YEAR-END TAX PLANNING FOR INDIVIDUALS

Byrd & Massey, Inc. • November 20, 2018


Once again, tax planning for the year ahead presents a number of challenges, this year, primarily due to tax laws changes brought about the passage of the Tax Cuts and Jobs Act of 2018. These changes include the nearly doubling of the standard deduction, elimination of personal exemptions, and numerous itemized deductions reduced or eliminated. Let's take a closer look.

General Tax Planning

General tax planning strategies for individuals this year include postponing income and accelerating deductions, as well as careful consideration of timing related investments, charitable gifts, and retirement planning. For example, taxpayers might consider using one or more of the following:

  • Selling any investments on which you have a gain or loss this year. For more on this, see Investment Gains and Losses , below.
  • If you anticipate an increase in taxable income this year, in 2018, and are expecting a bonus at year-end, try to get it before December 31. Keep in mind, however, that contractual bonuses are different, in that they are typically not paid out until the first quarter of the following year. Therefore, any taxes owed on a contractual bonus would not be due until you file your 2019 tax return in 2020. Don't hesitate to call the office if you have any questions about this.
  • Prepaying deductible expenses this year using a credit card. Examples of deductible expenses include charitable contributions and medical expenses. This strategy works because deductions may be taken based on when the expense was charged on the credit card, not when the bill was paid. Likewise with checks. For example, if you charge a medical expense in December but pay the bill in January, assuming it's an eligible medical expense, it can be taken as a deduction on your 2018 tax return.
  • If your company grants stock options, then you may want to exercise the option or sell stock acquired by exercise of an option this year. Use this strategy if you think your tax bracket will be higher in 2019. Generally, exercising this option is a taxable event; sale of the stock is almost always a taxable event.
  • If you're self-employed, send invoices or bills to clients or customers this year to be paid in full by the end of December.

Caution: Keep an eye on the estimated tax requirements.

Accelerating Income and Deductions

Accelerating income and deductions are two strategies that are commonly used to help taxpayers minimize their tax liability. Most taxpayers anticipate increased earnings from year to year, whether it’s from a job or investments, so this strategy works well. On the flip side, however, if you anticipate a lower income next year or know you will have significant medical bills, you might want to consider deferring income and expenses to the following year.

Accelerating Income

If you anticipate being in a higher tax bracket next year, accelerating income into 2018 is a good idea, especially for taxpayers whose earnings are close to threshold amounts ($200,000 for single filers and $250,000 for married filing jointly) that make them liable for additional Medicare Tax or Net Investment Income Tax (see below).

Caution: Taxpayers close to threshold amounts for the Net Investment Income Tax (3.8 percent of net investment income) should pay close attention to "one-time" income spikes such as those associated with Roth conversions, sale of a home or other large assets that may be subject to tax.

Tip: If you know you have a set amount of income coming in this year that is not covered by withholding taxes, there is still time to increase your withholding before year-end and avoid or reduce any estimated tax penalty that might otherwise be due. On the other hand, the penalty could be avoided by covering the extra tax in your final estimated tax payment and computing the penalty using the annualized income method.


In cases where tax benefits are phased out over a certain adjusted gross income (AGI) amount, a strategy of accelerating income and deductions might allow you to claim larger deductions, credits, and other tax breaks for 2018, depending on your situation. Roth IRA contributions, conversions of regular IRAs to Roth IRAs, child tax credits, higher education tax credits, and deductions for student loan interest are examples of these types of tax benefits.

Examples of other strategies a taxpayer might take include:

  • Pay a state estimated tax installment in December instead of at the January due date. However, make sure the payment is based on a reasonable estimate of your state tax.

  • Pay your entire property tax bill, including installments due in year 2019, by year-end. This does not apply to mortgage escrow accounts.

  • Pay 2019 tuition in 2018 to take full advantage of the American Opportunity Tax Credit, an above-the-line credit worth up to $2,500 per student to cover the cost of tuition, fees and course materials paid during the taxable year. Forty percent of the credit (up to $1,000) is refundable, which means you can get it even if you owe no tax.

  • Try to bunch medical expenses. For example, you might pay medical bills in whichever year they would do you the most tax good. Medical expenses are deductible only to the extent they exceed a certain percentage of adjusted gross income (AGI). For example, to deduct medical and dental expenses these amounts must exceed 7.5 percent of AGI. By bunching these expenses into one year, rather than spreading them out over two years, you have a better chance of exceeding the thresholds, thereby maximizing your deduction.


