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2025 Year-End Tax Planning for Individuals

November 25, 2025/in Tax /by Sweta Joshi

Tax planning is one of the most important steps an individual taxpayer can take to take full advantage of new and expanded tax benefits, lower your taxable income, and set yourself up for a stronger financial position in the year ahead. A little preparation before December 31 can go a long way toward reducing your tax bill.

Maximize Your Retirement Contributions

Making the most of your retirement savings is one of the most effective ways to reduce your taxable income. Here are the updated limits for 2025:

401(k), 403(b), 457(b), and SARSEP Plans: You can contribute up to $23,500, with an additional $7,500 catch-up contribution for those aged 50 and older, or $11,250 for ages 60–63.
SIMPLE IRA: The limit is $16,500 (or $17,600 for small employers), plus a $3,500 catch-up contribution ($5,250 for ages 60–63).
SEP or Profit-Sharing Plans: You can contribute less of $70,000 or 25% of your compensation.
Traditional or Roth IRA: Annual contribution limits are $7,000, with an extra $1,000 catch-up for those 50 and older.
Health Savings Accounts (HSAs): If you’re enrolled in a high-deductible health plan, individuals can save up to $4,300, and families up to $8,550. Those aged 55+ can contribute an extra $1,000. If both spouses are over 55 and HSA-eligible, each may add the additional amount to their own account.

Adjust Your W-4

Fine-tuning your tax withholding can help you avoid surprises at tax time.

Owed a big balance last year? Increase your withholding to stay on track.
Got a large refund? You might prefer more take-home pay during the year — simply reduce your withholding.
You can update your W-4 anytime. Download the form from the IRS website, complete it, and submit it to your HR or payroll department. Many employers also allow online updates.

Maximize Your Deductions

Your financial situation changes from year to year, so it’s worth revisiting whether itemizing or taking the standard deduction makes more sense. You can switch between these methods annually.

If you plan to itemize, consider timing certain expenses strategically — for example, you could “bunch” charitable donations into a single year to exceed the standard deduction threshold.

For 2025, the standard deduction is $15,000 for single filers and $30,000 for married couples filing jointly. If you’ve bought a home or had significant medical expenses this year, itemizing might offer better tax savings.

Five main categories of itemizable deductions include:

Medical expenses
Mortgage interest
State and local taxes
Charitable contributions
Casualty and theft losses from federally declared disasters

Remember: Medical expenses are deductible only when they exceed 7.5% of your Adjusted Gross Income (AGI). Grouping expenses into one year can help you reach that limit. Keep detailed receipts and records to make itemizing simpler and more accurate.

Plan for Expiring Energy and Vehicle Credits

Complete energy-efficient home improvements before certain credits expire after 2025.
You may be eligible to deduct up to $10,000 of interest on qualifying auto loans initiated after December 31, 2024.

Avoid Underpayment Penalties

To prevent penalties, make sure your withholdings or estimated payments cover at least 110% of your prior year’s tax liability or 90% of your 2025 tax liability — whichever is less. Don’t forget to include net investment income tax in your estimates.

Passive Activity Considerations

If you’d like to classify one or more business or trade activities as nonpassive, keep thorough and contemporaneous records showing how much time you spent and the type of work you performed. Accurate documentation helps ensure proper tax treatment.

Final Thoughts

Be mindful of recent legislative updates — such as the exclusion of qualified tip income, overtime pay adjustments, an additional $6,000 deduction for seniors aged 65+, and the new auto loan deduction. Running a quick tax projection can show how these changes might affect your overall tax picture.

By staying organized and taking a proactive approach, you can make the most of the opportunities 2025 has to offer. Thoughtful planning now can help minimize your taxes, take advantage of valuable credits, and keep your financial goals on track for the future.

As always, should you have questions about year-end tax planning for individuals or other matters affecting you or your business, please call 215.675.8364 or email us to speak with a CPA today.

DISCLAIMER: All communications by Wouch, Maloney & Co., LLP intend to provide general information, as of the date of the communication, and may reference information from reputable sources. Although our firm has made every reasonable effort to ensure that the information provided is accurate, we make no warranties, expressed or implied, on the information provided. Please be aware that this is not a comprehensive analysis of the subject matter covered and is not intended to provide specific recommendations to you or your business with respect to the matters addressed.

2025 Year-End Tax Planning for Businesses

November 4, 2025/in Tax /by Sweta Joshi

With the extended deadlines now in the rearview mirror it is the perfect time to take a strategic look at year-end tax planning. Proactive preparation can help reduce tax burdens, improve cash flows, and position companies for long-term success. With the passage of the One Big Beautiful Bill Act (OBBBA), several key tax provisions are changing, many of which will directly affect upcoming filings. Below are some important areas to review before year-end.

