When you hire a nanny, housekeeper or another domestic worker, pay close attention to the tax rules.

Over the years, there have been news stories about political appointees and others who got into trouble because they didn’t pay nanny taxes. The same could happen to you.

You must generally pay Social Security, Medicare and federal unemployment taxes on wages paid to domestic workers who are considered “employees” under federal law.

However, you don’t have to bother with this if:

• You pay someone less than $2,800 in 2025 (up from $2,700 in 2024).
• You hire students age 18 or younger.
• You hire occasional workers like painters or house-cleaning services.

Beyond that, you have to determine if domestic helpers are employees under your control or independent contractors in business for themselves.

It’s not a simple question, but if the workers come part-time and advertise or hand out business cards, they’re probably self-employed and responsible for their own taxes. On the other hand, a live-in housekeeper or full-time nanny who works in your home is an employee.

If you believe a worker is an independent contractor: Put the arrangement in writing and keep a copy of the person’s business card, brochure or advertisement. Why do you need this protection? Sometimes, domestic helpers reveal the names of people they worked for when they apply for Social Security. Uncle Sam then sends out assessments for back taxes, penalties and interest — even many years later.

Because this is a confusing issue, consult with your tax professional to ensure you’re on the right track.

Termination can be painful, whether it’s for cause or part of a business slump that you can’t avoid.

Employees who are fired or laid off often have negative feelings about the company and some could act out their anger in damaging or violent ways. Of course, you can try to ease the pain by handing out generous severance  packages, outplacement benefits and counseling. Give out written information about the support the company will give and let employees know you are providing cushions, even though you aren’t legally required to. But don’t expect these provisions to satisfy all distraught ex-employees.

7 important precautions

The following seven steps can help keep your company safe from serious harm inflicted by former employees:

7. Have a supervisor or security officer discreetly pack an employee’s personal belongings and bring them to the waiting room. Verify that nothing is forgotten or missing. Have the person escorted to the parking lot and remove any vehicle stickers that allow entry into the parking lot or garage.

1. Before taking any action, discuss your plans with supervisors. Act quickly to avoid starting the rumor mill and giving employees time to think about ways to sabotage. And consult a labor attorney to discuss the issues.

2. Notify your security manager after employees have worked their last shifts – but before they return to work to receive news of the termination. (If you don’t have a security officer, consider hiring an outside firm to help in the termination process.) Plan to bar the employees’ access to the building when the termination interview starts, and deactivate any security codes the employees may have to the building.

3. Have your network administrator (with the help of supervisors) determine every computer system the employees can access and deactivate passwords. Common types of computer access include:

• Company intranets,
• Customer lists,
• E-mail lists,
• Company communications and library,
• HR systems involving benefits and job postings, and
• Databases used on the job.

4. Keep each termination interview private and compassionate. Avoid embarrassing ex-employees and assure them the details will be kept private.

5. During the termination interview ask for all company-related ID cards. Make sure employees return such equipment as cell phones and laptop computers.

6. Ask the security officer to accompany former employees to a private waiting room to pick up their belongings. Don’t let employees back into their work areas. You may be tempted to just escort them right to the reception area or parking lot, but this could be humiliating. Keep the entire procedure as private as possible.

The U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) recently identified an increase in fraudsters using the bureau’s name, insignia and powers to target the public in widespread schemes. FinCEN is tasked with safeguarding the U.S. financial system from illicit activity, combating money laundering and terrorism funding, and providing financial intelligence to promote national security. Here’s a rundown of the latest schemes and tips to help you avoid them.

MSB Fraud

According to a December 2024 FinCEN alert, scammers are registering as money services businesses (MSBs) with FinCEN and using that registration to appear legitimate. Registered businesses may claim that FinCEN vets, approves or licenses them, but the bureau doesn’t confer any such approvals. Scammers sometimes engage in virtual asset investment scams, instructing victims to buy virtual currency and send the funds to fraudulent MSBs. They might also direct potential victims to FinCEN’s MSB Registrant Search Page to gain credibility with potential investors.

Potential red flags for MSB schemes include:

• A company that’s registered as an MSB with FinCEN but isn’t licensed by any state financial regulatory authority where it claims to operate,
• A registered MSB that shares a street address with other recently registered MSBs, and
• A company with a limited online or social media presence that prominently highlights its registration or claims to be licensed by FinCEN, alongside unverified testimonials and promotions of risk-free high-return investments.

Impersonation Scams

Criminals use FinCEN’s name and insignia to impersonate the bureau and its employees in government imposter scams. Typically, they contact people through “spoofed” phone calls, text messages, emails or U.S. mail. Spoofing occurs when a perpetrator disguises an email address, sender name, phone number or URL to convince victims that they’re dealing with a trusted source.

