THE END OF 2024 IS ALMOST HERE. ARE YOU READY?
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Filing your taxes for 2024 can be made easier by getting ready now. Another year winds down and another tax return needs to be filed. So, as we move toward the end of the year, we would like to offer a few reminders to individuals that have business operations. First, make sure you have filed the newly required Beneficial Ownership Interest (BOI) form by December 31, 2024. With the growth of sales over the internet, you may need to track out of state sales totals for reporting.
Secondly, as year-end payroll reporting nears, don’t forget the following annual payroll reporting requirements. These include:
- Employee personal use of company vehicles,
- Employer paid health insurance for employees for W-2 purposes,
- Employer paid health savings account deposits for W-2 purposes
- Employer paid childcare expenses for W-2 purposes,
- Employer paid education plans and term life insurance for W-2 purposes,
- Employer contributions to employee pension plans.
As we go into 2025, we are all uncertain of what new tax rules will apply in 2025. So you may want to consider deferring major equipment purchases and building repairs or improvements until next year unless you are able to specifically discuss how this may affect your business. In addition, you may want to consider postponing new tax elections or setting up new entities until, with your CPA, have a better understanding of what new tax laws will be introduced in 2025.
Next are a few year-end tax credits that might be valuable:
1. There is a new credit for smaller businesses who set up their first pension plan in 2024. This credit can, in many instances, completely offset the costs of setting up the plan as well as offset some or all of the employer’s plan contributions.
2. Some businesses may greatly benefit from the fuel tax credit. The Fuel Tax Credit is allowed for Federal highway tax paid for fuel used off-highway in a business such as pumps, generators, compressors, tractors, trucks used in lots, landscapers, farmers, grass cutters, tree trimmers, helicopters, crop-dusting and many more business applications. At over 18 cents per gallon this can be a huge credit!
Start a Special File that updates your information to have ready: This includes:
1. Has there been a change in ownership this year? If so, provide new owner identification information, dates and percentages.
2. Have you opened or closed any locations this year-if so, please provide that information with the physical address.
3. Provide a list of information about your owners email addresses and cell phone numbers.
Finally, do you have a website? If so, what is your website address: ___________________.
Additionally, make sure you have considered sales and income tax registration, collection and filing requirements in other states.
Last thing for filing normal year end information needed for filing 2024:
1. __ Copies of any new bank loans obtained during the year
2. __ Copies of any new leases signed during the year
3. __ List by date, amount and individual of any new investments made into the company this year by the owners
4. __ Copies of any federal or state tax correspondence received during the year
5. __ Copies of any equipment purchase invoices over $1,000
6. __ Loan payoffs, by loan number, of all business loans at December 31
7. __ Copies of your year-end bank reconciliation(s) and bank statements
8. __ 12/31/24 Year End Balances of:
- Accounts Receivable $___________
- Cost of Inventory on Hand $________
- Accounts Payable $ ______________
- Unpaid 941 Deposit for December $__________
- Unpaid State(s) Withholding deposits for December $_______________
- Unpaid Sales tax for December $_____________
- Unpaid wages earned through 12/31/23 $__________
9. __ The enclosed engagement letter needs to be signed and returned
10. __ Year-end summary of business activity-back up, online access or hard copy (Accounting software back-up, trial balance, etc.)
11. __ Sales breakdown by state and city if applicable (Call us to determine)
12. __ Copies of all 4 quarters Form 941, and 2023 W-2’s issued to employees
13. __ All Forms 1099-K, 1099-NEC and 1099-Misc received
Filling in the amounts above represents your company’s amounts as requested and should be compiled prior to your first meeting with your CPA.
Have questions? Make your 2024 tax filings easier this year. Simply fill out the information above and have it ready. Have any questions? Give us a call at 812-883-6938 to set an appointment and bring in this information and start 2025 off ahead.
