the cost of qualifying property in the year it is placed in service, providing a powerful tax-saving tool. Qualified property for bonus depreciation includes tangible personal property with a Modified Accelerated Cost Recovery System (MACRS) recovery period of 20 years or less, most computer software, certain leasehold improvements, and specific transport utility property. This depreciation benefit applies to both new and used assets acquired and placed in service after the designated date, offering businesses increased flexibility in managing their capital expenditures.
• De Minimis Safe Harbor– The de minimis safe harbor rule offers an opportunity to directly expense certain low-value items used in your business, bypassing the usual process of capitalizing and depreciating them as fixed assets. If your business maintains applicable financial statements, you can write off expenses of up to $5,000 per item or invoice for these purchases, assuming they’re also expensed for accounting purposes. Without such financial statements, the cap is lowered to $2,500. Despite its “de minimis” label, this provision allows for substantial immediate deductions. For instance, purchasing ten computers at $2,500 each could enable you to claim an upfront deduction of $25,000.

Year-end Inventory Management: Year-end inventory plays a significant role in determining a business’s profit or loss as it directly affects the Cost of Goods Sold (COGS), which is a critical component of calculating gross profit.

Cost of goods sold (COGS) is calculated as the beginning inventory plus purchases during the year minus the ending inventory. Thus, the value of the ending inventory directly reduces the COGS. A higher ending inventory results in a lower COGS, which increases gross profit and taxable income. Conversely, a lower ending inventory results in a higher COGS, reducing gross profit and taxable income. Here are some year-end strategies:

• Identifying and writing down obsolete or slow-moving inventory at year-end can lead to reductions in taxable income, as the inventory’s reduced value is recognized as a loss.
• Delaying inventory purchases until after year-end, businesses can manage their COGS and effectively reduce taxable income, thereby optimizing their financial results for the current year.

Contributing to a Retirement Plan: Retirement plan contributions not only offer significant tax advantages but also facilitate future savings for both business owners and employees. For self-employed individuals, contributing to a retirement plan such as a Simplified Employee Pension (SEP) IRA can be highly beneficial. Business owners can contribute up to 25% of their net self-employment earnings, with a maximum contribution of $70,000 for 2025. The advantage of a SEP IRA is its flexible contribution deadline, which extends until the tax return filing date, offering additional planning time.

For sole proprietors, freelancers, and independent contractors, a Solo 401(k) presents an excellent opportunity due to its dual-role contribution system, where you are considered both employer and employee, allowing for substantial contribution limits. This makes it an ideal choice for maximizing retirement savings. Additionally, employers can enhance employee satisfaction and retention by offering year-end bonuses and retirement plan contributions, which are often deductible. This dual benefit of tax savings and employee incentive strengthens both the company’s financial position and workforce stability.

Maximize the Qualified Business Income (QBI) Deduction: As the year-end approaches, business owners should take strategic steps to maximize the Qualified Business Income (QBI) deduction (also known as the Sec 199A deduction), a vital tax benefit allowing up to a 20% deduction on qualified business income. To optimize this deduction, first review your income levels to ensure they fall below the $197,300 for single filers or $394,600 for joint filers threshold (2025 amounts) to avoid phase-outs. Adjusting a “working shareholder’s” W-2 wages appropriately, aligning with industry standards while considering IRS scrutiny, is essential for businesses structured as S corporations. Making capital investments can enhance deductions through Section 179 expensing or bonus depreciation, effectively lowering business income.

Review Accounts Receivable for Bad Debts: As year-end approaches, business owners should evaluate their accounts receivable to consider writing off bad debts, which can provide valuable tax deductions. A bad debt is an uncollectible amount owed to your business, often arising from unpaid customer invoices or unreturned loans, and is categorized as either business or nonbusiness. To qualify for a business bad debt deduction, the debt must have been previously included in your business’s income, and it should be related to regular business operations.

For accrual method taxpayers, these debts are deductible in the year they become worthless. Documenting diligent collection efforts and the debt’s worthlessness is crucial for IRS compliance. Effective management of bad debts not only cleans up financial records but also optimizes taxable income, ultimately enhancing your business’s financial health. Consult with a tax advisor to ensure you take full advantage of this deduction as part of your year-end tax strategy.

Pre-Pay Expenses:As the year-end approaches, business owners can strategically manage their cash flow by prepaying expenses to reduce taxable income and, consequently, tax liability. By accelerating deductible business expenses such as insurance premiums, office supplies, or marketing costs before December 31st, you can effectively lower this year’s taxable income. This is especially beneficial for businesses using the cash accounting method, where expenses are deducted in the year they’re paid. Prepaying up to 12 months of expenses, allowed under the IRS’s safe harbor rule, can be an effective way to pull deductions into the current tax year, provided income can be appropriately deferred without jeopardizing cash flow needs.

Deferring Income: Deferring income to the following year can keep a business under certain tax thresholds, thus optimizing tax outcomes. For cash basis taxpayers, delaying client billing until after the new year means that income is counted when received. However, careful consideration is required to ensure that deferring income won’t adversely affect business operations or relationships. Balancing these strategies allows business owners to manage their taxable income actively, ensuring smoother cash flow and potentially significant tax savings.

First Year in Business? If so, you can elect to deduct up to $5,000 of start-up and $5,000 of organizational expenses in the first year of a business. Each of these $5,000 amounts is reduced by the amount by which the total start-up expense or organizational expense exceeds $50,000. Expenses not deductible in the first year of the business must be amortized over 15 years.

Avoid Underpayment Penalties:If you are going to owe taxes for 2025, you can take steps before year-end to avoid or minimize the underpayment penalty. The penalty is applied quarterly, so making a fourth quarter estimated payment only reduces the fourth-quarter penalty. However, withholding is treated as paid ratably throughout the year, so increasing withholding at the end of the year can reduce the penalties for the earlier quarters. Here are some possible solutions:

• If you have a qualified retirement plan, a temporary solution to address the under- withholding is to take an unqualified distribution from a qualified retirement plan, utilizing this as a temporary solution to address withholding shortfalls. Upon taking the distribution, 20% is automatically withheld for federal income taxes, providing an opportunity to catch up on required tax payments and avoid underpayment penalties. Meanwhile, you can mitigate tax implications by rolling over the full amount of the distribution, including the withheld portion, back into the plan within the 60-day window. This maneuver requires the use of other funds to cover the withheld amount during the rollover but allows for maintaining the tax-deferred status of the retirement savings and ensures compliance with rollover rules. This approach offers a unique yet viable method to align tax payments without incurring additional tax liabilities on the distribution.
• If you are married and your spouse is employed, the spouse can increase withholding for the end of the year. Even withhold as much as the entire paycheck with the help of a cooperative employer.
• If you have other sources of income subject to withholding, have the withholding increased appropriately.

It may be beneficial for you to consult with this office to estimate your underpayment and whether an underpayment penalty exception might apply.

Are You a Working Shareholder in an S Corporation?If so, you may not be aware of the IRS’s “reasonable compensation” requirements, which can influence your Section 199A (qualified business income) deduction and your payroll taxes. Reviewing the requirements as they apply to your circumstances may avoid future problems with the IRS.

Planning on Paying Your Employees a Bonus?Consider paying your employees their bonuses before year-end, rather than after the start of the new year. That way you benefit from the tax deduction a year sooner.

Reassess Your Business Entity:The end of the year is a smart time to evaluate whether your current business structure is still the best fit for your operations. Each structure has unique tax and liability implications. Options include sole proprietorships, partnerships, limited liability company, S Corporation and C Corporation.