1. Schedule a Meeting with Your CPA

Now is the time to connect with your CPA to review your financial position and plan strategically for tax season. A year-end tax planning meeting helps prevent surprises and allows for proactive adjustments. With the OBBBA introducing updates to bonus depreciation, Section 163(J) interest limitations, and R&D expense rules, modeling the impact of these provisions can reveal new opportunities and help you plan accordingly for cash flow or investment purposes.

2. Reconcile Bank Accounts and Review Accounting Records

Accurate records are the foundation of effective tax planning. Perform bank reconciliations and thoroughly review your accounting files to ensure all income and expenses are properly recorded. Look for unusual balances, make necessary adjustments, and resolve discrepancies promptly. Clean, reconciled books not only simplify tax preparation but also provide a solid base for implementing year-end tax-saving strategies.

3. Maximize Depreciation

If your business has acquired, built, or renovated real estate, a cost segregation study can accelerate depreciation deductions and enhance cash flow. By reclassifying certain components—such as lighting, flooring, and landscaping—from real property to shorter-lived personal property, businesses can take advantage of faster depreciation schedules (5, 7, or 15 years).

WM Wisdom:
Coordinate Section 179 and bonus depreciation to maximize deductions and think about how it will impact your state and local tax returns.

100% Bonus Depreciation

Under the OBBBA, 100% bonus depreciation has been permanently reinstated for qualified property acquired and placed in service after January 19, 2025.

Property placed in service between January 1–19, 2025 qualifies for a 40% bonus depreciation rate.
Section 179 expensing limits for 2025 are $2,500,000, phasing out after $4,000,000, and fully eliminated at $6,500,000.
Section 179 applies on an asset-by-asset basis, while bonus depreciation applies to all assets within a class unless the taxpayer elects out.

4. Review Eligibility for Business Tax Credits

Don’t overlook valuable business tax credits that can directly reduce your tax liability. The research credit rewards businesses for increasing qualified research activities.

Energy credits, such as the energy credit (IRC Sec. 48), clean electricity investment credit (IRC Sec. 48E), and clean electricity production credit (IRC Sec. 45Y), are available for investments in renewable energy and energy-efficient property. However, many energy credits are being phased out or terminated after 2025 due to recent OBBB legislation, especially those for clean vehicles, alternative fuel property, and residential clean energy. Hiring credits, such as the work opportunity credit (IRC Sec. 51) and empowerment zone employment credit (IRC Sec. 1396), incentivize hiring from targeted groups and are also set to expire after 2025. Review your eligibility for these credits now, as timely action may be required to capture expiring incentives.

5. Entity-Specific Year-End Considerations

S Corporations:
Ensure reasonable compensation is paid to shareholder-employees. Review basis and at-risk limitations to ensure losses can be fully utilized. Year-end capital contributions or shareholder loans can increase basis if needed.

Partnerships:
Optimize allocations, confirm partners have sufficient basis and at-risk amounts for loss deductions. Making additional contributions or adjusting debt shares before year-end can help fully utilize available deductions.

Final Thoughts

With the evolving tax landscape under the OBBBA, early preparation and strategic guidance from your CPA are more valuable than ever. At Wouch Maloney, we understand that navigating year-end tax planning can be complex, especially with the new tax rule changes. Our team of experienced professionals is here to help you develop strategies tailored to your business’s unique needs.

As always, should you have questions on this or other matters affecting you or your business, please call 215.675.8364 or email us to speak with a CPA today.

Business Provisions in the One Big Beautiful Bill Act of 2025

July 16, 2025/in OBBBA /by Sweta Joshi

Last week, we provided a general overview of the major tax provisions of the One Big Beautiful Bill (OBBB), which was signed into law on July 4, 2025. Today, we delve deeper into the specific business tax provisions. As with any form of sweeping tax legislation, there are still many questions regarding the specifics of these provisions, and as such we would alert readers that there may be a technical corrections bill in the next 90 days to address these concerns. Our team will continue to monitor updates and provide answers and solutions as they become available.

In this article, topics include:

Qualified Business Income (QBI) Deduction (Section 199A)
Limit on Business Interest Deduction
Bonus Depreciation & Sec. 179
100% Depreciation for Real Property Used for Producing Tangible Personal Property
Research and Development (R&D) Expensing
Qualified Small Business Stock (QSBS)
Charitable Contributions for Corporations
1099 Reporting
Estate and Gift Tax Exemption

Qualified Business Income (QBI) Deduction (Section 199A)

The 20% QBI deduction for pass-through entities (S corporations, partnerships, and sole proprietorships) is made permanent. There is also a new minimum deduction of $400 for active business owners with at least $1,000 in QBI, starting in 2026. The Act increased the phase in threshold for single filers from $50,000 to $75,000 and joint filers from $100,000 to $150,000, which will allow more taxpayers to take advantage of the deduction. QBI was originally scheduled to sunset at the end of 2025.

