Happy holidays! We are highlighting a few things that we feel might be pertinent to planning for the upcoming tax season. Links are included where you can find more relevant information. Please find attached our annual update letter to assist you in preparing for year-end. We pride ourselves on the partnerships we build with our businesses. We continuously invest in our knowledge and technology to meet, and exceed, your expectations. In order to maintain our level of service, we are increasing our minimum business return fees to $1,250 for the 2024/2025 tax season. Should you have any questions, please contact our office.
Corporate Transparency Act/Beneficial Ownership Interest: Please see our separate email that was sent November 19, 2024 regarding this new filing requirement for almost ALL business owners (not sole proprietorships). https://www.fincen.gov/boi.
AS OF DECEMBER 4, 2024, a court injunction has been filed effectively pausing enforcement of BOI reporting. This does not mean the law itself has been repealed or declared unconstitutional. It only means the enforcement for BOI reporting has been suspended until either the injunction is lifted, or the law is changed by Congress. If you have not filed a BOI report yet, legally you do not have to. However, be aware of any updates to the court case and injunction and be prepared to act on new guidance.
1099’s FOR SERVICES OR RENT OF $600 OR MORE: If these expenses were paid via cash or check, a 1099 may need to be issued. You must have the vendor complete a W-9 form in order to determine the entity type of that vendor. The W-9 protects your company and deduction from the IRS should there be a discrepancy so long as the form is completed. Attorneys are always issued a 1099-NEC regardless of their entity type. Please see our separate email sent October 22, 2024 for how to review your records.
W-2’s YEAR END REPORTING: Please verify your employee addresses, especially terminated employees, are correct and update any changes prior to processing W-2s or provide updated information to us if we prepare your W-2s.
2025 MILEAGE RATE: Not available yet from the IRS. 2024 mileage rate is $0.67 – please ensure your reimbursements are completed prior to year-end.
SECURE ACT 2.0 SIMPLE PLANS: Included a provision for small businesses (25 employees or less) that the maximum SIMPLE contribution for both the employee and the employer can be 110% of the limit. Also, for 2025 there is an additional, higher, catch-up contribution for those aged 60-63.
SECURE ACT 2.0 RETIREMENT PLANS: This applies primarily to small businesses with 50 employees or less, and who have at least one employee as a non-owner or family member. There are still some benefits for employers that have 50+ employees. https://www.irs.gov/retirement-plans/retirement-plans-startup-costs-tax-credit
— Retirement plan start-up costs tax credit for SEP, SIMPLE or qualified plans (401k)
— Credits may still be available towards employer matching contributions. This credit applies to aper-employee maximum of $1,000 for up to 5 years. An employee is not eligible if wages exceed$100,000.
— Additionally, for existing retirement plans, there is a $500 credit available for 3 years simply foradding an auto enrollment feature as part of your plan.
2024 GENERAL TAX REMINDERS:
— New energy efficiency credits for businesses https://www.irs.gov/credits-and-deductions-under-the-inflation-reduction-act-of-2022#businesses
Energy efficiency deductions even for contractors that build new homes that meet
Energy Star standards https://www.irs.gov/pub/irs-pdf/p5886.pdf
Special bonus depreciation begins to phase out – reduced to 60% for 2024 and 40% for 2025.Can still use section 179 deduction for 100% depreciation.
OUT OF STATE SALES: Both the WA Department of Revenue and other agencies are looking at something called “No Where Sales”. These are sales reported as out of state on WA DOR filings but then are also not reported in other states. If you are selling goods online or in person to out-of-state purchasers, be mindful that those sales may be considered taxable income reportable to that state in the form of excise or sales tax filings, and/or state income tax returns. Let us know if you believe this may apply to you. Nexus for each state depends on state laws and can be very complicated.
For more information on the Annual Apportionment Reconciliation of Apportionable Income please review https://dor.wa.gov/manage-business/my-dor-help/annual-reconciliation-apportionable-income.
AUTO FRINGE RULES: If you have an auto inside your corporation and the vehicle is used for personal use, the portion of personal use must be added to your W2.
WA DEPARTMENT OF REVENUE – Reminder of Sales Tax Rate Tools
Gig Harbor 2708: 8.9% in 2024 → 9.1% in 2025
Gig Harbor HBZ 2788: 8.9% in 2024 → 9.1% in 2025
RUNNING YOUR BUSINESS: Just a reminder that running your business includes keeping good records, updating the Employee handbook, creating annual minutes, updating your Operating Agreement for any changes, and many other business-related tasks to keep you within compliance.
We are here to support you in your business, whether that is growth, fine tuning and awareness of various business aspects, succession planning or estate planning. While we cannot always support certain aspects, we have business relationships and resources available.
As always, we sincerely appreciate the partnerships we have with our clients. You are the best part of what we do. Here’s to another year!
Michelle, Laurie, Tammi, Kaitlyn, Kim & Shannon
Peterson NW CPA