Conclusion: While year-end strategies primarily aim to manage and reduce income tax liabilities, it’s important to remember their wider financial benefits. Implementing these strategies can also diminish the burdens of self-employment tax and business payroll taxes. By shifting income, optimizing deductions such as the Qualified Business Income (QBI) deduction, and making strategic investments or prepayments, businesses can decrease taxable income to more favorable levels, thus lowering associated tax obligations across the board. Such comprehensive tax planning not only enhances cash flow but also strengthens the financial position of the business, paving the way for a more robust and tax-efficient new year. As you finalize your year-end financial strategies, consider consulting with this office to ensure you maximize these opportunities across all tax dimensions.

 

Holiday Gifts That Offer Tax Benefits for You and Your Loved Ones

Article Highlights:

• Educational Gifts:
  oA Gift for the Present
  oA Gift for the Future
• Retirement Contributions: A Gift with Long-Term Benefits
• Gifts to Spouses: Supporting Self-Employment
• Employee Gifts: Navigating Tax Implications
• Working Children Gift
• Understanding the Annual Gift Tax Exclusion
• Summary

The holiday season is a time of giving, and while the joy of gifting is often its own reward, there are ways to make your generosity even more impactful through strategic tax planning. By understanding the tax implications of certain gifts, you can maximize the benefits for both the giver and the recipient. This article explores various holiday gifts that come with tax advantages, including educational gifts, gifts to spouses, employee gifts, and contributions to retirement accounts.

Educational Gifts:

• A Gift for the Present–One of the most meaningful gifts a grandparent can give is the gift of education. Paying a grandchild’s college tuition directly to the institution not only supports their educational journey but also provides significant tax benefits. According to IRS rules, such payments are exempt from gift tax and do not count against the annual gift tax exclusion. This means grandparents can pay tuition directly without worrying about gift tax implications.Moreover, this act of generosity can also benefit the child’s parents. If the grandchild is claimed as a dependent, the parents may be eligible for education tax credits, such as the American Opportunity Tax Credit (AOTC). This credit can reduce the amount of tax owed by up to $2,500 per eligible student, providing a financial boost to the family. Thus, paying tuition can be seen as a dual gift: one to the grandchild in the form of education and another to the parents in the form of a tax credit.
• A Gift for the Future– Donating to a Section 529 plan can be a thoughtful and practical holiday gift that combines the spirit of giving with valuable tax benefits. A 529 plan is a tax-advantaged savings account designed to encourage saving for future education expenses. Contributions to a 529 plan grow tax-deferred, and qualified withdrawals are tax-free when used for eligible education expenses, such as tuition, room and board, and other related costs. One of the most attractive aspects of gifting to a 529 plan is that contributions are considered completed gifts for tax purposes, which means they qualify for the annual gift tax exclusion. For the 2025 tax year, individuals can gift up to $19,000 per recipient ($38,000 for a married couple) without triggering gift taxes or reducing their lifetime gift and estate tax exemption.Additionally, the 529 plan offers a unique five-year election option that allows individuals to supercharge their gift by front-loading contributions. This option permits contributors to treat a contribution as if it were spread over five years for gift tax purposes, up to five times the annual exclusion amount. For instance, a single contributor could donate up to $95,000 in one year ($190,000 for a married couple) without incurring gift tax consequences, provided no additional gifts are made to the same beneficiary during the five-year period. This feature enables grandparents or other family members to make significant contributions to a child’s education fund while effectively reducing their taxable estate, making it an excellent strategy for both holiday giving and long-term financial planning.

Retirement Contributions: A Gift with Long-Term Benefits

Providing the funds for someone to contribute to their retirement account, such as a traditional IRA, can be a gift that provides long-term benefits. For the gift recipient, contributions they make to a traditional IRA may be tax-deductible, reducing their taxable income for the year. This deduction can be particularly beneficial for individuals in higher tax brackets who aren’t covered by an employer’s retirement plan.

The annual contribution limit for IRAs is subject to change, so it’s important to check the current limits. For 2025, the limit is $7,000, or $8,000 for those aged 50 and over. By helping a loved one contribute to their traditional IRA, you are not only helping them save for retirement but also potentially providing them with immediate tax savings.

Gifts to Spouses: Supporting Self-Employment

Gifting items to a spouse that are used in their self-employment can be both a thoughtful gesture and a savvy tax move. For instance, if your spouse is self-employed and you gift them a new laptop or office equipment, these items can be deducted as business expenses on their tax return. This deduction reduces the taxable income from their business, potentially lowering their overall tax liability.

It’s important to ensure that the gifted items are indeed used for business purposes and that proper documentation is maintained. Receipts and records of business use should be kept substantiating the deduction in case of an audit. This strategy not only supports your spouse’s business endeavors but also provides a financial benefit through tax savings.

Working Children Gift:

Contributing to a Roth IRA on behalf of working children or grandchildren can be a profoundly impactful holiday gift that is rich with future potential. Young earners often overlook retirement planning, preferring to spend their hard-earned money on immediate needs or desires rather than contributing to retirement accounts. By stepping in to make a Roth IRA contribution, you are not only teaching the importance of early saving but also providing a gift that grows with them. Contributions to a Roth IRA are made with after-tax dollars, allowing for tax-free growth and tax-free withdrawals in retirement, provided certain conditions are met. Even modest contributions, when given the advantage of time, can accumulate significantly thanks to the power of compound interest. For example, a $1,000 contribution made today for a young worker can potentially grow to tens of thousands of dollars by retirement age, depending on the rate of return. This simple gesture not only helps secure their financial future but also imparts a valuable lesson in financial planning, making it a cherished and enduring holiday gift.

Employee Gifts: Navigating Tax Implications

Many employers choose to show appreciation to their employees during the holiday season through gifts. However, it’s crucial to understand the tax implications associated with different types of gifts.

1. De Minimis Fringe Benefits: These are gifts of minimal value, such as holiday turkeys or small gift baskets, which are not subject to taxation for the employee. The employer can deduct the cost of these gifts as a business expense.
2. Cash and Cash Equivalents: Gifts of cash, gift cards, or any item that can be easily converted to cash are considered taxable income for the employee. These must be reported as wages and are subject to payroll taxes. Employers should issue these gifts through payroll to ensure proper tax withholding.
3. Non-Cash Gifts: Items that are not easily convertible to cash, such as a company-branded jacket, may not be taxable if they fall under the de minimis threshold. However, more valuable items may need to be reported as income.

Employers should carefully consider the type of gifts they give to employees to ensure compliance with tax regulations while still expressing gratitude.

Understanding the Annual Gift Tax Exclusion

The annual gift tax exclusion is a key consideration when planning holiday gifts. For 2025, the exclusion amount is $19,000 per recipient. This means you can give up to $19,000 to any number of individuals without incurring gift tax or needing to file a gift tax return. Married couples can combine their exclusions to give up to $38,000 per recipient.

Gifts that exceed the annual exclusion may require the filing of Form 709, the United States Gift (and Generation-Skipping Transfer) Tax Return. These excess amounts also count against the lifetime gift and estate tax exemption, which is $13.99 million for 2025.

By staying within the annual exclusion limits, you can make generous gifts without affecting your lifetime exemption or incurring additional tax obligations.

Summary

The holiday season offers a unique opportunity to give gifts that not only bring joy but also provide financial benefits through tax savings. Whether it’s paying a grandchild’s tuition, supporting a spouse’s business, gifting employees, or contributing to a retirement account, understanding the tax implications can enhance the impact of your generosity.

By strategically planning your holiday gifts, you can maximize the benefits for both you and the recipients, ensuring that your gifts continue to give long after the holiday season has passed. Always consult with a tax professional to ensure compliance with current tax laws and to tailor your gifting strategy to your specific financial situation.