Limit on Business Interest Deduction

The limitation on the deductibility of business interest reverts to the more relaxed rule that was in effect between 2017 and 2022 (generally, 30% of EBITDA). For tax years beginning after December 31, 2021, depreciation and amortization deductions were not added back to tentative taxable income when calculating ATI. This effectively made ATI a tax-adjusted “EBIT” (Earnings Before Interest and Taxes) measure. This change generally resulted in a smaller ATI, and consequently, a lower allowable business interest deduction for many businesses. This is an important modification based on the next change we’ll discuss.

Bonus Depreciation & Sec. 179

The OBBB permanently reinstates 100% bonus depreciation for eligible business property acquired and placed in service after January 19, 2025. This allows businesses to deduct the full cost of qualifying assets in the year they are placed in service, encouraging investment. For property acquired or subject to a binding contract before January 20, 2025, the original phase-down schedule applies (i.e., 40% for 2025, 20% for 2026).

Increased Sec. 179 Expensing Limits – The Act increases the statutory expensing limit to $2,500,000 and increases the phase-down threshold to $4,000,000. This is effective for property placed in service in tax years beginning after December 31, 2024. For comparison, in the 2024 tax year, the maximum Section 179 expense deduction was $1,220,000 with a basis threshold of $3,050,000.

100% Depreciation for Real Property Used for Producing Tangible Personal Property

The Act allows for a temporary, elective, 100% expensing provision for certain newly constructed nonresidential real property used in qualified production activities. This provision applies to property where construction began after January 19, 2025, and before January 1, 2029, and is placed in service by the end of 2030. Qualified production activities, in general, include the manufacturing, production, and refining of tangible personal property within the United States, excluding agricultural and chemical production. It is important to note if a construction contractor builds a general commercial or office building for rental purposes (e.g., an office complex, a retail strip mall), these properties are not generally used for manufacturing, production, by the owner/taxpayer and therefore would not qualify for 100% deduction.

Research and Development (R&D) Expensing

The ability for businesses to immediately expense certain domestic research and experimental expenditures (rather than amortize them over five years) is restored. For taxable years beginning after December 31, 2024, The Act repeals the requirement to capitalize and amortize domestic R&D expenditures and instead allows taxpayers to immediately deduct domestic research or experimental expenditures paid or incurred during the taxable year. However, expenditures attributable to foreign research must still be capitalized and amortized over 15 years.

Taxpayers who previously capitalized and amortized domestic R&D costs under the prior law are given transition relief: they may elect to deduct any remaining unamortized domestic R&D expenditures in the first taxable year beginning after December 31, 2024, or alternatively, deduct such remaining unamortized amounts ratably over the two taxable years beginning after that date.

This election is available to all taxpayers, but the bill provides a special retroactive option for certain small businesses, allowing them to apply the new expensing rules retroactively to taxable years beginning after December 31, 2021, by filing amended returns within one year of enactment. This retroactive relief is not available to large taxpayers, who must apply the new rules prospectively. We recommend working with your tax advisors to determine the most suitable approach. Given current IRS staffing levels, the processing of amended returns may take considerable time, so it may be more practical to claim the deduction in 2025. We are currently awaiting guidance on how to proceed for taxpayers who have filed extensions in 2024.

Qualified Small Business Stock (QSBS)

The tax benefits associated with QSBS are significantly enhanced. This includes a new three-tiered capital gain exclusion (50% for 3+ years, 75% for 4+ years, 100% for 5+ years), an increased maximum capital gain exclusion from $10 million to $15 million per issuer, and an increase in the aggregate gross asset test for QSBS eligibility from $50 million to $75 million. These changes apply to QSBS issued after July 4, 2025. Historically, QSBS had to be held for more than five years from the date of original issuance to qualify for the gain exclusion.

Charitable Contributions for Corporations

The deduction for corporate charitable contributions is limited to amounts exceeding 1% of modified taxable income, with a cap at 10% of modified taxable income.

1099 Reporting

Payments to non-employees for personal services must be reported on an “information return,” commonly called a Form 1099-NEC, if the payment is $600 or more in a calendar year. Beginning in 2026, the new Act increases the $600 threshold to $2,000, which will then be adjusted for inflation beginning in 2027.

Estate and Gift Tax Exemption

The higher lifetime gift and estate tax exemption (initially doubled by the TCJA) is made permanent and increased to $15 million per person ($30 million per married couple) starting in 2026, with annual inflation indexing. This provides more certainty for wealth transfer planning. The estate and gift tax exemption was scheduled to sunset at the end of 2025 to its pre-2018 level to around $5-6 million per person.

We will continue this series on the One Beautiful Bill Act of 2025 next week. As always, should you have questions on this or other matters affecting you or your business, please call 215.675.8364 or email us today.