A FinCEN imposter may already know a victim’s name, Social Security number and account numbers from information available on the “dark web” from data breaches. Scammers might demand payments for outstanding debts or anti-money laundering and countering the financing of terrorism (AML/CFT) financing violations. They may also provide fake documentation from FinCEN officials and threaten the arrest or seizure of victims’ accounts. Alternatively, scammers might claim that victims are entitled to financial grants. However, to receive the funds, the victim must first provide bank account information and pay a fee to the imposter to release the funds.

Potential red flags for these schemes include:

• Receipt of a phone call, text, email or mail from FinCEN demanding immediate payment,
• Receipt of a letter from the FinCEN director, deputy director, or other FinCEN or Treasury Department official requesting immediate payment, and
• Notifications about AML/CFT violations, outstanding debts or a Treasury grant.

BOI Reporting Schemes

To be clear, U.S. companies and U.S. citizens are currently exempt from FinCEN’s beneficial ownership information (BOI) reporting requirements. But that hasn’t stopped fraudsters from claiming that the reporting requirements remain in effect and using scare tactics to steal money or personal information from unwary victims. (See “The Ongoing BOI Reporting Saga Is Now Over for Domestic Companies” above.) However, foreign entities may still be required to file BOI reports with FinCEN.

Ongoing confusion and uncertainty about the rules have created opportunities for fraudsters. For example, some scammers charge victims to prepare reports but never actually send them to FinCEN. They may also falsely claim FinCEN charges a filing fee. In addition to claiming to be legitimate third-party filing companies, scammers may use names similar to “FinCEN” or purport to be another government agency and send victims fake reporting forms.

Potential red flags for these schemes include:

• Third-party filing services with little or no online presence,
• Third-party filers with names similar to legitimate companies or government agencies, and
• Claims that failure to file or make a payment to FinCEN will lead to fines, penalties or legal action.

An Ounce of Prevention

The first step to avoid becoming a victim of these schemes is understanding how FinCEN operates. Notably, the bureau never:

• Contacts the general public to request payment or provide specific information (other than general information about BOI reporting) by phone, text, email or mail,
• Sends direct invitations to connect on social media,
• Demands immediate payment or asks people to move their money to a safe location,
• Freezes assets or blocks transfers,
• Requests payments to release funds or prove that you’re not involved in criminal activity,
• Charges for filing reports directly with FinCEN,
• Offers grants or collects debts, or
• Approves or endorses any business registered as an MSB.

If you’re unsure about an email, phone, social media or mail communication claiming to be from FinCEN, use the contact information listed on the bureau’s website to verify its legitimacy.  

Report Suspicious Behavior

If you receive questionable solicitations incorporating FinCEN’s name, immediately contact the Treasury Department’s Office of Inspector General and the Federal Trade Commission. Victims of cyber-enabled impersonation scams should file a complaint with the FBI’s Internet Crime Complaint Center and their nearest FBI field office. Your financial advisors can also advise you on more ways to safeguard you, your family and your assets from FinCEN and other fraud scams.

As the name implies, a “Savings Incentive Match Plan for Employees” (SIMPLE) is designed to be easy for employers to operate and for employees to manage their accounts. But the latest round of tax law changes is anything but simple. Among other key provisions, the SECURE 2.0 Act authorizes a complex set of new rules for “super” catch-up contributions from eligible older workers.

A SIMPLE Start

Let’s start with the basic rules for SIMPLE-IRAs — the most common and straightforward type of SIMPLE. (There are more complications with the lesser-used SIMPLE-401(k) version.)

SIMPLEs offer a simplified plan structure and reduced reporting requirements for certain small businesses. For starters, an employer can operate a SIMPLE only if it has no more than 100 employees who earned at least $5,000 in the previous year. Any employee who’s been paid at least $5,000 in compensation for any two prior years at the company — and expects to receive at least that much this year — can participate in the plan.  

SIMPLEs are available to virtually every type of business, including C Corporations, S corporations, limited liability companies (LLCs) and partnerships. Self-employed individuals can also use this setup.

Regular contributions to a SIMPLE are made on a pretax basis within generous limits, allowing them to grow and compound without any current tax erosion. Typically, the employer will offer a wide range of investment options, including mutual funds targeted to a retirement date.

In addition, an employer operating a SIMPLE must provide either:

• Matching elective contributions of up to 3% of compensation (but not less than 1% in no more than two out of five years), or
• Nonelective contributions of 2% of each eligible employee’s compensation.  

The maximum compensation taken into account for these purposes, which is adjusted annually for inflation, is $350,000 in 2025. Employer contributions made to employee accounts are generally deductible.

Contributions to SIMPLEs vest immediately, and employees can withdraw funds from the account anytime. But distributions made before age 59½ are taxable and may be subject to an additional penalty tax unless a special exception applies.