If you have questions, give this office a call.

 

CapEx vs. OpEx: The Smart Business Owner’s Guide to Cash Flow, Control, and Growth

Let’s be real—most business owners didn’t start their companies to debate accounting terms. But if you’ve been hearing more about CapEx and OpEx lately—especially in conversations about AI tools, cloud investments, or automation—you’re not imagining things.

The distinction between the two can completely change how your business looks on paper, how much tax you pay, and how much flexibility you have to grow.

Let’s break it down in plain English.

What’s the Difference Between CapEx and OpEx?
CapEx (Capital Expenditure) is money you spend on something that adds long-term value—an asset you’ll use for more than a year.

Think:

• Buying new equipment
• Building out an office or warehouse
• Investing in a company vehicle
• Developing custom software

These aren’t just costs. They’re investments—and they get added to your balance sheet as assets. But here’s the catch: you don’t deduct the full amount right away. Instead, you recover the cost slowly over time through depreciation (or amortization, for intangible assets).

OpEx (Operating Expense), on the other hand, covers the day-to-day costs of running your business.

Think:

• Rent and utilities
• Employee salaries
• Software subscriptions
• Marketing costs

These are deducted immediately, reducing your taxable income in the same year they’re incurred.

Why This Matters for Your Business

The CapEx vs. OpEx decision affects:

1. Cash Flow

CapEx ties up cash today for long-term benefit. OpEx spreads costs out as they’re used—keeping your cash flow lean and flexible.

2. Taxes

CapEx gives you tax deductions over time. OpEx gives you tax deductions now.

In a high-growth phase, businesses often lean on OpEx-heavy models (like leasing instead of buying) to keep taxable income low and cash available.

3. Financial Ratios and Investment Appeal

Investors and lenders analyze CapEx and OpEx differently. A business that manages OpEx well may look more agile. One that invests heavily in CapEx may look more committed to growth. The trick is balancing both.

In the AI and Automation Era: Why the Line Is Blurring
Once upon a time, CapEx meant buying servers. Now, it might mean buying AI infrastructure or developing proprietary software.

But here’s where it gets tricky—today’s “investments” often come through subscription models (cloud computing, AI tools, etc.), which classify as OpEx.

So even though you’re investing strategically, you’re not creating a long-term asset in the traditional accounting sense. The benefit? You stay nimble. The downside? You might not be building balance sheet value.

This is why so many CFOs and accountants are rethinking the CapEx vs. OpEx conversation—it’s not just about accounting anymore. It’s about how your business evolves in a fast-changing tech landscape.

A Real-World Example
Let’s say you’re a construction company considering new project management software.

Option A (CapEx): You build your own system in-house. You spend $200,000 now, but it’s yours—and you depreciate it over 5 years.

Option B (OpEx): You subscribe to a cloud-based system at $4,000/month. You don’t own it, but you can scale it, cancel it, or upgrade anytime.

Both choices make sense—but your tax strategy, cash flow goals, and future plans should drive the decision.

How to Decide What’s Right for You

Here’s what smart business owners do:

• Talk to your accountant before major purchases or long-term contracts.
• Model the impact on cash flow and taxes over several years.
• Align spending with strategy—don’t just chase deductions or assets.
• Revisit your approach annually. What was CapEx five years ago might now be OpEx in the subscription economy.

Let’s Make Your Dollars Work Smarter
Understanding the difference between CapEx and OpEx isn’t just about accounting—it’s about control. It’s how you stay profitable, flexible, and ready to scale.

If you want to learn more about how you can improve your cash flow, optimize expenses, or plan smarter for growth, contact our firm today. We’ll help you make the right calls for your business’s future.

 

Year End Stock Strategies for Savvy Investors

Article Highlights:

• Annual Loss Limit
• Navigating Wash Sale Rules
• Recognizing Year-End Gains and Losses
• Donating Appreciated Securities
• Managing Employee Stock Options
• Dealing with Worthless Stock
• Leveraging the Zero Capital Gain Rate
• Netting Gains and Losses

As the year draws to a close, taxpayers with substantial stock holdings have a unique opportunity to engage in strategic planning to optimize their tax positions. This article explores various strategies, including understanding the annual loss limit, navigating wash sale rules, recognizing gains and losses, donating appreciated securities, managing employee stock options, dealing with worthless stock, leveraging the zero capital gain rate, and netting gains and losses.

Annual Loss Limit –The Internal Revenue Service (IRS) allows taxpayers to offset capital gains with capital losses. If losses exceed gains, up to $3,000 ($1,500 if married filing separately) can be deducted against other income. Any remaining losses can be carried forward to future years. This annual loss limit is crucial for taxpayers with significant stock holdings, as it provides a mechanism to reduce taxable income and potentially lower tax liability.

Navigating Wash Sale Rules –The wash sale rule is designed to prevent taxpayers from claiming a tax deduction for a security sold at a loss and then repurchased right away. A wash sale occurs when a taxpayer sells a security at a loss and repurchases the same or substantially identical security within 30 days before or after the sale. If a wash sale is triggered, the loss is disallowed for tax purposes and added to the cost basis of the repurchased security. To avoid this, taxpayers should plan sales carefully, ensuring that any repurchase occurs outside the 61-day window surrounding the sale date.

Recognizing Year-End Gains and Losses –Timing is critical when recognizing gains and losses. Taxpayers should evaluate their portfolios to determine which securities to sell before year-end. Selling securities at a loss can offset gains realized earlier in the year, reducing overall tax liability. Conversely, if a taxpayer expects to be in a higher tax bracket in the future, it might be advantageous to recognize gains in the current year when the tax rate is lower.

Donating Appreciated Securities –Donating appreciated securities to a tax-exempt organization can be more beneficial than selling the securities and donating the cash proceeds. By donating the securities directly, taxpayers can avoid capital gains tax on the appreciation and claim a charitable deduction for the fair market value of the securities. This strategy is particularly advantageous for taxpayers who have held the securities for more than one year, as it maximizes the tax benefits associated with charitable giving.

Managing Employee Stock Options –Taxpayers with unexercised employee stock options should consider year-end strategies to optimize their tax outcomes.

• Non-qualified stock options (NSOs)– Exercising NSOs before year-end can accelerate income recognition, potentially taking advantage of lower tax rates. For example:

• Incentive Stock Options (ISOs)– Exercising ISOs and holding the shares for more than one year can qualify for long-term capital gains treatment. However, taxpayers should be mindful of the alternative minimum tax (AMT) implications associated with ISOs.

Dealing with Worthless Stock –If a stock becomes worthless, taxpayers can claim a capital loss for the entire cost basis of the stock. To qualify, the stock must be completely worthless, with no potential for recovery. Taxpayers should document the worthlessness of the stock and claim the loss in the year it becomes worthless. This strategy can provide a significant tax benefit by offsetting other capital gains or ordinary income.

Leveraging the Zero Capital Gain Rate —For most taxpayers in the 10% or 12% ordinary income tax brackets, the long-term capital gains tax rate is 0%. This presents an opportunity to realize gains on appreciated securities without incurring any tax liability. Taxpayers should assess their income levels and consider selling securities to take advantage of this favorable tax treatment, particularly if they anticipate moving into a higher tax bracket in the future.

Netting Gains and Losses –Netting gains and losses is a strategic approach to minimize tax liability. Taxpayers should review their portfolios to identify opportunities to offset gains with losses. If losses exceed gains, the excess can offset up to $3,000 ($1,500 for married filing separate taxpayers) of other income, with any remaining losses carried forward to future years. This strategy requires careful planning and record-keeping to ensure compliance with IRS regulations.