DISCLAIMER: All communications by Wouch, Maloney & Co., LLP intend to provide general information, as of the date of the communication, and may reference information from reputable sources. Although our firm has made every reasonable effort to ensure that the information provided is accurate, we make no warranties, expressed or implied, of the information provided. Please be aware that this is not a comprehensive analysis of the subject matter covered and is not intended to provide specific recommendations to you or your business with respect to the matters addressed.

Post-Tax Season Checklist — What to Do After April 15

May 6, 2025/in Tax /by Sweta Joshi

The April 15 tax filing deadline has passed and it’s tempting to forget about taxes until next year. Before you move on, please take a few final steps to ensure everything is completed for your 2024 return—and set yourself up for a smoother 2025 season.

Check your return status

If you filed electronically, you or your tax preparer should receive confirmation from the IRS within 2–3 business days. No confirmation? Be sure to follow up.

Confirm your tax payment was processed

If you scheduled your payment to be auto deducted on April 15, verify that the funds have been withdrawn. Some banks take longer to process.
If it’s been more than a week and the funds haven’t been debited, contact IRS e-File Payment Services at 1-888-353-4537. (Wait 7–10 days after your return was accepted before calling.)

Track your refund

Electronic filers with direct deposit: Expect refunds within 21 days.
Paper filers: Refunds usually arrive within 6–8 weeks.

Track the status of your refund

Online: Where’s My Refund?
Phone: Call the IRS TeleTax System at 1-800-829-4477
Be ready with your Social Security number, filing status, and the exact refund amount.

Review your filed return

Even if we prepared your return, it’s wise to review it for your own understanding. A better grasp of your tax situation helps with:

Future planning conversations
Withholding accuracy — Use the IRS Tax Withholding Estimator to ensure your paycheck withholding is on track.
W-4 adjustments — We’re happy to help you complete a new W-4 or review potential changes throughout the year.

Consider amending if new information surfaces

If a late document (e.g., K-1, 1099-INT) arrives post-filing, don’t ignore it. File Form 1040X to amend your return if the update is substantial. Amending now avoids potential IRS notices, penalties, and interest later.

Retain tax records safely

The IRS recommends keeping copies of returns and related documents, including proof of mailing for at least 3 years. If you need a copy of a prior return, ask us — if we filed for you, we can provide a copy. You may also contact the IRS directly for free copies of your tax transcripts either by mail or phone.

Mail: Submit Form 4506-T or 4506-T-EZ
Phone: Call 800-908-9946

Go digital with your financial organization

Simplify next tax season by embracing electronic tools:

Automate your finances — Online bill pay + financial software downloads.
Digitally store your records — Scan and upload receipts to your own personal cloud-based storage.
Use ShareFile — We can set you up with a secure folder to upload documents, access past returns, and streamline communication.

Need help with any of the above?

We’re just a call or message away and always happy to assist you with your post-filing needs, withholding planning, or preparation for next year. As always, should you have questions on this or other matters affecting you or your business, please call 215.675.8364 or email us to speak with a CPA today.

Employee Achievement Awards

April 22, 2025/in Company News /by Wouch Maloney

At the end of each tax season, our team looks forward to two Wouch Maloney traditions. We host an employee happy hour and an after-tax season dinner for our employees and their guests. In addition to celebrating a job well done, we also celebrate employee achievements.

Tax Season Excellence Award

We are proud to announce the recipient of our annual Tax Season Excellence Award for the 2025 tax season is Anthony Pellerito. The Tax Season Excellence Award is in memory of Terry C. Martin, CPA, a dedicated colleague and friend who demonstrated, every day, the value of excellence one person can provide through exceptional client service, teamwork, mentoring and leadership.

Congratulations, Anthony!

Anthony Pellerito is the 2025 recipient of the Tax Season Excellence Award presented by John F. Maloney, Managing Partner.

Article with Most Views on LinkedIn

If you regularly read our WM Wednesday Wisdom, you may be familiar with some of the author names. We like to recognize employees for contributing to our weekly articles and for the second year in a row, Sweta Joshi, CPA, received the award for writing the top-performing article for LinkedIn.

Congratulations, Sweta!

Sweta Joshi, CPA, (center) received the 2025 award for the top performing article on LinkedIn.

Kudos Awards (Employees Helping Employees)

New this year, our firm introduced Kudos awards for employees helping employees. In addition to receiving bragging rights and a medal for 1^st, 2^nd or 3^rd place, each recipient will receive paid time off and a gift card to the Wouch Maloney company store.

2025 KUDOS Awards

Gold: Samuel L. Mathew
Silver: Krystle Bondello
Bronze (tie): Alexander Gattison and Suzanne Feldman, CPA, MT

Employee Service Awards

Employees celebrating work anniversaries (in increments of 5 years) were also honored. In 2025, the following employees were recognized:

5 Years of Service

Christine Nelson
Sweta Joshi
Shelly Castorino

10 Years of Service

Brandon Landis, CPA, CVA, MAcc

25 Years of Service

Diane P. Hewitt

Congratulations to everyone on Team Wouch Maloney. We truly appreciate the work you have done this year and continue to do for our clients.

