We’re excited to share that Dan Horvath represented Beers, Hamerman, Cohen & Burger (BHCB) at Southern Connecticut State University’s Annual Accounting Roundtable!
Held by SCSU’s School of Business in collaboration with the PEP Talks series and Accounting Society, this event brought together students and local accounting professionals for an engaging panel discussion on careers, industry trends, and what firms like BHCB seek in top talent.
Dan spent time connecting with aspiring accounting professionals, sharing insights about our industry, and answering questions on the path to a successful career in accounting. Events like these are an excellent way for students and firms to build valuable connections in Connecticut’s accounting community.
Thank you to SCSU’s Vivien Szaniszlo and the Accounting Society for organizing such an impactful event. BHCB is always proud to support initiatives that bridge the gap between education and career!
The Financial Crimes Enforcement Network (FinCEN) has extended the deadline for Beneficial Ownership Information (BOI) reporting by six months for businesses in areas affected by Hurricane Helene and designated for relief by FEMA and the IRS.
New Deadline: Applies to BOI reports due between September 22, 2024, and December 21, 2024.
This extension provides additional time for businesses in disaster areas to file their BOI reports, ensuring they can focus on recovery first. For details and eligibility, visit: FinCEN BOI Notice
The IRS has issued its 2025 inflation adjustment numbers for more than 60 tax provisions in Revenue Procedure 2024-40. Inflation has moderated somewhat this year over last, so many amounts will increase over 2024 but not as much as in the previous year. Take these 2025 numbers into account as you implement 2024 year-end tax planning strategies.
Individual income tax rates
Tax-bracket thresholds increase for each filing status, but because they’re based on percentages, they increase more significantly for the higher brackets. For example, the top of the 10% bracket will increase by $325–$650, depending on filing status, but the top of the 35% bracket will increase by $10,200–$20,400, again depending on filing status.
2025 ordinary-income tax brackets
Tax rate
Single
Head of household
Married filing jointly or surviving spouse
Married filing separately
10%
$0 – $11,925
$0 – $17,000
$0 – $23,850
$0 – $11,925
12%
$11,926 – $48,475
$17,001 – $64,850
$23,851 – $96,950
$11,926 – $48,475
22%
$48,476 – $103,350
$64,851 – $103,350
$96,951 – $206,700
$48,476 – $103,350
24%
$103,351 – $197,300
$103,351 – $197,300
$206,701 – $394,600
$103,351 – $197,300
32%
$197,301 – $250,525
$197,301 – $250,500
$394,601 – $501,050
$197,301 – $250,525
35%
$250,526 – $626,350
$250,501 – $626,350
$501,051 – $751,600
$250,526 – $375,800
37%
Over $626,350
Over $626,350
Over $751,600
Over $375,800
Note that under the TCJA, the rates and brackets are scheduled to return to their pre-TCJA levels (adjusted for inflation) in 2026 if Congress doesn’t extend the current levels or make other changes.
Standard deduction
The TCJA nearly doubled the standard deduction, indexed annually for inflation, through 2025. In 2025, the standard deduction will be $30,000 for married couples filing jointly, $22,500 for heads of households, and $15,000 for singles and married couples filing separately.
After 2025, the standard deduction amounts are scheduled to drop back to the amounts under pre-TCJA law unless Congress extends the current rules or revises them. Also worth noting is that the personal exemption that was suspended by the TCJA is scheduled to return in 2026. Of course, Congress could extend the suspension.
Long-term capital gains rate
The long-term gains rate applies to realized gains on investments held for more than 12 months. For most types of assets, the rate is 0%, 15% or 20%, depending on your income. While the 0% rate applies to most income that would be taxed at 12% or less based on the taxpayer’s ordinary-income rate, the top long-term gains rate of 20% kicks in before the top ordinary-income rate does.
2025 long-term capital gains brackets*
Tax rate
Single
Head of household
Married filing jointly or surviving spouse
Married filing separately
0%
$0 – $48,350
$0 – $64,750
$0 – $96,700
$0 – $48,350
15%
$48,351 – $533,400
$64,751 – $566,700
$96,701 – $600,050
$48,351 – $300,000
20%
Over $533,400
Over $566,700
Over $600,050
Over $300,000
* Higher rates apply to certain types of assets.
As with ordinary income tax rates and brackets, those for long-term capital gains are scheduled to return to their pre-TCJA levels (adjusted for inflation) in 2026 if Congress doesn’t extend the current levels or make other changes.
