Tax Articles

Self-employment tax combines Social Security and Medicare taxes, with a 15.3% rate applied to the first $168,600 of net income in 2024. Future inflation adjustments will likely increase the tax burden, making strategies like restructuring as an S corporation a potential way to reduce costs. Understanding SE tax calculations and exploring tax-saving options can help self-employed individuals manage their financial obligations effectively.

The IRS has released the annual inflation adjustments for the 2025 tax year, which will affect taxpayers when they file their returns in 2026 including notable changes.

Lumsden McCormick presents a highlight summary of the significant cost-of-living adjustments (COLA) effective for 2025.

Spousal property rights, including the "elective share," are governed by state law and can significantly impact estate plans. Strategies such as transferring assets to a revocable trust may help mitigate the effect of these rights, but laws vary by state, making professional guidance essential for effective planning.

The Tax Cuts and Jobs Act requires businesses to amortize rather than immediately deduct R&E expenses, resulting in higher tax bills and reduced cash flow for many manufacturers. To offset this impact, companies can leverage tools like the research tax credit, cost segregation studies for accelerated depreciation, and reclassification of certain expenses. Congress may revisit this issue in 2025, potentially restoring immediate expensing for R&E costs.

As a business owner, understanding which travel expenses are tax-deductible can significantly impact your bottom line. This guide covers the essentials of deducting travel costs, from transportation and lodging to meals and tips, ensuring you stay compliant and maximize your tax savings. Proper recordkeeping and knowledge of your tax home are crucial for claiming these deductions.

Long-term care insurance is a valuable tool for protecting your estate and finances from the potentially high costs of nursing homes or in-home care. Key considerations include your financial situation, estate planning goals, age, and health, with premiums typically rising as you age. Consulting with an advisor can help you assess the best LTC options to secure your future needs and preserve wealth for your family.

A solo 401(k) is an excellent retirement savings option for self-employed individuals and small business owners with no employees, offering high contribution limits and tax savings. With flexible contributions and loan options, this plan allows for substantial, deductible retirement investments. However, solo 401(k)s require more administrative work, making them best suited for business owners with significant income and a commitment to maximizing retirement savings.

For business owners considering selling their companies, having a clear succession plan is crucial.

A buy-sell agreement is essential for business owners, ensuring an orderly transition of ownership in the event of death, disability, or other major changes. This agreement defines how a departing owner's interest is valued and purchased, often funded by life insurance, and provides flexibility to keep ownership within the family or provide liquidity for estate expenses. Regular reviews keep the agreement aligned with current business value and tax regulations, preserving the business's legacy for future generations.