Thank you for your professionalism, dedication, service and friendship.

Top photo: Tax Season Excellence Award Recipients, Past and Present: Diane Hewitt, Anthony Pellerito, John F. Maloney, Mark Cieri. Back row: Neil Dierolf, Brandon Landis and Stephen Slade.

DISCLAIMER: The WM Update, WM Wednesday Wisdom, WM Daily Update, and other related communications are intended to provide general information, as of the date of this communication, and may reference information from reputable sources. Although our firm has made every reasonable effort to ensure that the information provided is accurate, we make no warranties, expressed or implied, on the information provided. Please be aware that this is not a comprehensive analysis of the subject matter covered and is not intended to provide specific recommendations to you or your business with respect to the matters addressed.

Women in Construction Week 2025

March 5, 2025/in Construction /by Wouch Maloney

Happy Women in Construction Week!

Since 1998, the National Association of Women in Construction creates a theme for organizations to host events throughout the country celebrating the contributions women make in the construction industry. The theme for 2025 is “Together We Rise.” If you are a member of the AEC industry, we hope you can attend an event taking place this week to empower and support women who choose careers in construction or affiliated with the AEC industry.

Celebrating Women in Construction Week

On Monday, a kickoff meeting for Women in Construction week was hosted by the New Jersey and Philadelphia chapters of Professional Women in Construction (PWC) and Princeton University. Tia Cristy, CEO, TEDx speaker and communications coach, was the keynote speaker. She held a workshop, “Building Bridges and Connections: Intentional Networking and Mentorship,” to PWC members.

Audience listening to the speaker at a Women in Construction 2025 workshop. — *Keynote speaker Tia Cristy coaches a PWC member during a workshop at the Women in Construction week kickoff meeting at Princeton University on March 3, 2025.*

Serving the construction industry for over 35 years

Before Steve Wouch and John F. Maloney formed our firm in 1989, both worked closely with contractors in the Philadelphia region by providing accounting, tax and advisory services. As the firm grew, our accounting team continued to focus on the construction industry and expanded our service offerings, team, and locations.

Empowering Women in Construction

We are cognizant of the important role women in construction offer throughout the year. Our first female partner at Wouch Maloney, Adrienne Straccione, CPA, CCIFP, is an active member of many construction organizations in the Philadelphia region. Adrienne serves on the board of directors as treasurer for the Philadelphia Chapter of Professional Women in Construction and is a member of the National Association of Women in Construction (NAWIC).

In 2023, Adrienne earned her Certified Construction Industry Financial Professional (CCIFP) designation from the Construction Financial Management Association (CFMA). Of the 1,150 professionals nationwide, who hold a CCIFP designation, only 32% are women. To be eligible for the exam, you must have 4,000 hours of experience in construction-related activities. In addition, Adrienne was named to City & State Pennsylvania’s 2024 Power of Diversity: Women 100.

Construction News All Year

If you are not already on our mailing list for construction news, be certain to sign up for our Contractor newsletter and write “Construction” in the notes. We will be happy to add you to our construction newsletter email list.

Meanwhile, enjoy and celebrate a woman in construction today!

DISCLAIMER: The WM Update, WM Wednesday Wisdom, WM Daily Update, and other related communications are intended to provide general information, as of the date of this communication, and may reference information from reputable sources. Although our firm has made every reasonable effort to ensure that the information provided is accurate, we make no warranties, expressed or implied, on the information provided. As legislative efforts are still ongoing, we expect that there may be additional guidance and clarification from regulators that may modify some of the provisions in this communication. Some of those modifications may be significant. As such, be aware that this is not a comprehensive analysis of the subject matter covered and is not intended to provide specific recommendations to you or your business with respect to the matters addressed.

2024 Year-End Tax Planning – Businesses

November 27, 2024/in Tax /by Sweta Joshi

With one month remaining in 2024, it’s crucial for business owners to assess the tax implications of their operations throughout the year. They should consult their tax advisors to review the outcomes of 2024 and determine whether any of the year-end planning options listed below could be advantageous for them.

Choice of Entity

Discover how obtaining pass-through entity status can help reduce your tax liabilities. If you’re filing Schedule C, it’s wise to consult a tax professional to evaluate the pros and cons of choosing S corporation status. If you are launching a new venture with a partner, consider whether the business structure should be a partnership, S corporation, or C corporation.

Accounting Records/ Bookkeeping

Review your accounting records and bookkeeping to ensure that all revenues and costs are properly documented. Consider asking yourself the following questions:

Did any business-related expenses get incorrectly categorized as personal expenses?
Are there any home office costs that should be included in the final totals?
Are the payroll figures accurate?