Important: The early withdrawal penalty from a qualified plan or traditional IRA typically equals 10% of the distribution amount. With a SIMPLE-IRA, however, the penalty is 25% for the first two years the employee participates in the plan. After the two-year period expires, the usual 10% penalty applies to early SIMPLE plan withdrawals.

When distributions are finally made, the payouts are taxed at ordinary income rates. Usually, plan participants will be in a lower tax bracket if they wait until retirement to take withdrawals. The required minimum distribution (RMD) rules for qualified plans also apply to SIMPLEs. As with other SIMPLE distributions, RMDs are taxed at ordinary income rates.

Contribution Limits for SIMPLEs

The limit on employee contributions to SIMPLE accounts is adjusted annually for inflation. For 2025, the contribution limit is $16,500 (up from $16,000 in 2024). Similar to 401(k)s, the tax law also allows participating employees age 50 or older to make catch-up contributions to help grow their nest eggs later in life. This is where things start to get tricky.

Notably, SECURE 2.0 established new rules based on company size and created a special category of employees allowed to make “super” catch-up contributions. So, there are now two kinds of catch-up contribution opportunities for older plan participants:

1. Regular catch-up contributions. For 2025, the limit for regular catch-up contributions made by employees ages 50 and older is $3,500. This figure is indexed annually for inflation but is the same for 2024 and 2025.

2. Super catch-up contributions. Beginning in 2025, employees ages 60 through 63 can contribute more to their regular SIMPLE account. The limit in 2025 is equal to the greater of $5,000, 150% of the regular catch-up contribution limit or $5,250. After age 64, the limit reverts to the regular catch-up contribution limit.

Thus, the basic maximum SIMPLE contribution in 2025 is:

• $16,500 for employees under age 50,
• $20,000 for employees ages 50 through 59 ($16,500 plus $3,500),
• $21,750 for employees ages 60 through 63 ($16,500 plus $5,250), and
• $20,000 for employees ages 64 or older ($16,500 plus $3,500).

But wait, there’s more. SECURE 2.0 throws a few extra monkey wrenches into the mix.

The 10% rule. The contribution limit for all eligible employees, regardless of age, is increased by 10% for an eligible employer with 25 or fewer employees. This increase is automatic if the employer had no more than 25 employees earning at least $5,000 in the prior year. What’s more, employers with more than 25 employees can elect to offer the 10% increase if they provide either:

• Matching contributions of up to 4% of compensation (instead of the regular 2%), or
• Nonelective contributions of 3% of each eligible employee’s compensation (instead of the regular 3%).

So, if you benefit from the 10% boost, your employer either has 25 or fewer employees or makes the higher matching contribution for nonelective contributions. When the 10% rule applies, the contribution limit increases to:

• $17,600 for employees under age 50,
• $21,450 for employees ages 50 through 59 ($17,600 plus $3,850),
• $22,850 for employees ages 60 through 63 ($17,600 plus $5,250), and
• $21,450 for employees ages 64 or older ($17,600 plus $3,850).

Note that the indexed limit for super catch-up contributions doesn’t benefit from the 10% increase regardless of the company’s size or if it makes matching or nonelective contributions.

Additional SECURE 2.0 Provisions

If all that wasn’t confusing enough, SECURE 2.0 includes other changes that affect SIMPLE plans. Significantly, employers can now establish Roth-type accounts within a SIMPLE plan, effective as of 2023, though Roth accounts aren’t currently mandatory. Unlike traditional SIMPLEs, contributions to a Roth SIMPLE will be included in the employee’s income in the year of the contribution.

However, RMDs won’t be required from Roth-type SIMPLE accounts. Also, if a SIMPLE permits Roth contributions, catch-up contributions must be made to this type of account for those earning above $145,000.

The rule requiring mandatory Roth-type catch-up contributions for high wage-earners was scheduled to take effect on January 1, 2024. However, the IRS postponed the effective date to January 1, 2026, to give employers more time to comply with the new requirements.

Finally, SECURE 2.0 increased the required beginning date (RBD) for RMDs from qualified plans and SIMPLEs from age 72 to age 73, beginning in 2023. The RBD is scheduled to increase to age 75 in 2033.

Late Start for Employers

Fortunately, it’s not too late if your company doesn’t already have a SIMPLE for the 2025 tax year. It has until October 1, 2025, to establish a plan that can receive 2025 contributions. If you have any questions about this option or the dizzying array of new SIMPLE rules, contact your professional advisors.

We’re thrilled to announce that our Managing Partner, Dennis Cole, has been named to Forbes’ inaugural list of America’s Best-in-State CPAs for 2025. This prestigious recognition, developed in collaboration with research firm Statista, honors standout Certified Public Accountants from across the United States for their professional excellence, commitment to client service, and contributions to the accounting profession.