    Note: The 7.5 percent threshold is only in effect for tax years 2017 and 2018. In 2019, it reverts to 10 percent AGI.

Additional Medicare Tax

Taxpayers whose income exceeds certain threshold amounts ($200,000 single filers and $250,000 married filing jointly) are liable for an additional Medicare tax of 0.9 percent on their tax returns, but may request that their employers withhold additional income tax from their pay to be applied against their tax liability when filing their 2018 tax return next April.

High net worth individuals should consider contributing to Roth IRAs and 401(k) because distributions are not subject to the Medicare Tax.

If you're a taxpayer close to the threshold for the Medicare Tax, it might make sense to switch Roth retirement contributions to a traditional IRA plan, thereby avoiding the 3.8 percent Net Investment Income Tax (NIIT) as well (more about the NIIT below).

Alternate Minimum Tax

The alternative minimum tax (AMT) applies to high-income taxpayers that take advantage of deductions and credits to reduce their taxable income. The AMT ensures that those taxpayers pay at least a minimum amount of tax and was made permanent under the American Taxpayer Relief Act (ATRA) of 2012.

Although the AMT remained under the TCJA exemption amounts increased significantly. As such, the AMT is not expected to affect as many taxpayers. Furthermore, the phaseout threshold increases to $500,000 ($1 million for married filing jointly). Both the exemption and threshold amounts are indexed for inflation.

Note: AMT exemption amounts for 2018 are as follows:

  • $70,300 for single and head of household filers,


  • $109,400 for married people filing jointly and for qualifying widows or widowers,


  • $54,700 for married people filing separately.


Charitable Contributions

Property, as well as money, can be donated to a charity. You can generally take a deduction for the fair market value of the property; however, for certain property, the deduction is limited to your cost basis. While you can also donate your services to charity, you may not deduct the value of these services. You may also be able to deduct charity-related travel expenses and some out-of-pocket expenses, however.

Keep in mind that a written record of your charitable contributions--including travel expenses such as mileage--is required in order to qualify for a deduction. A donor may not claim a deduction for any contribution of cash, a check or other monetary gift unless the donor maintains a record of the contribution in the form of either a bank record (such as a canceled check) or written communication from the charity (such as a receipt or a letter) showing the name of the charity, the date of the contribution, and the amount of the contribution.

Tip: Contributions of appreciated property (i.e. stock) provide an additional benefit because you avoid paying capital gains on any profit.

Taxpayers age 70 ½ or older can reduce income tax owed on required minimum distributions (RMDs) from IRA accounts by donating them to a charitable organization(s) instead.

Investment Gains and Losses

This year, and in the coming years, investment decisions are often more about managing capital gains than about minimizing taxes per se. For example, taxpayers below threshold amounts in 2018 might want to take gains; whereas taxpayers above threshold amounts might want to take losses.


Caution: Fluctuations in the stock market are commonplace; don't assume that a down market means investment losses as your cost basis may be low if you've held the stock for a long time.

Minimize taxes on investments by judicious matching of gains and losses. Where appropriate, try to avoid short-term capital gains, which are taxed as ordinary income (i.e., the rate is the same as your tax bracket).

In 2018 tax rates on capital gains and dividends remain the same as 2017 rates (0%, 15%, and a top rate of 20%); however, due to tax reform, threshold amounts do not correspond to the new tax bracket structure as in prior years:

  • 0% - Maximum capital gains tax rate for taxpayers with income up to $38,600 for single filers, $77,200 for married filing jointly.
  • 15% - Maximum capital gains tax rate for taxpayers with income above $38,600 for single filers, $77,200 for married filing jointly.
  • 20% - Maximum capital gains tax rate for taxpayers with income above $425,800 for single filers, $479,000 for married filing jointly.

Where feasible, reduce all capital gains and generate short-term capital losses up to $3,000. As a general rule, if you have a large capital gain this year, consider selling an investment on which you have an accumulated loss. Capital losses up to the amount of your capital gains plus $3,000 per year ($1,500 if married filing separately) can be claimed as a deduction against income.

Wash Sale Rule. After selling a securities investment to generate a capital loss, you can repurchase it after 30 days. This is known as the "Wash Rule Sale." If you buy it back within 30 days, the loss will be disallowed. Or you can immediately repurchase a similar (but not the same) investment, e.g., and ETF or another mutual fund with the same objectives as the one you sold.