AMT
The alternative minimum tax (AMT) is a separate tax system that limits some deductions, doesn’t permit others and treats certain income items differently. If your AMT liability exceeds your regular tax liability, you must pay the AMT.
Like the regular tax brackets, the AMT brackets are annually indexed for inflation. In 2025, the threshold for the 28% bracket will increase by $6,500 for all filing statuses except married filing separately, which will increase by half that amount.
2025 AMT brackets
Tax rate
Single
Head of household
Married filing jointly or surviving spouse
Married filing separately
26%
$0 – $239,100
$0 – $239,100
$0 – $239,100
$0 – $119,550
28%
Over $239,100
Over $239,100
Over $239,100
Over $119,550
The AMT exemptions and exemption phaseouts are also indexed. The exemption amounts in 2025 will be $88,100 for singles and $137,000 for joint filers, increasing by $2,400 and $3,700, respectively, over 2024 amounts. The inflation-adjusted phaseout ranges in 2025 will be $626,350–$978,750 for singles and $1,252,700–$1,800,700 for joint filers. Phaseout ranges for married couples filing separately are half of those for joint filers.
The exemptions and phaseouts were significantly increased under the TJCA. Without Congressional action, they’ll drop to their pre-TCJA levels (adjusted for inflation) in 2026.
Education and child-related breaks
The maximum benefits of certain education and child-related breaks will generally remain the same in 2025. But most of these breaks are limited based on a taxpayer’s modified adjusted gross income (MAGI). Taxpayers whose MAGIs are within an applicable phaseout range are eligible for a partial break — and breaks are eliminated for those whose MAGIs exceed the top of the range.
The MAGI phaseout ranges will generally remain the same or increase modestly in 2025, depending on the break. For example:
The American Opportunity credit. For tax years beginning after December 31, 2020, the MAGI amount used by joint filers to determine the reduction in the American Opportunity credit isn’t adjusted for inflation. The credit is phased out for taxpayers with MAGIs in excess of $80,000 ($160,000 for joint returns). The maximum credit per eligible student is $2,500.
The Lifetime Learning credit. For tax years beginning after December 31, 2020, the MAGI amount used by joint filers to determine the reduction in the Lifetime Learning credit isn’t adjusted for inflation. The credit is phased out for taxpayers with MAGIs in excess of $80,000 ($160,000 for joint returns). The maximum credit is $2,000 per tax return.
The adoption credit. The MAGI phaseout range for eligible taxpayers adopting a child will increase in 2025 — by $7,040. It will be $259,190–$299,190 for joint, head-of-household and single filers. The maximum credit will increase by $470, to $17,280 in 2025.
Note: Married couples filing separately generally aren’t eligible for these credits.
These are only some of the education and child-related tax breaks that may benefit you. Keep in mind that, if your MAGI is too high for you to qualify for a break for your child’s education, your child might be eligible to claim one on his or her tax return.
Gift and estate taxes
The unified gift and estate tax exemption and the generation-skipping transfer (GST) tax exemption are both adjusted annually for inflation. In 2025, the amount will be $13.99 million (up from $13.61 million in 2024). Beware that the TJCA approximately doubled these exemptions starting in 2018. Both exemptions are scheduled to drop significantly in 2026 if lawmakers don’t extend the higher amount or make other changes.
The annual gift tax exclusion will increase by $1,000, to $19,000 in 2025. (It isn’t part of a TCJA provision that’s scheduled to expire.)
Crunching the numbers
With the 2025 inflation adjustment amounts trending slightly higher than 2024 amounts, it’s important to understand how they might affect your tax and financial situation. Also keep in mind that many amounts could change substantially in 2026 because of expiring TCJA provisions — or new tax legislation, which could even go into effect sooner. We’d be happy to help crunch the numbers and explain the tax-saving strategies that may make the most sense for you in the current environment of tax law uncertainty.
Thanks to today’s favorable federal gift and estate tax rules, most people haven’t amassed enough wealth to worry about federal estate taxes. However, even if you haven’t had the good fortune to win the lotto or inherit millions from a wealthy relative, you still need an estate plan to protect your assets and your loved ones. Here are some critical estate planning issues to consider.