Many taxpayers don’t feel the need to keep home improvement records, thinking the potential gain when they sell their home will never exceed the amount of the tax code’s exclusion for home gains explained as follows. Under the current version of the tax code, you are allowed to exclude from your income up to $250,000 ($500,000 for married couples) of gain from the sale of your primary residence if you owned and lived in it for at least 2 years (24 months) of the 5 years before the sale. You also cannot have previously taken a home-sale exclusion within the 2 years immediately preceding the sale. There is no limit on the number of times you can use the exclusion if you meet these time requirements; however, extenuating circumstances can reduce the amount of the exclusion. The home-sale gain exclusion only applies to your main home, not to a second home or a rental property. As noted above, you must have used and owned the home for 2 out of the 5 years immediately preceding the sale. The years don’t have to be consecutive or the closest to the sale date. Vacations, short absences, and short rental periods do not reduce the use period. If you are married, to qualify for the $500,000 exclusion, both you and your spouse must have used the home for 2 out of the 5 years prior to the sale, but only one of you needs to meet the ownership requirement. When only one spouse in a married couple qualifies, the maximum exclusion is limited to $250,000 instead of $500,000. If you don’t meet the ownership and use requirements, there are some situations in which a prorated exclusion amount may be possible. An example of this situation would be if you were required to sell the home because of extenuating circumstances, such as a job-related move, a health crisis or other unforeseen events. Another rule extends the 5-year period to account for the deployment of military members and certain other government employees. Please call this office if you have not met the 2 out of 5 rule to see if you qualify for a reduced exclusion. But what if your home sale gain is more than the home sale exclusion? Then it is in your best interests to have kept home improvement records, since the costs of improvements can be added to your purchase price of the home to be used in determining the gain. So keeping the receipts for the improvements, even if only in a folder or a shoe box, may be useful in the future when you sell your home. Here are some situations when having home improvement records could save taxes: The home is owned for a long period of time, and the combination of appreciation in value due to inflation and improvements exceeds the exclusion amount. The home is converted to a rental property, and the cost and improvements of the home are needed to establish the depreciable basis of the property. The home is converted to a second residence, and the exclusion might not apply to the sale. You suffer a casualty loss and retain the home after making repairs. The home is sold before meeting the 2-year use and ownership requirements. The home only qualifies for a reduced exclusion because the home is sold before meeting the 2-year use and ownership requirements. One spouse retains the home after a divorce and is only entitled to a $250,000 exclusion instead of the $500,000 exclusion available to married couples. There are future tax law changes that could affect the exclusion amounts. Everyone hates to keep records but consider the consequences if you have a gain and a portion of it cannot be excluded. You will be hit with capital gains (CG), and there is a good chance the CG tax rate will be higher than normal simply because the gain pushed you into a higher CG tax bracket. Before deciding not to keep records, carefully consider the potential of having a gain more than the exclusion amount. Home improvements include just about anything that will increase the value of the home, from big ticket items like remodeling a kitchen, adding another room or a swimming pool, and landscaping to smaller items like ceiling fans. But there are some home improvements that cannot be included in the cost of home improvements, or may be only partly included. Examples are items which qualify for tax credits such as home solar, home energy efficient improvements or those that qualify for a tax deduction such as handicap improvements. In addition, the costs of general maintenance or repairs, such as fixing leaks, painting (interior or exterior), and replacing broken hardware do not count as improvements. If you have questions related to the home gain exclusion or questions about how keeping home improvement records might directly affect you, please give this office a call.
With the signing of the One Big Beautiful Bill Act (OBBBA) many of the environmental credits that were in place and set to expire sometime in the future have now been moved up in their expiration dates. Below is a list of the credits set to expire and when they are to expire. Expiring after September 30, 2025 • Previously Owned Clean Vehicle Credit • Clean Vehicle Credit • Qualified Commercial Clean Vehicle Credit • Alternative Fuel Vehicle Refueling Property Credit To claim credit before the expiration date, you must purchase/install and have title to the property. Expiring after December 31, 2025 • Energy Efficient Home Improvement Credit • Solar Energy Credit • New Home Energy Efficient Home Credit To claim credit before the expiration date, the property must be installed, be functional and if necessary, approved by local agencies before the expiration date. If you have any questions about any of these credits, please contact your tax advisor or call us to discuss.
Hiring for the summer?
That’s exciting—until the IRS gets involved. While onboarding interns or part-time help sounds simple enough, summer hiring is one of the most common ways small business owners get tripped up on payroll, compliance, and classification. And yes, even a single misstep—like putting a W-2 employee on a 1099 “just for the summer”—can cost you big. Let’s Clear This Up: Not Everyone’s a Contractor You’re not alone if you’ve ever said: “We’re just paying them a flat rate—it’s easier that way.”
“They’re only here for 10 weeks.”
“They’re a student; it’s not really a job-job.” Here’s the hard truth:
If you control when, where, and how someone works—you’re probably supposed to issue a W-2. The IRS doesn’t care if it’s part-time, seasonal, freelance, or “just a favor.” If they look like an employee, they are one—and they want to see payroll taxes, not contractor payments. Need the official word? See IRS guidelines on worker classification Interns? Yes, They Usually Count Too. Many businesses think unpaid internships are a gray area. But unless it’s tied to a formal educational program with no expectation of compensation, the Department of Labor may classify your intern as an employee. That means: Minimum wage laws apply You may owe payroll taxes Workers’ comp coverage could be required Rule of thumb: If they’re contributing to your business, they probably need to be on payroll. Don’t Miss Out on This: The Work Opportunity Tax Credit (WOTC) Here’s some good news: If you’re hiring people from certain target groups—like veterans, long-term unemployed, or summer youth employees—you might qualify for the WOTC, which can reduce your federal income tax liability by up to $2,400 per qualifying hire. But: You have to apply before hiring The paperwork needs to be filed with your state agency Most businesses never realize they’re eligible More info? Explore the WOTC program here Other Things to Nail Down (Before Your First Payday) Set up correct federal and state withholding Ensure you have an active payroll system (manual payments often miss required filings) Collect and retain Form I-9s and W-4s Check if local labor laws require sick leave or additional reporting for part-time workers Know if you need to pay overtime—even if it’s “just for the summer” The Bottom Line: Don’t Wing Payroll We get it—your focus is on growing your business, keeping clients happy, and getting help in the door. But ignoring payroll compliance (even for “just a few weeks”) can lead to: Penalties for misclassification Missed tax credits State audits Unhappy former employees filing claims you didn’t see coming Need a Hand Sorting It Out? Call Us Before You Hire We’ve helped hundreds of small business owners set up summer payroll the right way—without overcomplicating things or drowning in red tape. If you’re planning to bring on part-time, seasonal, or intern help in the next few weeks, let’s talk.
We’ll help you stay compliant, minimize tax risk, and maybe even find some credits you didn’t know existed. Contact our office before you run that first paycheck—we’ll help you do it right from the start.