Tip: If you have losses, you might consider selling securities at a gain and then immediately repurchasing them, since the 30-day rule does not apply to gains. That way, your gain will be tax-free; your original investment is restored, and you have a higher cost basis for your new investment (i.e., any future gain will be lower).

Net Investment Income Tax (NIIT)

The Net Investment Income Tax, which went into effect in 2013, is a 3.8 percent tax that is applied to investment income such as long-term capital gains for earners above certain threshold amounts ($200,000 for single filers and $250,000 for married taxpayers filing jointly). Short-term capital gains are subject to ordinary income tax rates as well as the 3.8 percent NIIT. This information is something to think about as you plan your long-term investments. Business income is not considered subject to the NIIT provided the individual business owner materially participates in the business.

Please call if you need assistance with any of your long-term tax planning goals.

Mutual Fund Investments

Before investing in a mutual fund, ask whether a dividend is paid at the end of the year or whether a dividend will be paid early in the next year but be deemed paid this year. The year-end dividend could make a substantial difference in the tax you pay.

Example: You invest $20,000 in a mutual fund in 2018. You opt for automatic reinvestment of dividends, and in late December of 2018, the fund pays a $1,000 dividend on the shares you bought. The $1,000 is automatically reinvested.

Result: You must pay tax on the $1,000 dividend. You will have to take funds from another source to pay that tax because of the automatic reinvestment feature. The mutual fund's long-term capital gains pass through to you as capital gains dividends taxed at long-term rates, however long or short your holding period.

The mutual fund's distributions to you of dividends it receives generally qualify for the same tax relief as long-term capital gains. If the mutual fund passes through its short-term capital gains, these will be reported to you as "ordinary dividends" that don't qualify for relief.

Depending on your financial circumstances, it may or may not be a good idea to buy shares right before the fund goes ex-dividend. For instance, the distribution could be relatively small, with only minor tax consequences. Or the market could be moving up, with share prices expected to be higher after the ex-dividend date. To find out a fund's ex-dividend date, call the fund directly.

Please call if you'd like more information on how dividends paid out by mutual funds affect your taxes this year and next.

Year-End Giving To Reduce Your Potential Estate Tax

The federal gift and estate tax exemption is currently set at $11.18 million but is projected to increase to $11.4 million in 2019. ATRA set the maximum estate tax rate set at 40 percent.

Gift Tax. Sound estate planning often begins with lifetime gifts to family members. In other words, gifts that reduce the donor's assets subject to future estate tax. Such gifts are often made at year-end, during the holiday season, in ways that qualify for exemption from federal gift tax.

Gifts to a donee are exempt from the gift tax for amounts up to $15,000 a year per donee in 2018 and are expected to remain the same in 2019.

Caution: An unused annual exemption doesn't carry over to later years. To make use of the exemption for 2018, you must make your gift by December 31.

Husband-wife joint gifts to any third person are exempt from gift tax for amounts up to $30,000 ($15,000 each). Though what's given may come from either you or your spouse or both of you, both of you must consent to such "split gifts."

Gifts of "future interests," assets that the donee can only enjoy at some future time such as certain gifts in trust, generally don't qualify for exemption; however, gifts for the benefit of a minor child can be made to qualify.

Tip: If you're considering adopting a plan of lifetime giving to reduce future estate tax, don't hesitate to call the office for assistance.

Cash or publicly traded securities raise the fewest problems. You may choose to give property you expect to increase substantially in value later. Shifting future appreciation to your heirs keeps that value out of your estate. But this can trigger IRS questions about the gift's true value when given.

You may choose to give property that has already appreciated. The idea here is that the donee, not you, will realize and pay income tax on future earnings and built-in gain on sale.

Gift tax returns for 2018 are due the same date as your income tax return (April 15, 2019). Returns are required for gifts over $15,000 (including husband-wife split gifts totaling more than $15,000) and gifts of future interests. Though you are not required to file if your gifts do not exceed $15,000, you might consider filing anyway as a tactical move to block a future IRS challenge about gifts not "adequately disclosed." Please call the office if you're considering making a gift of property whose value isn't unquestionably less than $15,000.