Wills
There are several reasons why you should put together a written will:
1. To name a guardian for any minor children,
2. To name an executor for your estate, and
3. To specify which beneficiaries (including charities) should get which assets.
The guardian’s job is to take care of your kids until they reach adulthood (age 18 or 21 in most states). The executor’s job is to pay your estate’s bills, pay any taxes due, and deliver what’s left to your intended heirs and charitable beneficiaries.
Living Trusts
If you have significant assets, you should probably set up a living trust to avoid probate. Probate is a court-supervised legal process intended to make sure a deceased person’s assets are properly distributed. However, going through probate typically involves administrative red tape and legal fees — plus your financial affairs will become public information.
If you establish a living trust, you can transfer legal ownership of designated assets to the trust. The transferred assets won’t go through the probate process. Examples of assets you might want to consider transferring to a living trust include:
Your primary residence,
Vacation properties,
Vehicles, and
Antique furniture, artwork and other collectibles.
The trust documents name a trustee to be in charge of the trust’s assets after you die and specify which beneficiaries will get which assets from the trust. While you’re alive, you can function as the trustee — or you can designate your attorney, CPA, financial institution or a loved one to be the trustee. After you die, the trustee that you’ve named in the trust documents will take over.
Because a living trust is revocable, you can change its terms at any time or even unwind it while you’re alive and legally competent. It’s called a living trust because it’s effectively “alive” as long as you are. Other common names for living trusts are family trusts, grantor trusts and revocable trusts.
Living Trust Taxes While You’re Alive
For federal income tax purposes, your living trust is a “revocable grantor trust,” so it’s ignored while you’re alive. As such, you’re still considered to personally own the assets that are in the trust as far as the IRS is concerned. That means you’ll continue reporting on your federal tax return income generated by trust assets and deductions related to those assets, such as mortgage interest on your home.
For state-law purposes, the living trust is not ignored. Done properly, it achieves the estate planning goal of avoiding probate.
Living Trust Taxes After You Die
When you die, the assets in the living trust are included in your estate for federal estate tax purposes. However, assets that go to your surviving spouse aren’t included in your estate for tax purposes — assuming your spouse is a U.S. citizen — thanks to the unlimited marital deduction privilege.
If you’re married, your living trust can cover both you and your spouse. Typically, the trust will maintain grantor trust status while your spouse remains alive. Your surviving spouse will be considered to personally own the assets that are in the trust as far as the IRS is concerned. So, your spouse will report on his or her tax return income generated by trust assets and deductions related to those assets.
The trust becomes irrevocable after the grantor dies (or both spouses die if both spouses are the grantors). At that point, it falls under the trust income tax rules, and the trustee will need to do some planning to get the best tax results. Usually that will involve distributing trust income and gains to the trust beneficiaries and winding up the trust by distributing its assets to the beneficiaries.
Reality Check
Wills and living trusts offer meaningful benefits, but you should mind the details to achieve the expected advantages. Consider the following tips:
If you’re married, you and your spouse should have separate, but coordinated, wills. You never know who will die first.
Wills and living trusts should be consistent with beneficiary designations and the manner in which assets are legally owned. For example, when you fill out forms to designate beneficiaries for life insurance policies, retirement accounts and brokerage firm accounts, the named beneficiaries will automatically cash in upon your death without going through probate. The same is true for bank accounts if you name payable-on-death beneficiaries. It makes no difference if your will or living trust document specifies something different. So, keep your beneficiary designations current to make sure the money will go where you intend.
If you own real estate jointly with right of survivorship, the other co-owner(s) will automatically inherit your share upon your death. It makes no difference if your will or living trust documents say otherwise.
If you set up a living trust, you must transfer legal ownership of assets for which you wish to avoid probate to the trust. Many people fail to follow through by transferring ownership to their living trusts, causing them to lose out on the probate-avoidance advantage.
Wills and living trusts don’t avoid or minimize the federal estate tax or state death taxes. If you have enough wealth to be exposed to these taxes, additional planning is required to reduce or eliminate that exposure.
Important: Some states have death tax exemptions that are far below the $13.61 million federal estate tax exemption. So, you could be exposed to state death taxes even though you’re fully exempt from the federal estate tax.
Moving Target
Federal and state estate and death tax rules have proven to be unpredictable. Plus, personal circumstances may change. You might acquire new assets, win the lottery, lose relatives to death, disown relatives (or take them back) and gain children or grandchildren. Any of these events — and changes to tax laws — could require estate plan revisions. So, it’s important to review your estate plan at least annually and update as needed. Contact us for assistance.
