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.
Where should you hold your company retreat?
When you plan a company retreat, one of the first things you need to do is select the location. Holding it in your office can be a cost-conscious choice. After all, you won’t have to pay for meeting rooms, and you can better control food and beverage expenses. But off-site retreats may enable employees to focus and enjoy themselves more. If you decide to go off-site, be sure to negotiate and ask for discounts. Obtain multiple quotes and compare prices for space, meals, and any guest rooms you’ll need for speakers or out-of-town employees. Contact us for more ideas, including guidance on tax considerations.
If you’re married, should you file jointly or separately?
Married couples have a choice when filing their 2025 federal income tax returns. They can file jointly or separately. What you choose will affect your standard deduction, eligibility for certain tax breaks, tax bracket and, ultimately, your tax liability. Typically, filing jointly saves tax compared to filing separately. This is especially true when the spouses have different income levels. Combining two incomes can bring some of the higher-earning spouse’s income into a lower tax bracket. Also, some tax breaks aren’t available to separate filers. But filing separately may save tax when one spouse has significant medical expenses. Contact us to discuss your particular situation.
Some small businesses can still benefit from the health care coverage credit
Tax credits reduce tax liability dollar-for-dollar. So, they can be more valuable than deductions, which reduce only the amount of income subject to tax. One tax credit that hasn’t been getting much attention lately but that can still be valuable for certain small businesses is the credit for providing health insurance to employees. Although it’s been available for more than a decade and generally can be claimed for only two years, some small businesses may still be eligible. These may include newer businesses as well as older ones that only recently have begun offering health insurance. The credit can equal as much as 50% of health coverage premiums paid. Contact us to learn more.
Before claiming a charitable deduction for 2025, make sure you can substantiate it
If you itemize deductions on your 2025 individual income tax return, you potentially can deduct your 2025 donations to qualified charities. If you made a donation of $250 or more, you must substantiate it with a “contemporaneous written acknowledgment” from the charity. “Contemporaneous” means you receive it by the date you file your return (or the due date, including extensions, if earlier). If you haven’t yet received an acknowledgement for a 2025 gift (or filed your 2025 return), request it from the charity now. Additional substantiation rules apply to certain types of donations, such as noncash contributions. Contact us for help determining what you can deduct on your 2025 tax return.
How to get inventory under control
Businesses face many unknowns in today’s marketplace. But one thing is certain: Carrying excess inventory is expensive. The good news? You don’t have to sacrifice revenue or customer service to get inventory under control. Performing a thorough inventory count, reviewing your overall product mix and benchmarking inventory ratios against industry peers can help you right-size your inventory levels. Operating leaner can free up cash flow and improve margins. For more tips on managing inventory more efficiently and using forecasting tools, contact us.
Increase your current business deductions under tangible property safe harbors
Did your business make repairs to tangible property, such as buildings, equipment or vehicles, in 2025? Such costs may be fully deductible on your 2025 income tax return, if they weren’t actually for “improvements” that must be depreciated over a period of years. Some IRS safe harbors can help: 1) the routine maintenance safe harbor, 2) the de minimis safe harbor, or 3) the small business safe harbor. However, improvements might also be eligible to be deducted immediately in certain circumstances. Contact us to discuss what you can deduct on your 2025 return and to start planning for tax-efficient repairs, maintenance and improvements in 2026.
Advisory boards provide family businesses with independent perspectives
Does your family business keep strategic decisions within the family? It’s common to assign relatives to positions of authority and limit input from nonfamily employees. But an independent advisory board can help your business minimize certain risks without diminishing family control. Because advisory boards serve only in a consulting capacity, they can provide fresh perspectives and potential solutions to family disagreements over strategy, compensation and succession. Consider asking your professional advisors to serve and recommend others who can offer candid opinions. Contact us for more information.
Is your business vulnerable to payroll fraud?
The median loss from occupational payroll fraud incidents is $50,000, but these schemes can lead to losses in the millions. Watch for “ghost” scams, where crooked staffers put invented employees on the payroll and steal their “paychecks.” Another risk: Cybercriminals that phish for employee data and use it to divert direct deposits. Even falsified overtime claims can be considered payroll fraud. Strong internal controls are essential for preventing these scams. Require two or more workers to perform sensitive tasks, verify changes to direct deposit instructions, conduct payroll audits and educate employees. Contact us for help with internal controls.