New Tax Rate Structure for the Kiddie Tax

Under the TCJA, the kiddie tax rules have changed. For tax years 2018 through 2025, unearned income exceeding $2,100 is taxed at the rates paid by trusts and estates. For ordinary income (amounts over $12,501), the maximum rate is 37 percent. For long-term capital gains and qualified dividends, the maximum rate is 20 percent.

Other Year-End Moves

Maximize Retirement Plan Contributions. If you own an incorporated or unincorporated business, consider setting up a retirement plan if you don't already have one. It doesn't actually need to be funded until you pay your taxes, but allowable contributions will be deductible on this year's return.

If you are an employee and your employer has a 401(k), contribute the maximum amount ($18,500 for 2018), plus an additional catch-up contribution of $6,000 if age 50 or over, assuming the plan allows this and income restrictions don't apply.

If you are employed or self-employed with no retirement plan, you can make a deductible contribution of up to $5,500 a year to a traditional IRA (deduction is sometimes allowed even if you have a plan). Further, there is also an additional catch-up contribution of $1,000 if age 50 or over.

Health Savings Accounts. Consider setting up a health savings account (HSA). You can deduct contributions to the account, investment earnings are tax-deferred until withdrawn, and amounts you withdraw are tax-free when used to pay medical bills.

In effect, medical expenses paid from the account are deductible from the first dollar (unlike the usual rule limiting such deductions to the amount of excess over 7.5 percent of AGI). For amounts withdrawn at age 65 or later that are not used for medical bills, the HSA functions much like an IRA.

To be eligible, you must have a high-deductible health plan (HDHP), and only such insurance, subject to numerous exceptions, and must not be enrolled in Medicare. For 2018, to qualify for the HSA, your minimum deductible in your HDHP must be at least $1,350 for single coverage or $2,700 for a family.

529 Education Plans. Maximize contributions to 529 plans, which starting in 2018, can be used for elementary and secondary school tuition as well as college or vocational school.

Summary

These are just a few of the steps you might take. Please contact the office for assistance with implementing these and other year-end planning strategies that might be suitable for your particular situation.

Education Credits and Why They're Important

January 24, 2025
There are two types of educational credits to help students in their continuous pursuit of knowledge: The American Opportunity Tax Credit (AOTC) and the Lifetime Learning Credit (LLC). Understanding both is important if you attend college or have kids who do because it can greatly help with your tax bill. American Opportunity Tax Credit (AOTC) This undergraduate tax credit is a partially refundable credit that is good for the first four years in college and assists with students’ expenses such as qualified tuition expenses, school fees, and course materials. You can claim up to $2500 PER student each year; however, your modified adjusted gross income is a factor when claiming this credit. See the numbers below: Based on Modified Adjusted Gross Income (To claim FULL credit) Individual - $80,000 or less Married Filing Jointly - $160,000 Based on Modified Adjusted Gross Income (To claim REDUCED credit) Individual - Less than $90,000 Married Filing Jointly - Less than $180,000 To claim the AOTC credit, you will need the following: A TIN or Social Security Number A 1098-T (or tuition statement) from an eligible educational institution* Be pursuing a degree or other recognized education credential Be enrolled at least half time for at least one academic period beginning in the tax year Not have claimed the AOTC or the former Hope credit for more than four tax years Not have a felony drug conviction at the end of the tax year *Note: If you were not issued a 1098-T, you may still be able to claim the credit by showing proof of payment to the eligible educational institution attended. Lifetime Learning Credit (LLC) This tax credit is for undergraduate, graduate, and professional studies which includes any courses you take to improve job skills. The LLC is exactly that, for a lifetime. The credit never runs out if you are enrolled and taking courses from an eligible educational institution. You, your spouse, or dependent can receive a $2,000 tax credit every tax year. Based on Modified Adjusted Gross Income (To claim $2000 tax credit) Individual - Less than $90,000 Married Filing Jointly - Less than $180,000 To claim the LLC, you need: A 1098-T (or tuition statement) from an eligible educational institution Cannot also claim the AOTC If you do not receive a 1098-T, provide receipts of tuition and other approved expenses, such as course materials. Student Loans If you are one of millions of taxpayers with student loans, then you are already familiar with form 1098-E. Be sure to keep an eye out for yours. Student loan servicers will be sending notifications out this month. Hoping for help with the burden of student loans? There’s an interest deduction for that! According to the IRS, you may deduct the “lesser of $2500 that you paid throughout the previous year OR the amount of interest you actually paid during the year.” The amount phases out when you reach the annual limit for your filing status. For more information on educational and student loan credits click here and if you would like to see the format of the tax form for each credit, visit this link here . As always, we are here to help navigate the ins and outs of tax season. Send your questions to us via your client portal by clicking here to log in. We are happy to help and remember, we’re easy to talk to!