There are also tax advantages to matching long-term gains with short-term losses or vice versa. Here’s how it works:

1. Offsetting Gains and Losses:
   
   • Short-term capital gains are taxed at ordinary income tax rates, which are typically higher than the rates for long-term capital gains.
   • Long-term capital gains benefit from lower tax rates, generally capped at 20%.
2. Tax Strategy:
   
   • If you have short-term capital losses, you can use them to offset short-term capital gains first. This is beneficial because it reduces income that would otherwise be taxed at higher ordinary rates.
   • Similarly, long-term capital losses can offset long-term capital gains, which are taxed at lower rates.
3. Optimal Matching:
   
   • Ideally, you want to use long-term capital losses to offset short-term capital gains. This strategy maximizes your tax benefit because it reduces income taxed at higher rates.
   • Conversely, using short-term losses to offset long-term gains is less beneficial because it reduces income taxed at lower rates.

By strategically matching your gains and losses, you can potentially lower your overall tax liability. However, it’s important to consider your entire financial situation.

In conclusion, year-end strategic planning offers taxpayers with substantial stock holdings a range of opportunities to optimize their tax positions. By understanding the annual loss limit, navigating wash sale rules, timing the recognition of gains and losses, donating appreciated securities, managing employee stock options, dealing with worthless stock, leveraging the zero capital gain rate, and netting gains and losses, taxpayers can effectively manage their tax liabilities and enhance their financial outcomes.

Contact this office to tailor these strategies to individual circumstances and ensure compliance with tax laws.

Tax Consequences of Employee Holiday Gifts

Article Highlights:

• De Minimis Fringe Benefits
• Cash Gifts
• Gift Certificates and Debit Cards
• Non-cash Vouchers
• Group Meals
• Tax Compliance and Planning

It is common practice this time of year for employers to give their employees gifts. Where a gift is infrequently offered and has a fair market value so low that it is impractical and unreasonable to account for it, the gift’s value would be treated as ade minimis fringe benefit. As such, it would be tax-free to the employee, and its cost would be tax deductible by the employer.

De Minimis Benefits– In general, a de minimis benefit is one that, considering its value and the frequency with which it is provided, is so minor as to make accounting for it unreasonable or impractical. De minimis benefits are excluded from income under Internal Revenue Code section 132(a)(4) and include items not specifically excluded under other sections of the Code. Examples of de minimis benefits include such items as:

• Controlled, occasional employee use of a company photocopier.
• Occasional snacks, coffee, doughnuts, etc., furnished to employees.
• Occasional tickets for entertainment events given to employees.
• Holiday gifts from the employer to the employees.
• Occasional meal money or transportation expenses paid for by the employer for employees working overtime.
• Group-term life insurance on the life of an employee’s spouse or dependent with a face value not more than $2,000.
• Flowers, fruit, books, etc., provided to employees under special circumstances, such as a birthday or illness.
• Personal use ofa cell phone provided by an employer primarily for business purposes.

In determining whether a benefit is de minimis, you should always consider its frequency and value. An essential element of a de minimis benefit is that it is occasional or unusual in frequency. It also must not be a form of disguised compensation.

Whether an item or service is de minimis depends on all the facts and circumstances. In addition, if a benefit is too large to be considered de minimis, the entire value of the benefit is taxable to the employee, not just the excess over a designated de minimis amount. The IRS has ruled previously that items with a value exceeding $100 cannot be considered de minimis, even under unusual circumstances.

Holiday Gifts and Their Unique Considerations– While holiday gifts are often given in the spirit of generosity, they require careful handling for tax purposes:

• Cash Gifts:Irrespective of the amount, cash gifts are viewed as additional wages. Consequently, they are subject to employment and withholding taxes. For W-2 employees, any such cash gift must be reported as W-2 income, not on Form 1099-NEC or 1099-MISC. Employers treat cash gifts the same way they would regular compensation.
• Gift Certificates and Debit Cards:When an employer gives gift certificates, debit cards or similar items that are convertible to cash, the value is considered additional wages regardless of the amount.
• Non-cash Vouchers:In contrast, non-transferable gift coupons, redeemable only for specific items like a turkey, ham, or gift basket at a specific store, aren’t considered cash equivalents. Therefore, they are not taxable to the employee.
• Group Events:Events like holiday meals, parties, or picnics qualify as de minimis fringe benefits. Their value is not considered significant enough to count as taxable income.

Tax Compliance and Planning

Employers should carefully consider the tax implications of the gifts they plan to distribute. Misclassification or misunderstanding of the regulations can lead to unexpected tax liabilities. Systematic documentation and adherence to IRS guidelines help ensure compliance.

Employers with questions about specific scenarios or seeking personalized advice on the tax implications of holiday gifts are encouraged to consult a tax professional. This careful planning enables employers to maintain the goodwill intended by the gifts without facing unforeseen tax consequences. If you have further inquiries or need assistance with tax matters related to employee gifts, please don’t hesitate to contact our office for guidance.

Owe the IRS? How Individuals and Business Owners Can Fix Tax Problems Before They Spiral

You open the mailbox and freeze.

There it is — the envelope stamped “Official Government Correspondence.”

For individuals and business owners alike, those three letters — I.R.S. — can turn even the calmest person into a ball of anxiety.

Maybe you missed a payment. Maybe cash flow got tight. Maybe your business hit a slow quarter and you pushed off that payroll deposit “just this once.”

But here’s the truth: IRS problems don’t disappear with time.

They compound — with interest, penalties, and stress.

The good news? You can fix it. And right now, even during a government shutdown, is the time to get ahead of it.

The Hidden Cost of Waiting

The IRS doesn’t chase you immediately — but when it does, it’s relentless.

Every month you delay adds:

• Interest on unpaid balances
• Penalties for late filing or payment
• And, if you’re a business, the dreaded Trust Fund Recovery Penalty — one of the harshest in the tax code

Even a small missed payment can balloon fast. What starts as $2,000 in underpaid tax can quietly double once penalties and interest kick in.

And it’s not just individuals. Business owners who fall behind on payroll taxes or quarterly estimates face personal liability — meaning the IRS can come after you, not just your business.

Step 1: Face the Facts (and the Numbers)
Most people avoid IRS letters because they’re afraid of what they’ll find. But the truth is: the sooner you open that envelope (or request your IRS transcript), the sooner you can stop the bleeding.

Knowing the real number — and whether it’s one missed payment or several years — is step one.

Step 2: Understand Your Options (You Have Them)
The IRS isn’t out to destroy you — it’s a system. And systems have rules you can use to your advantage.

Here are the main ones:

• Payment Plan (Installment Agreement)Set up monthly payments to resolve your balance over time. Available to both individuals and businesses under certain limits.
• Offer in CompromiseNegotiate to settle your tax debt for less than you owe if you qualify. Complex, but possible with professional guidance.
• Penalty AbatementIf you’ve been compliant before or have a valid reason (illness, disaster, honest mistake), you can often get penalties reduced or waived.

• Currently Not Collectible (CNC) StatusIf you can’t pay right now due to financial hardship, the IRS can temporarily pause collections.

Each program has documentation and timing requirements — but with the right help, they work.

Step 3: For Business Owners — Watch Payroll Like a Hawk
If your business withholds taxes from employees, those funds are considered trust funds — meaning they belong to the U.S. government the moment you collect them.

Missing a deposit might seem harmless, but it’s one of the fastest ways to trigger aggressive IRS action.