The list was curated through a rigorous process involving peer recommendations, client feedback, and independent assessments of professional achievements. Those selected are seen as leaders in their field, demonstrating both technical knowledge and the ability to build lasting trust and results for their clients.

Dennis’ inclusion on this list is a testament to his dedication, leadership, and the exceptional work he has consistently delivered throughout his career. Under his guidance, Beers, Hamerman, Cohen & Burger has continued to grow and evolve—fostering a client-first culture and a standard of excellence we are proud to uphold.

“We’ve always known Dennis was among the best, but it’s wonderful to see that acknowledged on a national level,” said a member of our leadership team. “He brings integrity, expertise, and a personal touch to everything he does.”

To read more about this recognition, visit the official announcements:

• CTCPA News: 13 CTCPA Members Named to Forbes List
• Forbes: America’s Best-in-State CPAs 2025

Please join us in congratulating Dennis Cole on this well-deserved honor!

The U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) recently identified an increase in fraudsters using the bureau’s name, insignia and powers to target the public in widespread schemes. FinCEN is tasked with safeguarding the U.S. financial system from illicit activity, combating money laundering and terrorism funding, and providing financial intelligence to promote national security. Here’s a rundown of the latest schemes and tips to help you avoid them.

MSB Fraud

According to a December 2024 FinCEN alert, scammers are registering as money services businesses (MSBs) with FinCEN and using that registration to appear legitimate. Registered businesses may claim that FinCEN vets, approves or licenses them, but the bureau doesn’t confer any such approvals. Scammers sometimes engage in virtual asset investment scams, instructing victims to buy virtual currency and send the funds to fraudulent MSBs. They might also direct potential victims to FinCEN’s MSB Registrant Search Page to gain credibility with potential investors.

Potential red flags for MSB schemes include:

• A company that’s registered as an MSB with FinCEN but isn’t licensed by any state financial regulatory authority where it claims to operate,
• A registered MSB that shares a street address with other recently registered MSBs, and
• A company with a limited online or social media presence that prominently highlights its registration or claims to be licensed by FinCEN, alongside unverified testimonials and promotions of risk-free high-return investments.

Impersonation Scams

Criminals use FinCEN’s name and insignia to impersonate the bureau and its employees in government imposter scams. Typically, they contact people through “spoofed” phone calls, text messages, emails or U.S. mail. Spoofing occurs when a perpetrator disguises an email address, sender name, phone number or URL to convince victims that they’re dealing with a trusted source.

A FinCEN imposter may already know a victim’s name, Social Security number and account numbers from information available on the “dark web” from data breaches. Scammers might demand payments for outstanding debts or anti-money laundering and countering the financing of terrorism (AML/CFT) financing violations. They may also provide fake documentation from FinCEN officials and threaten the arrest or seizure of victims’ accounts. Alternatively, scammers might claim that victims are entitled to financial grants. However, to receive the funds, the victim must first provide bank account information and pay a fee to the imposter to release the funds.

Potential red flags for these schemes include:

• Receipt of a phone call, text, email or mail from FinCEN demanding immediate payment,
• Receipt of a letter from the FinCEN director, deputy director, or other FinCEN or Treasury Department official requesting immediate payment, and
• Notifications about AML/CFT violations, outstanding debts or a Treasury grant.

BOI Reporting Schemes

To be clear, U.S. companies and U.S. citizens are currently exempt from FinCEN’s beneficial ownership information (BOI) reporting requirements. But that hasn’t stopped fraudsters from claiming that the reporting requirements remain in effect and using scare tactics to steal money or personal information from unwary victims. (See “The Ongoing BOI Reporting Saga Is Now Over for Domestic Companies” above.) However, foreign entities may still be required to file BOI reports with FinCEN.

Ongoing confusion and uncertainty about the rules have created opportunities for fraudsters. For example, some scammers charge victims to prepare reports but never actually send them to FinCEN. They may also falsely claim FinCEN charges a filing fee. In addition to claiming to be legitimate third-party filing companies, scammers may use names similar to “FinCEN” or purport to be another government agency and send victims fake reporting forms.

Potential red flags for these schemes include:

• Third-party filing services with little or no online presence,
• Third-party filers with names similar to legitimate companies or government agencies, and
• Claims that failure to file or make a payment to FinCEN will lead to fines, penalties or legal action.

An Ounce of Prevention

The first step to avoid becoming a victim of these schemes is understanding how FinCEN operates. Notably, the bureau never:

• Contacts the general public to request payment or provide specific information (other than general information about BOI reporting) by phone, text, email or mail,
• Sends direct invitations to connect on social media,
• Demands immediate payment or asks people to move their money to a safe location,
• Freezes assets or blocks transfers,
• Requests payments to release funds or prove that you’re not involved in criminal activity,
• Charges for filing reports directly with FinCEN,
• Offers grants or collects debts, or
• Approves or endorses any business registered as an MSB.