ATOM: New Client Portal

January 10, 2025
We are thrilled to introduce you to your new client portal: ATOM This innovative platform represents a significant step forward in how we interact with our clients, offering several features designed to enhance communication and overall user experience. With ATOM, you will have access to the following: Schedule an appointment Get updates on the status on your tax return Upload and download documents to and from our office Secure messaging functionality In the main menu, clients will see a range of features which include: Viewing upcoming appointments Documents requiring e-signatures, and Messages sent from our CPAs and staff Once you have thoroughly reviewed your information and are confident you have no changes this tax season, simply upload your tax documents and any tax questions you have, and we will begin processing your tax return. Our commitment to excellence means that we will diligently review, verify, and process your information in a timely manner. If you would like to sign up for the client portal, please call 479-876-5599 If you have a portal, but are logging into ATOM for the first time, please follow these instructions: Click here Under Login Selection, please select E-mail from the drop-down menu Enter the E-mail address associated with your account ( primary taxpayer ) Password ( this will be given to you via portal instructions through email or phone ) Click the “Log In” button Should you have any questions, send us a message or give us a call. Remember, we're easy to talk to and we are happy to help!

Oh, BOI! The Beneficial Ownership Information Report and Financial Crimes Enforcement Network: A Quick Guide

December 6, 2024
The Corporate Transparency Act (CTA) went into effect on January 1, 2024. As a result, non-exempt companies (almost all closely held businesses, including LLCs, corporations, and limited partnerships) that are registered to do business within any state in the US (reporting companies) are required to file initial and updated reports (BOI Report) to the US Treasury Department’s Financial Crimes Enforcement Network (FinCEN) about their beneficial owners and company applicant. A “beneficial owner” is an individual who either controls 25% of the ownership interests, or directly or indirectly exercises substantial control over the reporting company. Non-owners (such as managers, officers, directors, etc.) can also be beneficial owners for purposes of the CTA. A “company applicant” is a person responsible for the reporting company’s initial formation or registration. There are 23 types of entities that are exempt from filing BOI reports; however, most entities will not be exempt. For reporting companies formed prior to January 1, 2024, the initial BOI reports are due by January 1, 2025. For reporting companies formed on or after January 1, 2024, and before January 1, 2025, the initial BOI reports are due within 90 days of formation. For reporting companies formed on or after January 1, 2025, the initial BOI reports are due within 30 days of formation. An updated BOI report MUST be filed within 30 days for any changes in the information given about the reporting company or its beneficial owners. For additional information, here is a link to the website for filing. In general, the following information is required to be included to be in the BOI report: Reporting Company Full legal name Any trade or doing business as (dba) name Address for principal place of business in the US Jurisdiction of formation/registration Taxpayer identification number (TIN) Beneficial Owners & Company Applicants Full legal name Date of birth Unique identifying number (i.e. driver's license or passport) Current address Image of the identifying document Failure to comply with the CTA can result in a civil penalty of $500 per violation per day, and a criminal fine and/or imprisonment of up to 2 years. Because the consequences of failing to report are significant, we are alerting you so that you may take whatever action is necessary to comply based on your unique circumstances. PLEASE NOTE: For purposes of clarification, Byrd and Massey will NOT be filing any BOI reports with FinCEN at this time.