If you’ve missed payroll deposits or filed Form 941 late, take action immediately:

• File any missing forms — even if you can’t pay in full.
• Work with a tax professional to set up a payment plan.
• Use automated payroll software or a trusted provider to stay current.

A clean payroll record protects both your business and your personal assets.

Step 4: Act Now — Because the IRS Is Slowing, Not Stopping
Right now is not business as usual for the IRS. Due to the ongoing government shutdown, nearly half of its workforce is furloughed.

What that means for you:

• Electronic systems like e-filing and online payments are still running, and all regular tax filing and payment deadlines remain in effect.
• Manual processes — paper correspondence, some refunds, audits, and call centers — are delayed or temporarily suspended.
• The backlog is growing, which might sound like “extra time,” but it actually means less flexibility later when full staffing returns.

Here’s what to do:

• Don’t assume the shutdown gives you a pass. Filings and payments are still due.
• Keep receipts and documentation of everything you submit — when IRS staff return, that proof protects you.
• If you can’t pay right now, still file your returns. It limits penalties and starts the statute-of-limitations clock.
• If you’re waiting on an IRS response, line up your next move with a tax pro now — so you’re first in line when operations resume.

In short, the IRS may be slower, but it hasn’t stopped watching the clock.

Step 5: Don’t DIY When It’s Serious
If your balance exceeds a few thousand dollars, or you’ve missed multiple years of payroll deposits, don’t try to handle it alone.

A qualified tax professional can:

• Access your full IRS record in minutes
• Negotiate directly with the IRS on your behalf
• Structure payment plans that protect your cash flow
• Keep future filings compliant so you never end up here again

This isn’t about judgment — it’s about leverage. Professionals know how to use the system to your benefit.

Step 6: Build Your “Never Again” Plan

Once your IRS balance is under control, use this moment to build systems that keep you protected going forward:

• Set automatic estimated payments or payroll tax transfers.
• Use accounting software that syncs with your bank and payroll providers.
• Schedule a mid-year tax check-in with your accountant to prevent surprises.

Good tax management isn’t just about filing — it’s about forecasting.

Bottom Line
Whether you’re a wage earner who fell behind on estimated payments or a business owner juggling payroll, IRS problems don’t define you — they just need a plan.

Even during a shutdown, the IRS clock keeps ticking. The sooner you act, the more control you regain — and the fewer surprises you’ll face once operations fully resume.

Ready to Get the IRS Off Your Back?

Don’t wait for another notice or another month of interest. Whether you’re an individual taxpayer or a business owner, contact our firm today.

We’ll review your IRS record, explain your options, and help you create a step-by-step plan to fix what’s past due — and keep it from happening again.

 

Get Ready: Tax Season Is Closer Than You Think

Article Highlights:

• Time to Gather Your Information
• New for 2025
• Choosing Your Alternatives
• Tips for Pulling Your Information Together

Tax time is just around the corner, and if you are like most taxpayers, you are probably facing the ominous chore of compiling records in preparation for your tax appointment—whether in person, by videoconference or telephone. The difficulty of this task depends upon how well you maintained your tax records throughout the year. No matter how good your record keeping was, being fully prepared for your tax return preparation will give us more time to:

• Consider every possible legal deduction,
• Evaluate which income reporting methods and deductions are best suited to your situation,
• Explore current law changes affecting your tax status, and
• Talk about tax-planning alternatives that could reduce your future tax liability.

New for 2025 —There are several changes this year, partially due to the One Big Beautiful Bill Act (OBBBA), including these predominate ones:

• No Tax on Tips:A deduction up to $25,000 is allowed for qualified cash tips in customary tip-receiving occupations. The deduction phases out when AGI is over $150,000 for singles and $300,000 for joint filers, reducing by $100 for every $1,000 over. The deduction applies per return and is available to both itemizers and standard deduction filers. Employers will include qualifying tips on the employee’s W-2, or for 2025 only, will provide a separate statement reporting the tips.
• No Tax on Qualified Overtime:A deduction of up to $12,500 ($25,000 for married taxpayers filing jointly) for overtime pay exceeding the regular rate. The deduction Phases out for MAGI over $150,000 (singles) and $300,000 (joint filers), reducing by $100 for every $1,000 over. Available to both itemizers and standard deduction filers.Example:
  Overtime Hourly Rate: $30.00
  Regular Hourly Rate: <$20.00>
  Deductible Amount: $10.00 per overtime hour worked
• Vehicle Loan Interest Deduction: Individuals may deduct up to $10,000 in interest on loans taken out after 2024 and secured by a new personal-use passenger vehicle, assembled in the U.S. and weighing under 14,000 pounds. Excludes family loans and non-personal vehicles like campers. The deduction phases out for incomes between $100,000-$150,000 (single) and $200,000-$250,000 (joint filers). Available to both itemizers and standard deduction filers. The lenders will report the interest on a new Form 1098-VLI. However, for 2025 only, IRS is allowing lenders to issue their own statements with specified information in lieu of the official form. If you paid vehicle loan interest, be on the lookout for this new form or a substitute statement.
• SALT Deduction Limit: The itemized deduction for state and local taxes (SALT) has been increased to $40,000 up from the prior $10,000 limit. However, the SALT limit for higher income taxpayers’ phases down starting at $500,000 MAGI, reaching a $10,000 floor at $600,000. It never drops below $10,000.
• Super Retirement Catch Up: Beginning in 2025 catch-up contribution limits have significantly increased for individuals aged 60 through 63. They can now contribute the greater of $10,000 or 50% more than the standard catch-up amount to qualified plans, such as SIMPLE plans, 401(k)s, 403(b) annuities, and 457(b) government plans, but not IRAs. For 2025 the enhanced catch-up for this age group is $11,250 except for SIMPLE plans which is $5,250.
• Child Tax Credit: OBBBA increased the credit amount. In 2025 through 2028 the credit is $2,200 ($1,700 refundable) for dependents under 17. Phases out at $400,000 MAGI for joint filers, $200,000 for others, decreasing by $50 per $1,000 above these limits. A work-eligible SSN is required for the child and one filer.
• Adoption Credit:OBBBA added a refundable amount. For 2025 the credit is $17,280 with $5,000 refundable.Those inflation adjusted amounts are$17,670 and for $5,120 for 2026. Phases out between $259,190 and $299,190 for 2025 and in 2026 between $265,080 and $305,080 for all filing statuses. Any excess can be carried forward 5 years.
• Section 179 Expensing: Allows businesses to immediately expense the cost of qualifying assets such as machinery, equipment, and certain vehicles, although SUVs are limited to a specific deduction cap ($31,300 for 2025). Sec 179 expensing benefits many small and medium-sized business enterprises, providing upfront tax savings and encourages investment. OBBBA substantially increased the limits for Sec 179 expensing. For 2025 the limit was increased to $2.5 million However, the deduction phases out dollar-for-dollar when purchases for the year exceed $4 Million in 2025. A drawback to the Section 179 expensing method is that if the business’ use of the asset drops to 50% or less, some or all the amount deducted may need to be recaptured.
• Bonus Depreciation: 100% bonus depreciation was made permanent by OBBBA and after January 19, 2025, allows businesses to immediately write off 100% of the cost of qualifying assets in the year they are placed in service. This applies to new and used tangible property with a recovery period of 20 years or less, such as machinery, equipment, and certain improvements. This provision is designed to incentivize business investments by accelerating tax deductions, providing businesses immediate financial benefits and improved cash flow. For qualifying property placed in service between January 1, 2025, and January 19, 2025, the bonus depreciation rate was 40%.
• Business Research or Experimental Expenditures: Effective beginning in 2025, domestic expenditures are immediately deductible. Expenses incurred outside the U.S. continue to be amortized over 15-years.