Scheduling of income and Expenses

If you’ve experienced an exceptional year and anticipate high profits this year, think about the possibility of postponing revenue recognition to the next year (depending on the timing of your cash receipts) and boosting this year’s expenses by prepaying certain costs for the upcoming year.
If you anticipate lower profits this year, consider speeding up cash collection before December 31, if you can, and postponing expense payments until the following year, if it is feasible

Depreciation

If you purchase either new or used equipment for your business and put it into operation by December 31, 2024, you may have the option to expense that purchase and receive a federal income tax deduction for the 2024 tax year under IRC Section 179. Currently, this benefit is expected to continue in subsequent years, with adjustments for inflation.

Bonus Depreciation

Also, bonus depreciation, which was set at 100% during the pandemic in 2020, will be 60% of the cost basis for property that is placed in service in 2024. Therefore, if you’re contemplating the purchase of new equipment, it might be wise to consider making that purchase now and ensuring it is operational before the year’s end to take advantage of the 60%.

Retirement Plans

Think about contributing to an employer-sponsored retirement savings plan like a SIMPLE IRA, SEP IRA, 401(k), or profit-sharing plan. These options not only assist you in saving for the future but also offer valuable tax benefits for both you and your employees. The contributions made for yourself, and your staff could be tax-deductible, thereby reducing your taxable income; however, keep in mind that there are specific limits and restrictions.

Gifting

As the expiration of the current elevated gift and estate tax exemptions under the Tax Cuts and Jobs Act of 2017 approaches, be aware that these exemptions are scheduled to revert to the 2017 baseline of $5 million for individuals and $10 million for couples (adjusted for inflation) after December 31, 2025. It may be prudent to assess how to allocate some of your wealth to your beneficiaries before these higher limits expire.

In a constantly evolving tax environment, partnering with a reliable advisor for tax planning is essential. We will remain vigilant regarding future developments and ensure you stay updated on the latest changes in tax law.

Questions?

As always, should you have questions on this or other matters affecting you or your business, please call or email us to speak with a CPA today.

DISCLAIMER: The WM Update, WM Wednesday Wisdom, WM Daily Update, and other related communications are intended to provide general information, as of the date of this communication, and may reference information from reputable sources. Although our firm has made every reasonable effort to ensure that the information provided is accurate, we make no warranties, expressed or implied, on the information provided. As legislative efforts are still ongoing, we expect that there may be additional guidance and clarification from regulators that may modify some of the provisions in this communication. Some of those modifications may be significant. As such, be aware that this is not a comprehensive analysis of the subject matter covered and is not intended to provide specific recommendations to you or your business with respect to the matters addressed.

TCJA Tax Provisions Expiring After 2025

November 6, 2024/in Tax /by Sweta Joshi

The Tax Cuts and Jobs Act (TCJA), enacted in 2017, contained some of the most substantial tax legislation to be passed in over 30 years. However, many of these tax provisions, particularly those affecting individuals and families, are scheduled to expire at the end of 2025.

Individual Tax Provisions

Standard deduction

The TCJA increased the standard deduction and eliminated personal exemptions. Starting in 2026, the standard deduction is scheduled to be cut by almost half.

Individual income tax rates

The TCJA lowered marginal income tax rates. For example, the TCJA cut the top marginal tax rate from 39.6% to 37%. These rates will increase to pre-2017 levels if the TCJA expires.

State and local tax (SALT) deduction

The TCJA imposed a $10,000 cap on the deductibility of state and local taxes (SALT). If this provision of the TCJA expires, all state and local property taxes and income taxes (or sales taxes in states without income taxes) will be deductible, primarily benefiting high-income taxpayers in high-tax states.

Mortgage Interest Deduction

For tax years beginning on or after January 1, 2026, the $750,000 debt limitation for the home mortgage interest deduction increases to $1 million.

Miscellaneous Itemized Deductions

For tax years beginning on or after January 1, 2026, taxpayers may claim certain miscellaneous itemized deductions subject to the 2% floor. Such deductions may include investment fees, tax preparation fees, certain repayments of income, safe deposit box rental fees, and certain unreimbursed employee business expenses.

Child Tax Credit

TCJA increased the tax credit for each child under 17 from $1,000 to $2,000, and that is not adjusted for inflation. The maximum credit that can be refunded increased from $1,000 to $1,400 per child in 2018; that is adjusted for inflation and is set at $1,700 in 2024. The TCJA also increased the income thresholds at which the credit phases out. The child tax credit will fall back to $1,000 if the TCJA expires, which would make the real value of the credit about 25% lower than it was in 2017.

Alternative minimum tax (AMT)

The TCJA increased the AMT exemption amounts and raised the income levels at which the exemptions phase out, resulting in fewer taxpayers liable for the AMT. If this provision of the TCJA expires, the 2026 AMT exemption for married couples filing jointly will be about $110,075, compared to about $140,300 if the provision is extended.