If you’re unsure about an email, phone, social media or mail communication claiming to be from FinCEN, use the contact information listed on the bureau’s website to verify its legitimacy.  

Report Suspicious Behavior

If you receive questionable solicitations incorporating FinCEN’s name, immediately contact the Treasury Department’s Office of Inspector General and the Federal Trade Commission. Victims of cyber-enabled impersonation scams should file a complaint with the FBI’s Internet Crime Complaint Center and their nearest FBI field office. Your financial advisors can also advise you on more ways to safeguard you, your family and your assets from FinCEN and other fraud scams.

Big news for U.S. businesses! FinCEN has issued an interim final rule removing the requirement for U.S. companies to report Beneficial Ownership Information (BOI) under the Corporate Transparency Act.

What does this mean?

• U.S.-created entities are no longer required to report BOI.
• Foreign entities still need to report but are not required to list U.S. persons as beneficial owners.
• FinCEN is accepting comments before finalizing the rule later this year.

Stay informed and ensure your business remains compliant.

Read more: fincen.gov

The twisty journey of the Corporate Transparency Act’s (CTA’s) beneficial ownership information (BOI) reporting requirements has taken yet another turn. Following a February 18, 2025, ruling by a federal district court (Smith v. U.S. Department of the Treasury), the requirements are technically back in effect for covered companies. But a short time later, the U.S. Department of the Treasury announced it would suspend enforcement of the CTA against domestic reporting companies and U.S. citizens. Here are the latest developments and what they may mean for you.

Latest announcement

On March 2, the Treasury Department stated the following in a press release: “The Treasury Department is announcing today that, with respect to the Corporate Transparency Act, not only will it not enforce any penalties or fines associated with the beneficial ownership information reporting rule under the existing regulatory deadlines, but it will further not enforce any penalties or fines against U.S. citizens or domestic reporting companies or their beneficial owners after the forthcoming rule changes take effect either. The Treasury Department will further be issuing a proposed rulemaking that will narrow the scope of the rule to foreign reporting companies only. Treasury takes this step in the interest of supporting hard-working American taxpayers and small businesses and ensuring that the rule is appropriately tailored to advance the public interest.”

The reinstatement

On January 23, 2025, the U.S. Supreme Court granted the government’s motion to stay, or halt, a nationwide injunction issued by a federal court in Texas (Texas Top Cop Shop, Inc. v. Bondi). But a separate nationwide order from the Smith court was still in place until February 18, 2025, so the reporting requirements remained on hold. With that order now stayed, the new deadline to file a BOI report with the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) is technically March 21, 2025.

Reporting companies that were previously given a reporting deadline later than this deadline are required to file their initial BOI report by the later deadline. For example, if a company’s reporting deadline is in April 2025 because it qualifies for certain disaster relief extensions, it’s allowed to follow the April deadline rather than the March deadline.

Important: Due to ongoing litigation in another federal district court (National Small Business United v. Yellen), members of the National Small Business Association as of March 1, 2024, aren’t currently required to report their BOI to FinCEN.

BOI requirements in a nutshell

The BOI requirements are intended to help prevent criminals from using businesses for illicit activities, such as money laundering and fraud hidden through shell companies or other opaque ownership structures. Companies covered by the requirements are referred to as “reporting companies.”

Such businesses have been reporting certain identifying information on their beneficial owners. FinCEN estimated that approximately 32.6 million companies would be affected by the reporting rules in the first year.

Beneficial owners are defined as natural persons who either directly or indirectly 1) exercise substantial control over a reporting company, or 2) own or control at least 25% of a reporting company’s ownership interests. Individuals who exercise substantial control include senior officers, important decision makers, and those with authority to appoint or remove certain officers or a majority of the company’s governing body.

For each beneficial owner, under the requirements, a reporting company must provide the individual’s:

• Name,
• Date of birth,
• Residential address, and
• Identifying number from an acceptable identification document, such as a passport or U.S. driver’s license, and the name of the issuing state or jurisdiction of the identification document.

A reporting company also must submit an image of the identification document.

BOI reporting isn’t an annual obligation. However, companies must report any changes to the required information previously reported about their businesses or beneficial owners. Updated reports are due no later than 30 days after the date of the change.

Stay tuned

The temporary stay of the injunction in the Smith case applies only until the U.S. Court of Appeals for the Fifth Circuit rules on FinCEN’s appeal of the lower court’s original injunction order in that case. The appeal was filed on February 5, 2025. Additional challenges are also proceeding in other courts. It’s also possible that Congress will pass legislation to repeal the BOI requirements.

Meanwhile, the March 2 Treasury announcement appears to ease compliance concerns for domestic companies. However, FinCEN will continue to enforce requirements for foreign reporting companies. Contact us if you have questions about your situation.

