QTPs and Roth IRAs offer tax-advantaged ways to save for higher education, with QTPs being attractive for high-income earners due to higher contribution limits and no income restrictions.
Roth IRAs provide flexibility for retirement savings if funds are not needed for education.
The best choice depends on factors like income, availability of other resources, and investment preferences, and a coordinated strategy using both may maximize benefits.
Estates and non-grantor trusts must file their federal tax returns as separate legal entities, just like individual taxpayers. Unlike individuals, however, these entities may distribute income to beneficiaries, which can shift tax liability. Beneficiaries, heirs, trustees, executors, and those devising plans to transfer their assets need to understand how different types of distributions are taxed.
Business losses can provide tax relief through the net operating loss (NOL) deduction, allowing companies to reduce taxable income in future years. To qualify for this deduction, a business’s deductions must exceed its income, typically resulting from business operations, casualty or theft losses from federally declared disasters, or rental property losses. However, certain items, such as excess capital losses, nonbusiness deductions, and the NOL deduction itself, are generally excluded from NOL calculations. While individuals and C corporations can claim the deduction, partnerships and S corporations usually do not qualify, although their partners and shareholders can calculate NOLs based on their shares.
Changes from the Tax Cuts and Jobs Act (TCJA) have significantly impacted the rules surrounding NOLs. Carrybacks are now eliminated for most businesses, carryforwards are allowed indefinitely, and deductions are limited to 80% of taxable income for the year. Additionally, the TCJA introduced a limitation on excess business losses, which restricts non-corporate taxpayers from using business losses to offset income beyond a certain threshold. For 2025, this threshold is set at $313,000 for single filers and $626,000 for married couples filing jointly, with unused losses carried forward. Understanding these provisions is essential for effective tax planning.
If you’re considering setting up a retirement plan for yourself and your employees. However, you’re concerned about the financial commitment and administrative burdens involved. There are a couple of options to consider. Look at a Simplified Employee Pension (SEP) and a Savings Incentive Match Plan for Employees (SIMPLE).
Watch out for the 100% penalty Certain tax violations carry more severe consequences than others. One notable example is failing to pay federal income and employment taxes that have been withheld from employees’ paychecks. In such cases, the IRS can impose the trust...
Wait before you file the Beneficial Ownership Information Report! The Corporate Transparency Act (CTA) requires most businesses, LLCs, Corporations, and limited liability entities to report their beneficial owners to the Financial Crimes Enforcement Network (FinCEN)...
Estate Planning appearance on WPHT - February 2, 2025 Ron Cappuccio focuses on retirement and estate planning with host, Joe Yocavitch. Joe and Ron discuss how retirement isn't a one-size-fits-all situation, especially with many clients continuing to work into...
How Section 1231 gains and losses affect business asset sales
Understanding the tax implications is crucial when selling business assets. One area to focus on is Section 1231 of the Internal Revenue Code, which governs the treatment of gains and losses from selling or exchanging specific business property.
The requirement for filing Beneficial Ownership Information reports is on hold until the Fifth Circuit makes its final decision. If the taxpayers win, I anticipate the Treasury Department will appeal to the U.S. Supreme Court. On the other hand, when administrations change on January 20, 2025, there will hopefully be actions to drastically alter or eliminate this intrusive law.
Operating as a C corporation: Weigh the benefits and drawbacks When deciding on the best structure for your business, one option to consider is a C corporation. This entity offers several advantages and disadvantages that may significantly affect your business...
