Tax-Saving Ways to Help Pay for College - Once Your Child Starts Attending

If you have a child or grandchild in college — congratulations! To help pay for the expenses, many parents and grandparents saved for years in tax-favored accounts, such as 529 plans. But there are also a number of tax breaks that you may be able to claim once your child begins attending college or post-secondary school. Tuition tax credits  You can take the American Opportunity Tax Credit (AOTC) of up to $2,500 per student for the first four years of college — a 100% credit for the first $2,000 in tuition, fees, and books, and a 25% credit for the second $2,000. You can take a Lifetime Learning Credit (LLC) of up to $2,000 per family for every additional year of college or graduate school — a...

Keeping Debtors Honest with a Solvency Opinion

Are you worried your business won’t receive what a liquidating creditor owes it? In most cases, liquidating companies come by their financially distressed situations honestly. But there’s always a chance that a debtor has made fraudulent transfers or taken other steps to hide assets from creditors. A solvency expert can help you and your legal counsel determine whether a liquidating business is capable of meeting its interest and repayment obligations. How experts test the balance sheet Solvency experts consider many issues when examining a business. But ultimately, the outcome of three tests enable an expert to determine solvency. The first is to assess the business’s balance sheet. At the time of the transaction at issue, did the debtor company’s asset value exceed its liability value? Assets are generally...

How the New SECURE 2.0 Law May Affect Your Business

If your small business has a retirement plan, and even if it doesn’t, you may see changes and benefits from a new law. The Setting Every Community Up for Retirement Enhancement 2.0 Act (SECURE 2.0) was recently signed into law. Provisions in the law will kick in over several years. SECURE 2.0 is meant to build on the original SECURE Act, which was signed into law in 2019. Here are some provisions that may affect your business. Retirement plan automatic enrollment. Under the new law, 401(k) plans will be required to automatically enroll employees when they become eligible, beginning with plan years after December 31, 2024. Employees will be permitted to opt out. The initial automatic enrollment amount would be at least 3% but not more than 10%....

Tax-Wise Ways to Save for College

If you’re a parent or grandparent with college-bound children, you may want to save to fund future education costs. Here are several approaches to take maximum advantage of the tax-favored ways to save that may be available to you. Savings bonds  Series EE U.S. savings bonds offer two tax-saving opportunities when used to finance college expenses: You don’t have to report the interest on the bonds for federal tax purposes until the bonds are cashed in, and Interest on “qualified” Series EE (and Series I) bonds may be exempt from federal tax if the bond proceeds are used for qualified college expenses. To qualify for the college tax exemption, you must purchase the bonds in your own name (not the child’s) or jointly with your spouse. The proceeds...

Looking to the Future When Valuing a Business

Historical financial results are only relevant in a valuation to the extent that the business expects to achieve similar results in the coming years. When projecting future economic benefits, it’s important to consider expected changes to a subject company’s internal and external conditions. Challenging the status quo The last three to five years of financial statements are usually on the list of documents experts use to value a business. With some companies, it’s possible to simply take historical financial statements and apply an assumed growth rate into perpetuity. But experienced valuation professionals know that future performance can’t always be expected to mirror the past. One key reason is capacity constraints. To achieve an expected growth rate, a larger facility or additional equipment may be needed over the long...

IRS Issues Guidance and FAQ Updates Related to the Clean Vehicle Tax Credits

On 2/3/2023, the IRS issued Notice 2023-16 guidance that modifies the definitions of certain vehicle classifications for the new, previously owned and qualified commercial clean vehicle tax credits. As a result of this notice, the IRS updated the related frequently asked questions for these credits which can be found on IRS Fact Sheet 2023-4 here: IRS Fact Sheet 2023-04 (This is Blog Post #1340)...

Employers Should be Wary of ERTC Claims that are Too Good to be True

The Employee Retention Tax Credit (ERTC) was a valuable tax credit that helped employers that kept workers on staff during the height of the COVID-19 pandemic. While the credit is no longer available, eligible employers that haven’t yet claimed it might still be able to do so by filing amended payroll returns for tax years 2020 and 2021. However, the IRS is warning employers to beware of third parties that may be advising them to claim the ERTC when they don’t qualify. Some third-party “ERTC mills” are promising that they can get businesses a refund without knowing anything about the employers’ situations. They’re sending emails, letters and voice mails as well as advertising on television. When businesses respond, these ERTC mills are claiming many improper write-offs...

The Standard Business Mileage Rate is Going Up in 2023

Although the national price of gas is a bit lower than it was a year ago, the optional standard mileage rate used to calculate the deductible cost of operating an automobile for business will be going up in 2023. The IRS recently announced that the 2023 cents-per-mile rate for the business use of a car, van, pickup or panel truck is 65.5 cents. These rates apply to electric and hybrid-electric automobiles, as well as gasoline and diesel-powered vehicles. In 2022, the business cents-per-mile rate for the second half of the year (July 1 – December 31) was 62.5 cents per mile, and for the first half of the year (January 1 – June 30), it was 58.5 cents per mile. How rate calculations are done The 3-cent increase...

SECURE 2.0 Law May Make Your More Secure in Retirement

A new law was recently signed that will help Americans save more for retirement, although many of the provisions don’t kick in for a few years. The Setting Every Community Up for Retirement Enhancement 2.0 Act (SECURE 2.0) was signed into law on December 29, 2022. SECURE 2.0 is meant to build on the original SECURE Act of 2019, which made major changes to the required minimum distribution (RMD) rules and other retirement provisions. Here are some of the significant retirement plan changes and when they’ll become effective: The age for beginning RMDs is going up. Employer-sponsored qualified retirement plans, traditional IRAs and individual retirement annuities are subject to RMD rules. They require that benefits start being distributed by the required beginning date. Under the new law,...

January is the Cruelest Month for Retail Refund Fraud

For many retailers, January isn’t just the first month of the year: It’s “return season,” when customers bring back their unwanted holiday gifts for refunds or exchanges. Return season can be fraught for businesses if, for example, a higher percentage of gifts are returned than stores expect. According to the National Retail Association, consumers are expected to have returned more than $816 billion of merchandise (almost 17% of goods sold) in 2022. Another major risk is retail return fraud. This is when customers trick stores into issuing illegitimate refunds. If you’re in retail, you must be proactive to discourage these schemes. Cash transactions Return fraud perpetrators could be customers, employees or even a criminal gang working with employee accomplices. In perhaps the most common scheme, an individual steals...