Choosing Your Best Alternatives —The tax law allows a variety of methods of handling income and deductions on your return. The choices you make when preparing your return often affect not only the current year but also future returns. Related topics include:

• Sales of Property—If you sold property for which you’re receiving payments on a sales contract over a period of years, you can sometimes choose between reporting the whole gain in the year of the sale or over a period of time as you receive payments from the buyer.
• Depreciation—You can deduct the cost of your investments in certain business properties. You can either depreciate the cost over a number of years or, in certain cases, deduct them all in one year.

Where to Begin —Start preparing for your tax return in January, whether you are going have a face-to-face appointment, meet by videoconference or mail in your information and then have a follow-up telephone discussion. Right after the New Year, set up a safe storage location, such as a file drawer, cupboard or safe. As you receive pertinent records, file them right away, before you forget or lose them. Make this a habit, and you’ll find your job a lot easier on your appointment date or when sending in your material.If you will be receiving source documents electronically, you’ll need to print out a copy of the forms or statements, unless advised otherwise by this office. Other general suggestions include:

• Segregate your records according to income and expense categories. File medical expense receipts in one envelope or folder, mortgage interest payment records in another, charitable donations in a third, etc. If you receive an organizer or questionnaire to complete before your appointment, fill out every section that applies to you. (Important: Read all explanations and follow the instructions carefully. By design, organizers remind you of transactions you may otherwise miss.)
• Call attention to any foreign bank account, foreign financial account or foreign trust in which you have an ownership interest, signature authority or controlling stake. We also need to know about foreign inheritances and ownership of foreign assets. In short, bring any foreign financial dealings to our attention so we know if you will have any special reporting requirements. The penalties for not making and submitting required reports can be severe.
• Beware! The IRS has kept cryptocurrency on its radar and is ramping up enforcement programs. Cryptocurrency (virtual currency) and other digital assets are treated as property, and every time it is sold or used, the gain or loss from the transaction must be computed and reported in the same manner as a stock transaction. This year brokers are required to report digital transactions on new Form 1099-DA.
• If you acquired your health insurance through a government marketplace, you would receive Form 1095-A, issued by the marketplace, which will include information needed to complete your return and determine the amount of your premium tax credit. Include the 1095-A with the other material you bring to your appointment or mail in. If your insurance coverage was through an employer and the employer issued a Form 1095-B, Form 1095-C or substitute form detailing your coverage, include that as well.
• Keep your annual income statements separate from your other documents (e.g., W-2s from employers; 1099s from banks, stockbrokers, etc.; and K-1s, including instructions and attachments, from partnerships and trusts). Be sure to take these documents to your appointment or provide them with the other items you are sending in!
• Write down your questions as you assemble the material, so you don’t forget to ask them at the appointment or include them with the documents being mailed in. Review last year’s return. Compare your income on that return to your income for the current year. A dividend from ABC stock on your prior year’s return may remind you that you sold ABC this year and need to report the sale or that you haven’t yet received the current year’s 1099-DIV form.
• Make sure you have Social Security numbers for all of your dependents. The IRS checks these carefully and can deny deductions and credits for returns filed without them.
• Compare deductions from last year with your records for this year. Did you forget anything?
• Collect any other documents and financial papers that you’re puzzled about. Prepare to bring these to your appointment or include them with the rest of your tax material that you are mailing in so you can ask about them.

Accuracy in Details —Make sure you review personal data to ensure the greatest accuracy possible in all details on your return. Check names, addresses, Social Security numbers and occupations on last year’s return. Note any changes for this year. Although your telephone number and e-mail address aren’t required on your return, they are always helpful should questions occur during return preparation.

Marital Status Change —If your marital status changed during the year, you lived apart from your spouse or your spouse died during the year, list the dates and details. Bring copies of prenuptial, legal separation, divorce or property settlement agreements, if any, to your appointment or include copies when sending your material to this office. If your spouse passed away during the year, you should have a copy of their trust agreement or will available for review.

Dependents —If you have qualifying dependents, you will need to provide the following for each (if you previously provided us with items 1 through 3, you will not need to supply them again):

1. First and last name
2. Social Security number
3. Birth date
4. Number of months living in your home
5. Income amounts (both taxable and nontaxable). If your dependent is a child over age 18, note how long the child was a full-time student during the year.

For anyone other than your child to qualify as your dependent, they must pass five strict dependency tests. If you think one or more other individuals qualify as your dependents (but you aren’t sure), tally the amounts you provided toward their support vs. the amounts they provided. This will simplify the final decision.

Some Transactions Deserve Special Treatment —Certain transactions require special treatment on your tax return. It’s a good idea to invest a little extra preparation effort if you have had the following types of transactions:

• Sales of Stock or Other Property:All sales of stocks, bonds, securities, real estate and any other property need to be reported on your return, even if you had no profit or loss. List each sale and have purchase and sale documents available for each transaction.The purchase date, sale date, cost and selling price must all be noted on your return. Make sure this information is contained in the documents you bring to your appointment.
• Gifted or Inherited Property:If you sell property that was given to you, you need to determine when and for how much the original owner purchased it. If you sell property you inherited, you need to know the original owner’s death date and the property’s value at that time. You may be able to find this on estate tax returns or in probate documents; otherwise, ask the executor.
• Reinvested Dividends: You may have sold stock or a mutual fund for which you participated in a dividend reinvestment program. If so, you will need to have records of each stock purchase made with the reinvested dividends.
• Sale of Home: The tax law provides special breaks for home sale gains, and you may be able to exclude up to $500,000 of the gain from your primary home if you file a married joint return and meet certain ownership, occupancy and holding period requirements. The maximum exclusion is $250,000 for others. Since the cost of improvements made on your home can also be used to reduce gains, it is good practice to keep a record of them. The exclusion of gains applies only to a primary residence, so keeping a record of improvements to other property, such as your second home, is important. Be sure to provide us with a copy of the sale documents (usually the final closing escrow statement).
• Purchase of a Home: We’ll need to see a copy of the final closing escrow statement if you purchased a home in 2025.
• Vehicle Purchase: If you purchased a new plug-in electric car (or cars) in 2025 before September 30, 2025, you may qualify for a special credit. Please bring the purchase statement to the appointment with you or include a copy if you are mailing in your documents.
• Home Energy—Related Expenditures: If you installed a solar, geothermal or wind power-generation system in your home or second home, you’ll need to provide the details of the purchase and manufacturer’s credit qualification certification. You may qualify for a substantial energy-related tax credit.
• Energy-Efficient Home Modifications: If you made qualifying energy-saving improvements to your home, you may qualify for a tax credit equal to 30% of the cost (capped to certain amounts by type of modification) subject to an overall limit of up to $1,200. The credit-qualifying improvements include energy-efficient air conditioning, heaters, storm windows and doors, certain energy-efficient roofing, qualifying windows and skylights. There is an additional credit of up $150 for having an energy audit during the year.
• Identity Theft: Identity theft is rampant and can impact your tax filing. If you have reason to believe that your identity has been stolen, please contact this firm as soon as possible. The IRS provides special procedures for filing if you have had your identity stolen.
• Car Expenses for Business: If you used one or more automobiles for business, list the expenses of each business vehicle separately. When claiming vehicle-related business expenses, the government requires your total mileage, business miles, and commuting miles for each business vehicle to be reported on your return, so be prepared to have those numbers available.Job-related vehicle expenses are not deductible by employees for federal and most states on their federal returns. However, some states, including California, still allow them. So, if you have unreimbursed employee business expenses, continue to provide the information noted above in case the deduction is allowed for your state taxes. If you were reimbursed for mileage through an employer, know the reimbursement amount and whether it was included in your W-2.
• Charitable Donations: You must substantiate cash contributions (regardless of amount) with a bank record or written communication from the charity showing the name of the charitable organization, date and amount.Unreceipted cash donations put into a “Christmas kettle,” church collection plate, etc., are not deductible. For clothing and household contributions, donated items must generally be in good or better condition, and items such as undergarments and socks are not deductible. You must keep a record of each item contributed that indicates the name and address of the charity, the date and location of the contribution, and a reasonable description of the property. Contributions valued under $250 and dropped off at an unattended location do not require a receipt. For contributions above $500, the record must also include when and how the property was acquired and your cost basis in the property. For contributions above $5,000 and other types of contributions, please call this office for additional requirements.