Today, members of our team are representing Beers, Hamerman, Cohen & Burger (BHCB) at the American College of Physicians Annual Scientific Meeting at the Aqua Turf Club in Plantsville, CT.
This event offers top-notch educational content, CME and Maintenance of Certification credits, and is a great opportunity to connect with general internists, subspecialty internists, hospitalists, allied health practitioners, residents, and medical students. BHCB is excited to be part of this important gathering!
Here’s a little-known secret for parents planning to send their children to college in the future: Some of the tax-saving moves you make now could hurt your student’s chances for getting financial aid later.
That’s because of the way the financial aid system treats different assets. Retirement plans and IRAs don’t count for college aid purposes. You’re not expected to break into these accounts to pay for tuition.Another key point:The college aid formula requires 20% of the assets in your child’s name to be used for college costs. But the government-mandated formula only expects about 5.6% of the money in the parent’s name to be spent. So you’re better off keeping accounts in your own name, especially during the last two years of high school, which is generally when you’ll be asked to start providing tax returns.
Don’t assume you’re not eligible for assistance. With the high cost of college today, many schools now have programs available to relatively well-off families if they meet certain qualifications. For example, your child might be able to get a “merit award” based on high standardized test scores and superior grades.
The best strategy: If you expect to apply for financial aid, don’t hold back placing money in your own retirement plan in order to put away savings in a college account in your child’s name.
Contributions to retirement accounts are usually tax-deductible and the earnings are tax deferred until withdrawn. On top of these tax breaks, your family may also become eligible for more financial aid.
Remember that you can usually tap retirement accounts for college money. Many 401(k) plans allow loans to be taken. And thanks to a tax law that went into effect in 1998, you can generally withdraw a limited amount from your IRAs penalty-free to pay higher education costs for yourself, your children and grandchildren.
Although fewer paper checks are being issued now than in the past, old-fashioned paper checks remain the “go-to” payment method for many individuals and organizations. While checks may be convenient and familiar, fraud is a persistent problem. According to the Federal Reserve Bank of Boston, the total losses from check fraud were estimated at $24 billion in 2023, nearly double the amount from five years earlier.
These schemes are on the rise, partly because check theft is an easy, low-tech crime to pull off. Plus, there’s still a sizeable pool of potential victims. Dishonest individuals and organized crime networks often steal checks from residential mailboxes and public mail drop boxes.
Recent Statistics
A recent government report from the Financial Crimes Enforcement Network (FinCEN) highlighted common ways checks stolen from U.S. mail were used to commit fraud:
20% were fraudulently signed and deposited,
44% were altered and then deposited, and
26% were utilized as templates to create counterfeit checks.
The FinCEN report revealed over $688 million in suspicious activity linked to checks in just six months. In addition to direct financial losses, check fraud can adversely impact credit scores and business goodwill, as well as result in bank fees and payment delays.
Nip Check Fraud in the Bud
After a check has been stolen, the thief may continue to conduct fraudulent transactions until theft has been detected. So, it pays to prevent fraud from happening in the first place. Consider the following seven preventive measures:
1. Stop writing checks. Replace checks with alternative payment methods, including debit and credit cards, wire and Automated Clearing House (ACH) transfers, and third-party electronic payment services, such as PayPal, Venmo and Zelle. These options have security measures in place to prevent criminal activity.
2. Use your bank’s fraud prevention tools. Banks provide customers with many solutions to combat payment fraud. Visit your local branch or contact your relationship manager for customized fraud-prevention advice.
3. Respond quickly to alerts or calls from your bank. Many banks offer fraud alert services that notify you of suspicious account activity, such as transactions over a certain dollar threshold. Make sure to update your contact information with the bank. Businesses should also train employees who are designated as points of contact to understand the importance of responding quickly.
4. Reconcile accounts regularly. It’s essential to verify the legitimacy of transactions posted to your account as often as possible. Most banks offer online banking tools and apps that allow you to view check images as soon as they post to your account. Use these tools to verify the payee, amount and account paid. Notify your bank promptly when you suspect fraudulent activity. Acting quickly maximizes the assistance your bank can provide and lowers your out-of-pocket costs.