RMDs: An Overview

November 25, 2024
Birth Year Acknowledgement If you were born in 1950 or earlier, you should have already started taking your Required Minimum Distributions (RMDs). For those born between 1951 and 1959, you have a bit more time. You can wait until April 1st of the year after you turn 73 to begin taking your RMDs. Those born in 1960 or later will have until April 1 st of the year after turning 75. It's crucial to stay informed and compliant with these regulations to avoid any unnecessary penalties. If you have any questions or need assistance, consult with your financial advisor to ensure you're on the right track. Subsequent RMDs After taking your first RMD, all future RMDs must be taken by December 31 st of each year. If you delay your first RMD until April 1 st of the following year, you will need to take TWO distributions in that year, one by April 1 st and the other by December 31 st . This can have significant tax implications. To ensure you make the best financial decisions, we strongly recommend discussing your RMD strategy with a financial advisor . Stay informed and plan ahead! First RMD Deadline for IRAs If you turned 73 in 2024, a first RMD must be taken by April 1, 2025. This applies to ALL types of IRAs, including SEP and SIMPLE IRAs; however, Roth IRAs are an exception. Roth IRA owners are not required to take RMDs during their lifetime . First RMD Deadline for 401(k) and Other Defined Contribution Plans If you are still working and do not own more than 5% of the company sponsoring your retirement plan, you may be able to delay your first RMD until after retirement. This exception applies exclusively to workplace retirement plans and does not extend to IRAs, SEP IRAs, or SIMPLE IRAs. To discuss tax planning strategies, you can book an advisory appointment online or by giving us a call at 479-876-5599. We are happy to help!

Major Life Changes + Taxes

November 1, 2024
If you have recently married, purchased a home, or had a baby, you are likely aware of the significant life adjustments such milestones present! But you may not realize that major life changes usually have tax implications associated with them. Here are a few things to consider when major life events happen: Getting Married -- What is the best filing status for our financial situation? Should we update our withholding? Buying a House – Do I get a tax break when I buy a house? Having a Baby – Will I be eligible for the child tax credit? Changing Jobs – I’m making more money. Should I bump up my withholding? Sending Kids to College – Can I claim tax credits and deductions for the education-related expenses I paid for my child? Does it make more sense for my child to take the credits? Going Through a Divorce – What filing status do I qualify for after a divorce? Getting Ready to Retire – Should I be concerned about the tax implications of required minimum distributions? Will I pay taxes on my Social Security benefits? If you are a Returning Tax Client , the above questions can be addressed via a note enclosed with your tax organizer and documents, and your CPA will review and acknowledge it accordingly. If you are new to the firm, a sit-down meeting is required so a CPA can understand your previous year and current tax situation moving forward. There is no fee for this meeting; however, should you need to discuss tax planning in a more detailed manner, you can schedule an advisory appointment online or give us a call at 479-876-5599. As always, we are here to help and we're easy to talk to!

We're Going Green!

November 1, 2024
Thinking about going green with a new plug-in electric vehicle (EV) or fuel cell vehicle (FCV)? You might qualify for a clean vehicle tax credit of up to $7,500! If you place your new EV or FCV in service in 2023 or later, ensure the seller provides information about the vehicle's qualifications AND reports it to the IRS. Without this, your vehicle will not be eligible for the credit. Eligibility requirements include: - Buying the vehicle for personal use, not resale - Using it primarily in the U.S. - Meeting specific income thresholds -$300,000 for married couples filing jointly (or a surviving spouse) -$225,000 for heads of households -$150,000 for all other filers For vehicles placed in service from April 18, 2023, additional critical mineral and battery component requirements apply and can be found here . To claim the credit, you will need to file Form 8936 with your tax return. Please be sure to get a time-of-sale report from the dealer. **Please note that as of January 1, 2024, Clean Vehicle Tax Credits MUST be initiated & approved AT THE TIME OF SALE. For more information on purchasing clean vehicles and the clean vehicle tax credit, visit the following IRS websites: Credits for NEW Clean Vehicles Purchased in or After 2023 Transferring Clean Vehicle Tax Credits How to Claim a Clean Vehicle Tax Credit Drive green and save green!

6 Key Retirement Planning Considerations for Employees

October 16, 2024
With the end of the year approaching fast, we wanted to share a few important considerations when it comes to employees and retirement. Max Out Your Contributions The limit for 2024 is $23,000 for those under 50 and $30,500 for those 50 and up. If you haven’t reached this limit yet, consider increasing your contributions through the end of the year. Adjust Payroll Deductions If you find that you need to contribute more, adjust your payroll deductions. Check with your HR department to ensure the changes are made ON TIME. Assess Investment Allocations Review your current investment allocations to ensure they align with your retirement goals. Rebalance if necessary. Maximize Employer Match Make sure you are contributing enough to get the full employer match. Review and Update Beneficiaries Be sure your beneficiary designations are current and reflect any life changes, such as marriage, divorce, or the birth of a child. Plan for Required Minimum Distributions (RMDs) If you are 73 or order, you NEED to be taking RMDs from your 401(k). Missing an RMD can result in hefty penalties. Be sure you know how much you need to withdraw to meet the minimum RMD requirement. Tax season is right around the corner, so be sure to make any changes you feel are necessary, now. If you have questions about tax planning, we offer advisory services which can be booked online HERE or by calling us at 479-876-5599.