If you did something out of the ordinary this year that could be related to your tax return, please contact us in advance about what me documentation or additional information may be needed. If you have questions about assembling your tax data, please give this office a call.

 

Your Annual Reminder to File Worker 1099s

Article Highlights:

• 1099-NEC Filing Requirements
• Filing Due Date
• Independent Contractor Filing Threshold
• Landlords
• Additional Filing Requirements
• Form W-9
• Household Workers
• Penalties
• Endeavors to Mitigate Penalties
• Worksheet

This is our annual reminder that if you use workers other than employees to perform services for your business and pay them $600 or more for 2025, you are required to issue each one a Form1099-NECafter the end of the year to avoid facing penalties and the potential loss of the deduction for their labor and expenses.

Filing Due Date:The 1099s for 2025 must be provided to workers and filed with the IRS no later than February 2, 2026. Normally the due date is January 31, but since it falls on the weekend, the due date is extended to the next business day, which is February 2, 2026.

Landlords:The requirement to file Form 1099-NEC may also apply to landlords considering the 20% pass-through deduction (Sec. 199A deduction) for business income. The IRS, in regulations for this tax code section, cautions landlords that to be treated as a trade or business (and therefore to generally be eligible for the 199A deduction), they should consider reporting payments to independent contractor service providers on IRS Form 1099-NEC. This generally wasn’t required for rental activities in the past and still isn’t required when a rental is classified as an investment rather than as a trade or business.

Additional Filing Requirements:Although not commonplace, Form 1099-NEC filing is also required in the following situations:

• File Form 1099-NEC or Form 1099-MISC to report sales totaling $5,000 or more of consumer products to a person on a buy-sell, a deposit-commission, or other commission basis for resale.
• Also file Form 1099-NEC for each person from whom federal income tax has been withheld under the backup withholding rules regardless of the amount of the payment (report in box 4).

Form W-9:It is not uncommon to, say, have a repairman out early in the year, pay them less than $600, and then use their services again later and have the total for the year exceed the $600 limit. As a result, you could easily overlook getting the necessary information, such as their complete name and tax identification number (TIN), to file the 1099s for the year. Therefore, it is good practice to have unincorporated individuals complete and sign the IRS Form W-9 the first time you use their services, whether or not the initial payment exceeds the 1099 filing threshold. Having properly completed and signed Form W-9s for all independent contractors and service providers eliminates oversights and protects you against IRS penalties, potential loss of the business deduction and conflicts.

The government provides IRS FormW-9as a means for you to obtain the data required to file 1099s for your vendors, contractors or service providers. This data includes the individual’s name, address, type of business entity and TIN (usually a Social Security number or an Employer Identification Number) as well as certifications of the ID number and citizenship status. It also provides verification that you complied with the law should the individual provide you with incorrect information. We highly recommend that you have potential vendors, contractors, etc., complete Form W-9 prior to engaging in business with them. The form can either be printed to fill out or completed onscreen and then printed. A Spanish-language version is also available. The W-9 is for your use only and is not submitted to the IRS. The W-9 was last revised by the IRS in March 2024, so if you previously printed out blank W-9s of an earlier version to give to your vendors, you may want to print copies of the latest version (including the instructions) and discard the older unused forms.

Household Workers:1099-NEC worker reporting does not apply to household workers, as they are considered employees. Call for additional information.

Penalties:If a business does not submit a Form 1099-NEC or Form 1099-MISC by the specified date, penalties range from $60 to $340 per form for filings within the 2026 tax year (1099-NECs for 2025), influenced by the lateness of the submission. In cases where a business willfully ignores the obligation to accurately provide a Form 1099-NEC or Form 1099-MISC, they face a minimum penalty of $680 per form or 10% of the income stated on the form for the 2025 tax year, with no upper limit.

Endeavors to Mitigate Penalties:Have the contractor complete a Form W-9, Request for Taxpayer Identification Number and Certification, when they are initially hired. If that was not done, the following actions may help to mitigate penalties:

• Conduct Multiple Solicitations: Make up to three efforts to obtain the TIN from the payee, proving reasonable attempts were made. Document all attempts through email, certified mail, or text messages.
• Initiate Backup Withholding: If the contractor fails to provide their TIN, start backup withholding at a 24% rate on any subsequent reportable payments and send this to the IRS.
• Submit the 1099-NEC by Paper: If the TIN is still not received by the filing deadline, submit a paper Form 1099-NEC and write “Refused” in the section designated for the TIN.
• Reply to IRS notices: The IRS may inquire about the missing TIN. You should respond promptly with proof of your attempts to obtain the TIN.

Consequences of non-compliance: If filing requirements are intentionally ignored, such as not collecting a TIN, substantial penalties could be imposed ($660 per form for the 2025 tax year), without a maximum cap. Following these procedures is essential in reducing penalties.

State Filings:State filing deadlines may vary. Some states participate in the Combined Federal/State Filing program, while others require direct filing.

E-File Mandate:The threshold for the e-file mandate requires filers to electronically submit returns if they file 10 or more returns in a calendar year. This threshold is determined by aggregating various types of returns, rather than having separate limits for each return type as was previously the case.

Paper Filed 1099-NECs: If a business is not subject to the e-file mandate, 1099-NECs can be paper filed, but on special optically scannable forms.

Preparing For Next Year:The reporting threshold for independent contractors paid during the 2026 tax year has been increased to $2,000 by the One Big Beautiful Bill Act. But make sure W-9s are collected from all independent contractors even though the threshold is higher than it’s been in the past.

If you need assistance with filing 1099-NEC or have questions related to this issue, please give this office a call. You can complete the1099-NEC worksheet and forward it to this firm to prepare 1099s.

Life Events That Impact Your Business Taxes

When Change Hits Your Business, So Do Tax Consequences

In business, change is constant. You start strong, add partners, grow fast, face challenges, and eventually think about what’s next.

Each of those turning points—what we’ll call “life events”—comes with tax and financial ripple effects that are easy to overlook in the moment.

From new partnerships to ownership disputes, from marriage to retirement, these transitions don’t just affect your stress level—they affect your bottom line.

Here’s how planning ahead can keep your business steady through the major life and business events that owners face.

1. New Partnerships or Ownership Changes: Check the Structure

Bringing in a partner can accelerate growth, but it also changes everything about your business structure, tax reporting, and liability.

Will you file as a partnership, S corporation, or LLC? How will profits and losses be allocated? What happens if one partner wants out?

Even the best partnerships can sour if the ownership and tax details aren’t mapped out early. A clear operating or buy-sell agreement is essential—it determines what happens in successandin separation.

2. Marriage or Divorce: Who Owns What?

If you or your business partner gets married or divorced, ownership questions can get tricky fast.

Who legally owns the shares of the business—just you, or your spouse too? If the marriage ends, how does that affect control, valuation, or buyout terms?

