April 15 is the deadline for more than just your income tax return
You know your 2025 federal income tax return is due April 15, 2026. But do you know what else has an April 15 deadline? If you don’t, you could miss out on valuable tax-saving opportunities or become subject to interest and even penalties. The April 15 deadline also generally applies to 1) making 2025 IRA contributions, 2) making 2025 SEP contributions, 3) paying the first installment of 2026 estimated taxes, 4) filing a 2025 income tax return for a trust or estate, 5) filing a 2025 gift tax return, and 6) filing a Report of Foreign Bank and Financial Accounts (FBAR). An extension is available in some cases, but not for the payment of tax due. Contact us to discuss which deadlines apply to you.
Options for forfeited employee FSA balances
Many businesses offer flexible spending accounts (FSAs) for health care and dependent care. One potential drawback is the use-it-or-lose-it rule. Under IRS cafeteria plan rules, unused amounts generally are forfeited after any applicable grace period or permitted health care FSA carryover. Employers may retain forfeitures, often to offset plan costs. If not retained, the funds may be used to reduce the employee contributions that would be required to reach certain FSA balances for the next plan year or returned to employees, provided these amounts are allocated on a reasonable and uniform basis. Contact us to for help reviewing your plan and ensuring forfeitures are handled properly.
Selling your business? You might benefit from presale financial due diligence
If you’re planning to sell your business, expect buyers to closely review your financial statements, operations and legal agreements. Conducting your own due diligence now can smooth the buyer review process and ease deal negotiations. The primary goal of presale due diligence is to evaluate the quality and sustainability of earnings, identify potential risks, and normalize financial results before giving prospective buyers access to your business’s statements. It’s also important to review employee and customer contracts, assess tax and regulatory compliance, and confirm ownership of intellectual property. Contact us to learn more.
4 types of interest expense you may be able to deduct
Personal interest expense generally can’t be deducted for federal tax purposes. But there are exceptions. You probably know that home mortgage interest may be deductible if you itemize deductions rather than claiming the standard deduction. New for 2025 through 2028, you may be eligible to deduct up to $10,000 of car loan interest if the vehicle’s “final assembly” was in the U.S. and other requirements are met. But the deduction phases out starting at $100,000 of modified adjusted gross income ($200,000 for married couples filing jointly). Other potential interest expense deductions are student loan interest and investment interest. Contact us with any questions.
What’s your potential business vehicle deduction?
If you used one or more vehicles in your business during 2025, you may be eligible for valuable tax deductions on your 2025 income tax return. But the rules are complicated, and your deductions may be affected by factors such as the vehicle’s weight and business vs. personal use. The year you place a car, SUV, van, pickup or panel truck in service, you can choose to deduct the actual expenses (such as gas, insurance, repairs and registration fees) and depreciation attributable to your business use of the vehicle or claim the cents-per-mile deduction (with a depreciation allowance built into it). Heavier vehicles may be eligible for larger deductions. Contact us if you have questions.
ABCs of customer profitability
Not every customer relationship adds value to your business. One way to assess where to focus your time and resources is to look at customer level profitability. Identify the most and least profitable customers based on their purchase history and needs. Then assign them grades: “A” for the best customers you want to retain and grow, “B” for those with positive contributions and growth potential, and “C” for customers that aren’t profitable yet require substantial resources. Try shifting attention away from C and towards A and B customers. If many of your customers fall into the C group, it might be time for broader strategic changes. Contact us for help.
Parents: Claim all the tax credits you’re entitled to
Raising a family comes with plenty of expenses, but it may also make you eligible for various tax breaks. Some of the most valuable are tax credits, because they reduce your tax liability dollar for dollar (unlike deductions, which only reduce the amount of income subject to tax). Which credits might you be eligible for on your 2025 return? The child credit, credit for other dependents, child and dependent care credit, adoption credit, American Opportunity credit and Lifetime Learning credit are some of the possibilities. But various rules and income-based limits apply. We can help ensure you maximize your tax savings from these and other tax breaks you’re eligible for.
Deferring taxes on advance payments
If your business uses the accrual method of accounting and received advance payments in 2025, you may be able to defer reporting some or all of that income until 2026 for federal tax purposes. An advance payment is one received by a business before it provides whatever is being paid for. Examples of advance payments that may be eligible for this favorable tax treatment include payments for services, the sale of goods, gift cards, the use of intellectual property, the sale or use of computer software, warranty contracts and subscriptions. But complicated rules apply. Contact us for help determining if your business is eligible to defer 2025 advance payments.
To maximize — or not to maximize — depreciation deductions on your 2025 tax return
Claiming the maximum depreciation deductions you can on your 2025 income tax return will generally provide the greatest 2025 tax savings. But sometimes it may be better to depreciate business assets over a period of years, such as if you expect to become subject to higher tax rates. If you claim 100% bonus depreciation or Sec. 179 expensing today, you’re eliminating future depreciation deductions for those assets. And deductions save more tax when tax rates are higher. We can identify which depreciation breaks you’re eligible for, review your overall tax situation and help determine whether you should maximize depreciation-related breaks on your 2025 return. Contact us to get started.
Quadrupled SALT deduction limit means more taxpayers will benefit from itemizing on their 2025 returns
One big decision to make when filing your individual income tax return is whether to claim the standard deduction or itemize. Itemizing saves tax if total itemized deductions are larger than the standard deduction. If you paid more than $10,000 in state and local taxes (SALT) last year, you might save tax by itemizing on your 2025 return even if claiming the standard deduction has saved you more tax in recent years. This is because of a tax law change that increased the SALT deduction limit to $40,000 for 2025 ($20,000 for married couples filing separately). But an income-based limit could reduce your SALT deduction. We can assess the impact of the SALT limit change on your tax situation.