Business Tax Provision

Qualified business income (QBI) 20% deduction (Sec. 199A)

Owners of passthrough businesses, such as partnerships and S corporations, as well as sole proprietorships, may currently claim a deduction of up to 20% of QBI. Beginning in 2026, the Sec. 199A QBI deduction no longer will be available.

Estate and Gift Tax

The TCJA doubled the estate and gift tax exemption of $5 million, which is adjusted for inflation to over $13 million for single filers and $27million for married couples for 2024. However, in 2026 the estate and gift exemption will revert to pre-TCJA levels, effectively reduced by half, and is expected to be in the ballpark of $6.8 million per individual and close to $14 million for a married couple.

Tax Bills 2026

The expiring provisions will affect many taxpayers’ tax bills in 2026, and it’s important to know what might change and what tax-planning moves you can make if the law does change. We’ll keep you updated with any changes in these tax provisions.

Questions?

As always, should you have questions on this or other matters affecting you or your business, please call or email us to speak with a CPA today.

DISCLAIMER: The WM Update, WM Wednesday Wisdom, WM Daily Update, and other related communications are intended to provide general information, as of the date of this communication, and may reference information from reputable sources. Although our firm has made every reasonable effort to ensure that the information provided is accurate, we make no warranties, expressed or implied, on the information provided. As legislative efforts are still ongoing, we expect that there may be additional guidance and clarification from regulators that may modify some of the provisions in this communication. Some of those modifications may be significant. As such, be aware that this is not a comprehensive analysis of the subject matter covered and is not intended to provide specific recommendations to you or your business with respect to the matters addressed.

Beneficial Ownership Information Reporting (BOI)

July 31, 2024/in Business Advisory /by Sweta Joshi

The Corporate Transparency Act of 2020 (CTA), enacted January 1, 2021, created new reporting requirements relating to the beneficial owners of certain companies doing business in the U.S. Beginning in 2024, certain companies must file a Beneficial Ownership Information Report (BOI report) with the Financial Crimes Enforcement Network (FinCEN) to disclose the individuals who ultimately own or control a company.

Who Must File

Domestic and foreign reporting companies that are created or registered by filing documents with the secretary of state (SOS) or similar office are subject to the BOI reporting requirements. This includes a corporation, an LLC, or any other entity type.

However, there are over 20 exemptions. Most of these exemptions are for entities such as financial institutions, insurance companies, securities brokers, and other types of entities that are already required to report ownership information to a governmental authority.

Some notable exemptions include the following entities:

Accounting Firms. Any public accounting firm registered in accordance with Section 102 or the Sarbanes-Oxley Act of 2002.
Large Operating Companies. Any entity with more than 20 full-time U.S. employees and an operating presence at a physical office in the U.S. that reported more than $5,000,000 in gross receipts on its prior year federal income tax or information return
Inactive Entities. Any entity that (1) was in existence on or before January 1, 2020; (2) is not engaged in active business; (3) is not foreign owned; (4) has had no ownership changes in the prior 12 months; (5) has had no transactions greater than $1,000 in the prior 12 months.

When to File

For existing reporting companies created or registered before 2024, the initial report is due January 1, 2025.
For companies created or registered in 2024, the BOI report is due 90 days from the formation or registration date.
For companies created or registered after 2024, the filing deadline reverts to 30 days.

How to File

FinCEN expects that many reporting companies will be able to submit their beneficial ownership information to FinCEN on their own using the guidance FinCEN has issued.

The e-filing portal https://boiefiling.fincen.gov/ provides two methods to submit a BOI report: (1) fill out a web-based version of the BOI report and submit it online or (2) upload a completed PDF version of the BOI report. A BOI report cannot be faxed or mailed to FinCEN.

Reporting companies that need help meeting their reporting obligations can consult with professional service providers.

Given the nature of the CPA-client relationship, a client’s first inclination may be to turn to their CPA for advice on the BOI. However, advising a client on BOI reporting is potentially regarded as the unauthorized practice of law (UPL). Therefore, businesses are encouraged to seek legal counsel for BOI compliance.

Penalties for Not Filing

The fine for willfully failing to complete an initial or updated report or for willfully providing false or fraudulent information to a reporting company is $500 per day, up to $10,000 and imprisonment for up to two years. The fine for knowingly disclosing or using BOI without authorization is $500 per day, up to $250,000 and imprisonment for up to five years.

As always, should you have questions on this or other matters affecting you or your business, please call or email us to speak with a CPA today.

What To Do After Filing Your Taxes?

May 1, 2024/in Tax /by Sweta Joshi

The April 15 filing deadline for individual income tax returns may now be behind us but there are still some important steps to take and information to consider as part of a post-tax season checklist before you put your 2023 taxes out of your mind.