In community property states, your spouse may automatically have a claim on part of your business interest. Without clear agreements, the outcome can get expensive and disruptive.

Pro tip:Keep ownership documents, partnership agreements, and succession plans current with your personal life changes.

3. Disputes Between Owners: Plan Before There’s a Problem

It’s not fun to think about, but disagreements between co-owners are among the most common “life events” that lead to costly legal and tax fallout.

If one partner wants out—or you need to remove a partner—do you have a roadmap for how that buyout will be handled and valued?

A properly drafted buy-sell agreement outlines how ownership changes will be taxed, what valuation method applies, and how funding the buyout will work.

Without it, you’re left negotiating under pressure—and usually paying more tax than necessary.

4. Retirement, Sale, or Succession: Timing Is Everything

Whether you’re selling, gifting ownership, or gradually stepping back, transitions like retirement require strategic timing.

Selling too quickly can push you into a higher tax bracket, while spreading it over multiple years may minimize your liability.

Having a succession plan in place also ensures continuity for employees and clients—and helps your successor avoid surprises when it’s their turn to file taxes.

5. Major Personal Events: Marriage, Health, or Death Still Matter

Even though this article focuses on business life events, personal changes can’t be ignored.

Marriage, health issues, or the passing of a spouse or partner can alter ownership percentages, estate plans, and filing responsibilities.

Coordinating your personal and business financial strategies ensures that neither gets overlooked when life shifts unexpectedly.

The Common Thread: Anticipate Before You React

Most tax complications don’t come from bad decisions—they come fromno plan at all.

By working with a trusted financial professional, you can anticipate how big life or business events will affect your taxes, cash flow, and ownership structure—so when change comes, you’re ready.

Bottom Line

Every major business milestone—from taking on a partner to stepping away from the company—comes with tax consequences. The best time to plan for them is before they happen.

If your business is facing a change or transition, contact our firm today to make sure your tax and financial strategy are ready for what’s next.

 

2025 Year-End Tasks in QuickBooks® Online Every Business Should Tackle Before December

Closing out the year smoothly begins before December arrives. For business owners using QuickBooks® Online (QBO), now’s the time to move beyond last-minute scrambles and step into structured, tax-ready bookkeeping and planning. With new features and increased IRS scrutiny, lining things up ahead of year-end can save time, reduce risk and set you up for 2026.

1. Reconcile Your Accounts and Clean Up Transactions

Go to Settings → Chart of Accounts → Reconcile. Match your ending bank and credit-card statements, review Undeposited Funds, and confirm all outstanding items are accounted for. QBO’s built-in guidance highlights unreconciled items so you don’t get hit in April.

2. Review Customer & Vendor Aging Reports

Run Accounts Receivable Aging and Accounts Payable Agingreports. Address any uncollectible receivables and outstanding vendor bills now—this ensures your profit-and-loss and balance sheet reflect accurate balances and your tax preparation doesn’t get delayed.

3. Use the Enhanced Reporting Features

QBO has expanded the “Modern View” of standard reports: you’ll find better filters, faster load times, and more customization. These updates mean you can pull reports like Profit & Loss, Balance Sheet and Cash Flow Forecasts more efficiently.

4. Set Up and Track 1099/NEC for Contractors

For businesses using freelancers or independent contractors, go to Expenses → Vendors → Prepare 1099s. Make sure W-9s are collected, payment thresholds tracked, and QBO flags vendors properly. Missing this step now can cause costly filings and penalties in Q1.

5. Close the Books & Confirm Fiscal Settings

Under Settings → Advanced, confirm the “First month of fiscal year”. Then, issue closing balances and lock down changes. This ensures your year-end data won’t be accidentally altered and your tax preparer receives clean books.

6. Forecast for 2026 and Build Cash-Flow Resilience

Use QBO’s Cash Flow projections to model January-March 2026: anticipated revenue dips, tax payment schedules, seasonal cost spikes. Preparing now gives you cushion and clarity—not just tidying up last year’s records.

7. Leverage Automation and New Tools

QBO’s latest enhancements include easier pay item clean-up (inactive payroll items) and e-signatures for payroll documents. These tools improve efficiency and reduce error risk ahead of year-end chaos.

Bottom line: Taking 30-60 minutes each week now to reconcile accounts, review vendor/ customer aging, run updated reports, track contractor obligations, and complete your closing settings means you’ll walk into 2026 with clarity—not chaos. QuickBooks® Online isn’t just about recording transactions; it’s about strategic readiness.

 

December 2025 Individual Due Dates

December 1 – Time for Year-End Tax Planning

December is the month to take final actions that can affect your tax result for 2025. Taxpayers with substantial increases or decreases in income, changes in marital status or dependent status, and those who sold property during 2025 should call for a tax planning consultation appointment.

December 10 – Report Tips to Employer

If you are an employee who works for tips and received more than $20 in tips during November, you are required to report them to your employer on IRS Form 4070 no later than December 10. Your employer is required to withhold FICA taxes and income tax withholding for these tips from your regular wages. If your regular wages are insufficient to cover the FICA and tax withholding, the employer will report the amount of the uncollected withholding in box 8 of your W-2 for the year. You will be required to pay the uncollected withholding when your return for the year is filed.

December 31 – Last Day to Make Mandatory IRA Withdrawals

Last day to withdraw funds from a Traditional IRA Account and avoid a penalty if you were born before January 1, 1952. If your birth date is during the period January 1, 1952, through December 31, 1952 (i.e., you reached age 73 in 2025), your first required distribution is for tax year 2025, but you can delay the distribution to April 1, 2026. If you are required to take a distribution in 2025, and the institution holding your IRA will not be open on December 31, you will need to arrange for withdrawal before that date.

December 31 – Last Day to Pay Deductible Expenses for 2025

Last day to pay deductible expenses for the 2025 return (doesn’t apply to IRA, SEP or Keogh contributions, all of which can be made after December 31, 2025).

December 31 – Caution! Last Day of the Year

If the actions you wish to take cannot be completed on the 31st or in a single day, you should consider taking action earlier than December 31st, as some financial institutions may be closed that day.

Weekends & Holidays:

If a due date falls on a Saturday, Sunday or legal holiday, the due date is automatically extended until the next business day that is not itself a legal holiday.

Disaster Area Extensions:

Please note that when a geographical area is designated as a disaster area, due dates will be extended. For more information whether an area has been designated a disaster area and the filing extension dates visit the following websites:

FEMA:https://www.fema.gov/disaster/declarations
IRS:https://www.irs.gov/newsroom/tax-relief-in-disaster-situations

 

December 2025 Business Due Dates

December 15 – Corporations

The fourth installment of estimated tax for 2025 calendar year corporations is due.

December 15 – Social Security, Medicare and Withheld Income Tax

If you are an employer and the monthly deposit rules apply, December 15 is the due date for you to make your deposit of Social Security, Medicare, and withheld income tax for November 2025. This is also the due date for the nonpayroll withholding deposit for November 2025 if the monthly deposit rule applies.

December 31 – Caution! Last Day of the Year

If the actions you wish to take cannot be completed on the 31st or in a single day, you should consider taking action earlier than December 31st, as some financial institutions may be closed that day.

Weekends & Holidays:

If a due date falls on a Saturday, Sunday or legal holiday, the due date is automatically extended until the next business day that is not itself a legal holiday.

Disaster Area Extensions:

Please note that when a geographical area is designated as a disaster area, due dates will be extended. For more information whether an area has been designated a disaster area and the filing extension dates visit the following websites:

FEMA:https://www.fema.gov/disaster/declarations
IRS:https://www.irs.gov/newsroom/tax-relief-in-disaster-situations