Although 2024 is in the review mirror, you may still be able to take actions in early 2025 to lower last year’s federal income tax bill. Here are five ideas to consider.

1. Make a Deductible HSA Contribution

If you had qualifying high-deductible health insurance coverage last year, you can still establish a health savings account (HSA) and make a deductible contribution to it for the 2024 tax year. The contribution deadline for a tax year is April 15 of the following tax year.

For 2024, the maximum deductible HSA contribution is:

• $4,150 for self-only coverage, or
• $8,300 for family coverage (anything other than self-only coverage).

The write-off for HSA contributions is an above-the-line deduction. That means you can take it even if you don’t itemize.

The HSA contribution privilege isn’t subject to income limitations. Even billionaires can contribute if they have qualifying high-deductible health insurance coverage and meet the other eligibility requirements.

2. Choose to Deduct State and Local Sales Taxes Instead of State and Local Income Taxes 

You may be able to claim itemized deductions on last year’s federal income tax return for state and local sales taxes instead of state and local income taxes. This option may make sense for people who:

• Live in a jurisdiction with low or no state and local personal income taxes, or
• Owe little or no state income taxes for whatever reasons.

Additionally, this option is relevant only if your allowable itemized deductions for last year exceed your allowable standard deduction for last year. The basic standard deductions for 2024 are:

• $29,200 for married couples who file jointly,
• $21,900 for heads of households, and
• $14,600 for single people and married people who file separately. 

Important: The annual limit for deducting all categories of state and local taxes (SALT) combined is $10,000 ($5,000 for married people who file separately). So, if you paid more than $10,000 for state and local property taxes in 2024, you’ve already hit the annual limit. You don’t need to consider the amounts paid for state income or sales taxes.   

However, suppose you benefit from choosing the state sales tax option. In that case, you can use an IRS-provided table (based on where you live, your income and the number of your dependents) to determine your allowable sales tax deduction. If you use the table, you also can add on actual sales tax amounts from major purchases, such as:

• Motor vehicles, including motorcycles, off-road vehicles and RVs,
• Boats,
• Aircraft, and
• Home improvements. 

On the other hand, if you kept receipts from all your 2024 purchases, you can add up the actual sales tax amounts and deduct the total (subject to the overall SALT limitation). This requires significant legwork, but it may result in a higher deduction than using the IRS table.  

3. Make a Deductible Traditional IRA Contribution

If you’ve not yet made a deductible traditional IRA contribution for your 2024 tax year, you can still do so between now and April 15. If your 2024 income permits, you can potentially make a deductible contribution of up to $7,000 ($8,000 if you were age 50 or older as of December 31, 2024). If you’re married, your spouse may also be eligible to make a separate contribution.

There’s currently no age limit for making deductible traditional IRA contributions. In prior years, this option wasn’t available to people who were 70 ½ or older. That restriction no longer exists.

But there are some important caveats to consider. First, you must have enough earned income (typically from jobs or self-employment) for 2024 to equal or exceed your IRA contribution for the year. If you’re married, you or your spouse (or both) can be the source of the earned income. 

Second, deductible IRA contributions are phased out (reduced or eliminated) if your 2024 modified adjusted gross income (MAGI) exceeds applicable limits and you and/or your spouse participated in a tax-favored retirement plan last year. Tax-favored retirement plans include employer-sponsored plans and self-employed plans, such as Simplified Employee Pensions (SEPs), Savings Incentive Match Plans for Employees (SIMPLE) IRAs or Keogh plans.

The 2024 MAGI phaseout ranges for making deductible traditional IRA contributions are as follows:

• $77,000 and $87,000 for single individuals who participated in a tax-favored retirement plan in 2024,
• $123,000 and $143,000 for married couples who both participated in tax-favored retirement plans in 2024, 
• $123,000 and $143,000 for a married individual who participated in a tax-favored retirement plan but whose spouse didn’t participate in a tax-favored retirement plan in 2024, and
• $230,000 and $240,000 for a married individual who didn’t participate in a tax-favored retirement plan but whose spouse participated in a tax-favored retirement plan in 2024.

If you’re single and didn’t participate in a tax-favored retirement plan in 2024, there’s no MAGI limit on making a deductible traditional IRA contribution for 2024 (assuming you have sufficient earned income for the year).

Likewise, if you’re married and neither you nor your spouse participated in a tax-favored retirement plan last year, there’s no MAGI limit on making a deductible traditional IRA contribution for 2024 (assuming you have sufficient earned income for the year). In this situation, both spouses can make separate contributions if you have IRAs set up in your respective names.        