Check Your Return Status

Typically, within 2-3 days of filing, you or your tax preparer should receive confirmation from the IRS indicating acceptance of your return.

Following Up On Your Tax Payment

If you requested funds to be auto-drawn on April 15, double check the payment has been pulled. It may take a day or two for that to happen and some banks update more quickly than others, so perhaps your bank is a little slower to report pending transactions.
However, if it has been a week and you still don’t see those funds debited, then it pays to do some digging. Call IRS e-file Payment Services 24/7 at 1-888-353-4537 to inquire about or cancel your payment, but please wait 7 to 10 days after your return was accepted before calling.
Keep in mind that the IRS may not have information on your payment until 7 to 10 days have passed since you submitted your tax return.

Track Your Refund

The IRS issues most refunds in fewer than 21 days for taxpayers who filed electronically and chose direct deposit.
If you file a complete and accurate paper tax return, your refund should be issued in about six to eight weeks from the date IRS receives your return.
You can have a refund check mailed to you, or have your refund deposited directly into your bank account. If it has been at least four weeks since you filed your return, you can check on the status of your refund by calling the IRS TeleTax System at 1-800- 829-4477. You may also check the status of your refund by visiting the Where’s My Refund page on the IRS website. You will be asked to enter your social security number or taxpayer identification number, plus your filing status and the exact whole dollar amount of your expected refund to find your return. The IRS updates the website every day.

Look Over Your Filed Returns

It’s always a good idea to look over and review your tax returns. While we here at Wouch Maloney are always focused on proactive planning, having a solid understanding of what goes into your own tax returns can help the overall dialogue.
All taxpayers are encouraged to check their withholding using the Tax Withholding Estimator on IRS.gov. Using this tool will help to make certain your employer is withholding the right amount of tax from your paycheck. Doing this now will help avoid an unexpected tax amount due or possibly a penalty when you prepare and file your taxes next year.
You can use the results from the Estimator to help complete a new Form W-4 and adjust income tax withholding with your employer, if needed. We can certainly help in this area, either by directly assisting you with the completion of the W-4, or periodic planning throughout the year to gauge the potential impact of a withholding change.

Amended Tax Returns

No matter how thorough you are, sometimes information you should have included on your tax return comes out of hiding after you file.

When something substantial changes on your return, don’t hesitate to file a Form 1040X, Amended U.S. Individual Income Tax Return. This frequently occurs when you receive a K-1 or 1099-INT, or another similar form, that was not expected or provided to your tax preparer. It is better to proactively amend your returns than to wait for the IRS to send a bill, which will include penalties and interest if the missing forms resulted in a tax increase.

Consider Automation or Electronic Organization

Our society is progressing more and more towards an electronic one and utilizing available technology can help us all improve our organization and document storage. Here are a few helpful suggestions to implement in advance of next tax season.

Automate your financial life – Pay bills online and download your transactions to personal finance software.
Organize files online – Scan your receipts and upload other documents onto an online service so they’re easy to access when you need them.
Utilize Sharefile – we can get you set up with a secure folder on Sharefile, where you can upload tax notices, financial documents and anything else for us to review together. We can store your tax returns here – if you happen to need returns for financial aid or a mortgage re-finance, you could access the returns right on your Sharefile folder.

State Letters

The Pennsylvania Department of Revenue (PA DOR) has a new online tax system, the Pennsylvania Tax Hub (PATH). This system enables the agency to generate new notices to keep taxpayers and tax practitioners well-informed.

One of the new notices that may be seen more frequently is the Application of Credit Notice.

The Application of Credit Notice is an informational notice sent to taxpayers any time they request a credit to the next tax period. A credit occurs when there is an overpayment on the Personal Income Tax Return, and it is elected to carry all or a portion of this overpayment to the next tax period.

Upon receipt of this notice, it is advised to compare the amount of the overpayment on the notice to the tax return from that period. Important note: This notice will not require action unless the credit does not match your tax return. A common reaction to a tax notice is to worry that something is amiss but, rest assured, PA’s goal here is simply to keep taxpayers informed.

Questions?

As always, should you have questions on this or other matters affecting you or your business, please call 215.675.8364 or email us to speak with a CPA today.

DISCLAIMER: The WM Update, WM Wednesday Wisdom, WM Daily Update, and other related communications are intended to provide general information, as of the date of this communication, and may reference information from reputable sources. Although our firm has made every reasonable effort to ensure that the information provided is accurate, we make no warranties, expressed or implied, on the information provided. As legislative efforts are still ongoing, we expect that there may be additional guidance and clarification from regulators that may modify some of the provisions in this communication. Some of those modifications may be significant. As such, be aware that this is not a comprehensive analysis of the subject matter covered and is not intended to provide specific recommendations to you or your business with respect to the matters addressed.

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