The Child & Dependent Care Credit: What you need to know for the upcoming tax season

September 18, 2024
The Child and Dependent Care Credit is a tax benefit for parents or guardians who acquire expenses while caring for a child or dependent. Did You Know? The Child & Dependent Care Credit is not just for children? It can also be applied to other dependents; for example, a parent, or disabled spouse who lives with you and requires care. There are a few key elements to qualify for the credit. Eligibility requirements are below: If you are caring for qualifying individual(s): The credit applies to children under the age of 13 or dependents – of any age – who are physically or mentally incapable of self-care and have lived with you for more than half of the year. You – and your spouse, if filing jointly – must be employed or actively seeking employment. The credit is aimed at those who need childcare to work or find work. You may also be eligible if your spouse is disabled or a student. There is no income limit for the credit; however, the credit you receive and the maximum amount of expenses eligible for the credit decreases as your income increases. Most filing statuses qualify, but if you are filing Married Filing Separate , you will not be eligible to claim this credit. You must provide the TIN (usually the Social Security Number) of each qualifying individual. -Qualifying Expenses & Claiming the Credit- Expenses that qualify are daycare, preschool, and day camp, and may be provided in the household or outside of the household. It does not cover expenses such as private school tuition, overnight camps, or care provided by a spouse, the parent of your qualifying individual, your child under the age of 19, or a dependent whom you or your spouse may claim on your tax return. There is a limit to the total amount you can use to calculate the Child and Dependent Care Credit. You can claim up to $3,000 for one qualifying individual or up to $6,000 for two or more qualifying individuals; however, if you received any dependent care benefits that you exclude or deduct from your income, you must subtract the amount of those benefits from the dollar amount that applies to you. For more information click here . To claim this credit, you will need to complete Form 2441 and attach it to your tax return (which we can do for you). :) Please note that we will need information about the care provider, including their name, address, and taxpayer identification number (TIN), as well as the total amount paid to the provider during the year. Most facilities will provide families with a document at the beginning of the new year. Reach out to your care facility to request this document if you have not received one in an appropriate amount of time. If you have questions about the credit, please let us know or include a note when you drop off or upload your tax documents this upcoming tax season. We’re here to help anyway we can!

Non-Cash Contributions: What You Need to Know for the Upcoming Tax Year

June 21, 2024
 Starting in 2024, if you are making non-cash contributions over $500, you'll need signed receipts for each donation (for federal tax deductions) . You must have a signed acknowledgement from whichever charitable organization you choose to donate to (i.e., The DEB Project, Beautiful Lives, Helping Hands, Goodwill, Salvation Army, etc.). It must show the amount of the donation and a description of the items donated. If you're a frequent donor, make sure to get a signed receipt every time you donate; especially if your contributions will total more than $500 in a calendar year. This applies to donations like clothing, household items, etc. given to qualified charitable organizations. Remember, your receipt must include the following: The approximate amount of the donation A description of the items donated We're already halfway through the year, so let's stay ahead of the game. Happy donating and keep those receipts handy. It will make things a whole lot easier when tax season rolls around!

QBD to QBO: Making the Switch

June 7, 2024
Adios QuickBooks Desktop; say Hello to Fully Integrated QuickBooks Online! If you’re a diehard QuickBooks Desktop (QBD) user, the way you use QuickBooks is changing and it’s happening very fast! As of May 31, 2024, QuickBooks Desktop 2021 ended users’ capability to access online banking, payroll services, payments, and even support. Critical security updates protecting your data have also stopped as of June 1, 2024, and Intuit announced their plans to discontinue selling new subscriptions to many of their Desktop products as of July 31, 2024. As we move into June, we want to make sure our clients, both current and prospective, can migrate to QuickBooks Online (QBO) seamlessly, so planning for these changes now will go a long way toward preparing for and advancing your QBO skills when the time arrives. If you have recently imported your QBD company file into QBO and feel like you could use some personalized guidance, we offer one-hour training sessions to help you master the functionality of QBO. You can easily book a session with Nita online here or by giving us a call. At Byrd and Massey, we are committed to your success and always here to assist you any way we can.
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