4. Add Up Health Insurance Premiums and Medical Expenses

You can claim an itemized medical expense deduction to the extent your total qualifying expenses exceed 7.5% of your adjusted gross income (AGI) for the year. This may seem like a daunting hurdle to clear, but it may be worth considering, especially if you’re older, have a serious medical condition, or support one or more dependents. For example, if you pay health care expenses for an elderly parent who qualifies as your dependent, you can deduct their qualifying expenses, too.

When adding up your medical expenses, don’t forget to include premiums for private health insurance coverage and premiums for Medicare health insurance. These items are costly and can help put you over the AGI limit.

Important: If you’re self-employed or an S corporation shareholder-employee, you can probably claim an above-the-line deduction for your health insurance premiums — including Medicare premiums. Ask your tax advisor for details.

5. Deduct 2025 Personal Casualty Loss on Your 2024 Return

Under current law, you may be able to claim a tax deduction for personal casualty losses from a federally declared disaster. A special rule allows you to claim a deduction on either:

• Your return for the year the casualty event actually occurs, or
• An original or amended return for the year before the casualty event.

In effect, this timing rule allows you to claim the deduction in the year when it’s most beneficial.

If you’ve already been affected by a federally declared disaster in 2025 (such as the recent California wildfires) or you’re hit with another federally declared disaster that happens later this year, you can elect to deduct qualifying losses from 2025 on your 2024 return instead of waiting to deduct it on your 2025 return. Choosing this option may allow you to get tax relief sooner. Plus, if your 2024 income is lower than your 2025 income, claiming the loss in 2024 can also result in a bigger deduction.

How much can you deduct for qualifying losses related to personal-use property? Under the general rules for claiming an itemized deduction for personal-use property losses incurred between 2018 and 2025, the disaster must be on the IRS list of federally declared disasters, and the full amount of the loss isn’t deductible for federal income tax purposes. To calculate your allowable personal casualty loss deduction under the general rules, you must:

• Subtract any insurance proceeds,
• Subtract $100 per casualty event, and
• Subtract 10% of your AGI for the year you claim the loss deduction.

The Federal Disaster Tax Relief Act, which became law in December 2024, liberalized the rules for deducting eligible personal casualty losses for some taxpayers. This law introduced new tax relief for victims of federally declared disasters that began on or after December 28, 2019, and on or before December 12, 2024. It allows eligible taxpayers to claim personal casualty losses without itemizing deductions on Schedule A. In addition, a casualty loss from these qualified disasters doesn’t need to exceed 10% of AGI. However, the $100 limit per casualty is increased to $500.

Important: If you were a victim of a federally declared disaster that falls under the scope of the Federal Disaster Tax Relief Act, you may qualify for a tax refund from a prior year under the liberalized rules. Contact your tax advisor to see if you should file an amended return.

These are the rules for personal casualty losses. Business casualty losses can be deducted without limitations.

Coming Soon

The federal income tax filing deadline for individuals is just around the corner. Contact your tax advisor to determine whether these or any other last-minute strategies might work for your circumstances.

The deadlines for filing 2024 tax returns (or extensions) are fast approaching. Has your small business taken advantage of all the legitimate ways to lower its federal income tax bill for 2024? Fortunately, it may not be too late to make some tax-smart moves for last year.

Here are five last-minute tax breaks that may benefit business owners and strategies to optimize your tax results for 2024. These breaks may be available to the following types of entities:

• C corporations,
• Sole proprietorships,
• Single-member limited liability companies (LLCs) treated as sole proprietorships for tax purposes, and
• Pass-through entities, including partnerships, LLCs treated as partnerships for tax purposes and S corporations. 

1. QBI Deductions 

The deduction based on qualified business income (QBI) was a key element of the Tax Cuts and Jobs Act. This break is available to individual owners of sole proprietorships, single-member LLCs treated as sole proprietorships for tax purposes and pass-through entities. Estates and trusts that own these types of businesses are also eligible for the QBI deduction.  

For tax years through 2025, the deduction can be up to 20% of the owner’s QBI. It’s subject to restrictions that can apply:

• At higher income levels, and
• Based on the owner’s taxable income.

It’s important to remember that the QBI deduction can also be claimed for up to 20% of income from qualified real estate investment trust dividends and up to 20% of qualified income from publicly traded partnerships. 

Because of the income limitations on this deduction, other last-minute tax planning moves may inadvertently increase or decrease your allowable QBI deduction. For instance, claiming big first-year depreciation deductions or making deductible retirement plan contributions (discussed below) can reduce QBI and lower your allowable QBI deduction. Work with your tax advisor to get the best overall tax results by making the right moves on your 2024 business return or forms.        

2. Section 179 First-Year Depreciation Breaks

The first-year Section 179 depreciation deduction privilege allows many small businesses to write off the full cost of some or all of their 2024 depreciable asset additions on their 2024 federal income tax returns. For tax years beginning in 2024, the maximum Sec. 179 deduction is $1.22 million.

