Tax Information
UNDERSTANDING START-UP COSTS FOR YOUR NEW BUSINESS
Starting a new business involves a variety of expenses and understanding how these costs are handled for tax purposes can be crucial for your financial planning. Here, we will break down when and how start-up expenses can be reported, what qualifies as a start-up cost, and other important considerations.
When Can You Report Start-Up Expenses?
According to IRC Sec 195(b)(1)(A), a company can deduct start-up expenses in the tax year when the trade or business becomes active. The allowable deduction is the lesser of the actual start-up expenses or $5,000. However, if the total start-up costs exceed $50,000, the $5,000 deduction is reduced dollar for dollar for any amount over $50,000, until it is completely phased out.
Amortizing Start-Up Costs
If you cannot deduct all your start-up costs in the first year because they exceed the allowable amount, IRC Sec 195(b)(1)(B) requires that these costs be amortized. This means they must be spread out and deducted evenly over a 180-month period.
THE TOP 4 INVESTMENTS EVERY HIGH-INCOME EARNER SHOULD REDUCE TAXES
Attention HIGH W-2 EARNERS!
I’ve advised hundreds of clients on how they can save in taxes and protect their assets. Every now and then I’ll receive inquiries from individuals who are High W-2 wage earners who are curious about tax planning and if it will work for them. I’m going to share with you how the U.S. Tax System works and from here you can decide for yourself if tax planning for you is necessary.
The tax code rewards individuals who participate in the marketplace and do business with the government. We are NOT talking about taxpayers who participate in an employee stock option program. The tax code rewards individuals who purchase or create paper stocks as this is a real risk.
Depending on your income type will signal the type of tax benefits and loopholes you get to participate in.
Let’s start with the four types of income that any taxpayer can generate.
The first income type is Employee. Employee income is known as W-2 wages. W-2 wages are the most expensive type of income that any taxpayer could earn and the easiest to obtain.
For example, when you receive your paycheck, you notice that you’ve been taxed paying social security taxes, federal and state withholding taxes. After you receive your paycheck, and you begin to use your paycheck you notice that you are required to pay consumption taxes. And last, when you begin to make more money with your employer you notice that you are required to pay more in taxes. It never ends.
A consumption tax is known as a sales tax, a food and beverage tax and excise taxes. These are the taxes that you pay in your everyday American life. As W-2 earners, you pay these taxes and receive no tax benefit from paying the tax.
The only tax incentives that you are allowed to receive are from your employer. Your employer puts all the risk to be rewarded to hire you and offer benefits.
THE ULTIMATE GUIDE TO WRITING OFF YOUR VEHICLE COSTS FOR BUSINESS USE
Did you know that if you use your vehicle for business purposes, you may be eligible for significant tax deductions?
As a business owner, you’re always on the lookout for ways to minimize your tax liability and maximize your deductions. In this comprehensive guide, we’ll delve into the world of vehicle expenses for business use and explore how tracking mileage, fuel, and maintenance costs meticulously can lead to substantial tax savings.
Understanding Business Vehicle Deductions
Business vehicle deductions are a valuable tax benefit for entrepreneurs and small business owners who use their personal vehicles for work-related purposes. The IRS allows eligible taxpayers to deduct certain vehicle expenses to offset their taxable income. But the key here is to maintain accurate records and meet specific IRS requirements.
IRS RELEASES TAX INFLATION ADJUSTMENTS FOR TAX YEAR 2025
The tax year 2025 adjustments described below generally apply to income tax returns to be filed starting tax season 2026. The tax items for tax year 2025 of greatest interest to many taxpayers include the following dollar amounts:
- Standard deductions. For single taxpayers and married individuals filing separately for tax year 2025, the standard deduction rises to $15,000 for 2025, an increase of $400 from 2024. For married couples filing jointly, the standard deduction rises to $30,000, an increase of $800 from tax year 2024. For heads of households, the standard deduction will be $22,500 for tax year 2025, an increase of $600 from the amount for tax year 2024.
- Marginal rates. For tax year 2025, the top tax rate remains 37% for individual single taxpayers with incomes greater than $626,350 ($751,600 for married couples filing jointly). The other rates are:
- 35% for incomes over $250,525 ($501,050 for married couples filing jointly).
- 32% for incomes over $197,300 ($394,600 for married couples filing jointly).
- 24% for incomes over $103,350 ($206,700 for married couples filing jointly).
- 22% for incomes over $48,475 ($96,950 for married couples filing jointly).
- 12% for incomes over $11,925 ($23,850 for married couples filing jointly).
- 10% for incomes $11,925 or less ($23,850 or less for married couples filing jointly).