5. Use security ink. Check fraud often involves altering legitimate checks. Criminals can easily erase regular ink using common household products, such as bleach and nail polish remover. Security ink is hard to erase, making it more difficult for criminals to compromise your checks.
6. Secure your checks. While check fraud often involves third parties, it can also be committed by family, friends and employees. Store blank checks in a locked cabinet. Businesses should also limit employees’ ability to reorder checks.
7. Shred old checks and statements. Destroying old financial records can prevent sensitive information from being used to engage in check fraud or any other payment fraud
Awareness Is Key
While opportunity is fueling check fraud schemes, knowledge and vigilance can help individuals and businesses reduce their risks. Alternative payment methods are the first line of defense against check theft, but that’s not a realistic solution for every situation. So, implementing additional security measures is crucial for those who still write and accept paper checks.
We’re thrilled to be part of the Fairfield University Career Fair today, connecting with the next generation of bright minds!
If you’re a passionate accounting major or just curious about the dynamic world of public accounting, stop by our booth to learn more about our amazing team and how we’re helping clients succeed every day!
Members of our team spent the morning at the Quinnipiac University Business Career Fair. Marcos and Victoria had the opportunity to meet and share their knowledge with future accountants and auditors.
Marcos is quite familiar with the experience as he interned for BHCB this past busy season and was asked to join us full time once his internship was completed.
If you withdraw money from a traditional IRA before age 59½, you’ll generally owe income tax plus a 10% penalty on the amount. But there are exceptions, including if you withdraw the money to cover certain higher education costs or to buy a home (first-time homebuyer expenses up to $10,000). You can usually make penalty-free IRA withdrawals when you have or adopt a child ($5,000 limit per child), in the event of a financial emergency ($1,000 limit per year) and to help with disaster recovery costs ($22,000 limit). Those who become disabled and domestic violence victims ($10,000 limit), among others, also may qualify.
Document Your Donations Right Away
Did your summer chore list leave you with boxes of items to donate to local charities? Not only is it generous to donate, but you might end up with tax savings as well (if you itemize deductions on your tax return). You’ll need to secure proper documentation from the qualified charities you donate to. Noncash donations of less than $250 must be supported by a receipt, showing your name, address, date of donation and detailed descriptions of the items. For donations valued at $250 to $500 you must also obtain a “contemporaneous written acknowledgement” from the charity. Click here for more details, including documentation needed for higher value donations.
Time’s Almost Up to File Your Extended Return!
If you requested an extension to file your tax return after the original April 15, 2024, due date, you probably know that the new deadline is coming up soon on Oct. 15. If you have the information you need, you may want to file now, the IRS says.
There’s no advantage to waiting, and last-minute filing may lead to worry. If you’re concerned about paying any tax owed, the IRS offers short- and long-term payment plans, as well as installment agreements, to taxpayers who qualify. It’s important to act quickly if you owe because any amount that was due April 15 accrues interest until the balance is paid. As soon as possible, gather your 2023 tax year records and contact the office for a tax preparation appointment or to ask questions you may have.
Tax Credit Help with Dependent Care Costs
If you incur daycare expenses for children or other dependents, you may qualify for a tax credit. The Child and Dependent Care Credit is available for expenses that allow you or your spouse to work or actively seek work. If eligible, you may be eligible to claim up to 35% of your expenses. The credit can’t exceed $3,000 for one qualifying person, or $6,000 for two or more persons, and a percentage applies based on your income. Suppose you pay your mother to watch your children during the day. Does that count towards a credit? Yes, if your mother isn’t your dependent. You can also pay other relatives to watch your kids, but conditions apply. Click here for more information.
An Idea for Lowering your 2024 Tax Bill
With the year more than half over, now’s the time to consider ways to lower your 2024 tax bill. If you own or are a beneficiary of an IRA and you’re at least 70½, here’s one option: Make donations of up to $100,000 to IRS-approved charities directly from your IRA (or $200,000 for a married couple where both spouses meet the age requirement).
These qualified charitable distributions (QCDs) can fulfill your annual required minimum distribution if applicable. You can’t take a charitable deduction for a QCD, but the donated amount is removed from your taxable income, which may preserve your eligibility for other tax breaks. QCDs also offer other tax advantages. Contact us to learn more.
If you like what you’ve seen so far, we’d love to hear from you! Reach out to us today and discover how we can work together to achieve your financial goals. Our team is excited to connect with you and provide the exceptional service and expertise that sets BHCB apart.