Eligible assets include:

• Depreciable personal property, such as equipment, computer hardware and peripherals,
• Transportation equipment, including certain passenger vehicles, and
• Commercially available software.

Sec. 179 deductions can also be claimed for real estate qualified improvement property (QIP) up to the maximum allowance of $1.22 million. QIP is defined as an improvement to an interior portion of a nonresidential building placed in service after the date the building was placed in service. However, expenditures attributable to the enlargement of a building, elevators or escalators, or the internal structural framework of a building don’t count as QIP and usually must be depreciated over 39 years. There’s no separate Sec. 179 deduction limit for QIP. These deductions reduce your maximum Sec. 179 deduction dollar for dollar.

For nonresidential real property, Sec. 179 deductions are also allowed for qualified expenditures for:

• Roofs,
• HVAC equipment,
• Fire protection and alarm systems, and
• Security systems.

Finally, eligible assets include depreciable personal property used predominantly to furnish lodging, such as furniture and appliances in a property rented to transients.

Important: A phaseout rule kicks in if you put more than $3.05 million of qualifying assets into service last year. In addition, Sec. 179 deductions can’t cause an overall business tax loss. The Sec. 179 deduction limitation rules can be tricky if you own an interest in a pass-through business entity.

3. First-Year Bonus Depreciation Deductions

Depreciable assets that can’t be written off in 2024 under the Sec. 179 deduction rules may qualify for first-year bonus depreciation deductions. Specifically, 60% first-year bonus depreciation can be claimed for qualified assets that were placed in service in calendar year 2024.

Important: The limitations to Sec. 179 deductions don’t apply to first-year bonus depreciation deductions. 

Eligible assets for first-year bonus depreciation include:

• Depreciable personal property, such as equipment, computer hardware and peripherals,
• Transportation equipment, including certain passenger vehicles, and
• Commercially available software.

First-year bonus depreciation can also be claimed for real estate QIP.

The first-year bonus depreciation percentage is scheduled to drop to 40% for qualified assets placed in service in calendar-year 2025, unless Congress passes legislation to change the bonus depreciation rules. There’s also a possibility that Congress will reinstate 100% first-year bonus depreciation for 2025. Contact your tax advisor for the latest developments on this potentially valuable tax break.

4. Tax-Favored Retirement Plans

If your business doesn’t already have a tax-favored retirement plan, now might be the time to take the plunge. Current rules allow for significant annual deductible contributions.

For example, you can set up a Simplified Employee Pension (SEP) IRA if you’re self-employed. Then, you can contribute up to 20% of your net self-employment income, with a maximum contribution of up to $69,000 for your 2024 tax year. If you’re employed by your own corporation, you can contribute up to 25% of your salary, with a maximum contribution of up to $69,000. If you’re self-employed and in the 32% federal income tax bracket, making a maximum contribution could cut what you owe Uncle Sam for 2024 by a whopping $22,080 ($69,000 times 32%). If you’re employed by your own C corporation, a company contribution of $69,000 to your account could cut your company’s tax bill by $14,490 ($69,000 times 21%). 

Other small business retirement plan options include:

• 401(k) plans and solo 401(k)s that are set up for just one person,
• Self-employed defined contribution Keogh plans,
• Corporate defined contribution profit-sharing plans,
• Defined benefit pension plans, and
• Savings Incentive Match Plans for Employees (SIMPLE) IRAs.

Depending on your circumstances, these plans may allow bigger deductible contributions and/or more flexibility than a SEP-IRA.

Important: Your business can adopt a tax-favored retirement plan and fund it as late as the due date (including any extension) of its federal income tax return for the plan adoption year. The plan can then receive deductible contributions made by that due date. (See “Tax Filing Deadlines for 2024” at right.)

For instance, if you extend your 2024 personal tax return and operate a calendar-year sole proprietorship or single-member LLC that’s treated as a sole proprietorship for federal tax purposes, you have until October 15, 2025, to establish a plan and make the initial deductible contribution.

There’s a critical exception, however. To make a SIMPLE IRA contribution for the 2024 tax year, you must have set up the plan by October 1, 2024. So, it’s too late to use that option for 2024.

5. Business Casualty Loss Deductions

If your business has already been affected by a federally declared disaster in 2025 (such as the recent California wildfires) or is hit with another federally declared disaster that happens later this year, you can claim a deduction for an uninsured business casualty loss. You can elect to deduct qualifying losses from 2025 on your business’s 2024 return instead of waiting to deduct it for the 2025 tax year.

Choosing this option may allow you to get tax relief sooner. Plus, if your 2024 income is lower than your 2025 income, claiming the loss in 2024 can also result in a bigger deduction.  

For More Ideas

These are just five last-minute tax-saving maneuvers that small business owners may be able to make before Tax Day. As always, your tax professional can advise you on the optimal tax-saving strategies for your situation.