Bonus Depreciation and Other Year-End Tax-Saving Tools for Businesses

As this year comes to a close, business owners seeking to reduce their taxes for 2025 have a variety of opportunities. Here’s a look at two tax-saving tools: bonus depreciation and retirement plan contributions.

Assets Eligible for Bonus Depreciation

First-year bonus depreciation has been given new life under the legislation commonly known as the “One Big Beautiful Bill Act" (OBBBA). It had been scheduled to be only 40% for 2025 (60% for certain long-production assets) and to vanish after 2026. The OBBBA permanently reinstates 100% bonus depreciation for eligible assets acquired and placed in service after January 19, 2025. Acquiring eligible assets and placing them in service by Dec. 31, 2025, could significantly reduce your 2025 tax liability.

Eligible assets include most depreciable personal property, such as:

• Equipment,
• Computer hardware and peripherals,
• Certain vehicles, and
• Commercially available software.

Also eligible is qualified improvement property (QIP), defined as improvements to the interior of a nonresidential building that was already placed in service. QIP doesn’t include costs to change the building’s internal structural framework (such as enlargement). These costs must generally be depreciated over 39 years.

Unlike Section 179 expensing, which is limited to $2.5 million for 2025 (up from $1.25 million before the OBBBA) and subject to a phaseout, the amount of bonus depreciation a taxpayer can claim is generally unlimited. But there are other tax consequences to consider.

Beware of the Excess Business Loss Rule

Individual taxpayers who have losses as a sole proprietor or as an owner of a pass-through entity (partnerships, S corporations and, generally, limited liability companies) may inadvertently trigger the excess business loss rule when they claim bonus depreciation. The excess business loss rule allows business losses to offset income from other sources (such as salary, self-employment income, interest, dividends and capital gains) only up to an annual limit. Amounts above that limit are excess business losses. For 2025, this is the excess of aggregate business losses over $313,000 ($626,000 for married couples filing jointly).

Excess business losses can’t be deducted in the current year and must be carried forward to the following tax year. Such losses can then be deducted under the rules for net operation loss carryforwards. As a result, an individual taxpayer’s 100% first-year bonus depreciation deduction can effectively be limited by the excess business loss rule.

Save Taxes by Saving for Retirement

Tax-favored retirement plans can provide significant savings for small business owners, both by building retirement security and by reducing taxes. Contributions are tax-deductible (or pre-tax, if you’re contributing as an employee).

One of the simplest options is a Simplified Employee Pension (SEP) IRA. If you’re self-employed, you can contribute up to 20% of your net income to a SEP IRA, with a cap of $70,000 for the 2025 tax year. If your own corporation employs you, the contribution limit is 25% of your salary, also capped at $70,000. The tax savings can be substantial.

Other options include 401(k)s, SIMPLE IRAs and defined benefit plans. Depending on your age and income, some of these options might allow you to make even larger contributions. Ask your tax advisor for details.

Wrapping it Up

The permanent restoration of 100% first-year bonus depreciation creates tax-saving opportunities for taxpayers while they expand their business potential. And a tax-favored retirement plan is beneficial for you, your business and your employees. Every business is different, so it’s essential to consult a tax professional. Contact the office for help tailoring your tax strategies for 2025 and beyond.

5 Smart Tips for Individual Year-End Tax Planning

Even during the last two months of the year, you can take steps to reduce your 2025 tax liability. Here are five practical strategies to consider.

1. Use Bunching to Maximize Deductions

If your itemized deductions are close to the standard deduction, consider a “bunching" strategy. This means timing certain payments (such as mortgage interest, state and local taxes, charitable gifts and medical expenses) so that they push you above the standard deduction in one year. The following year, you can take the standard deduction and, to the extent possible, defer paying deductible expenses to the following year. This alternating approach helps you capture deductions that might otherwise be lost.

2. Balance Gains and Losses

If you have investments in taxable accounts, keep an eye on both realized and unrealized gains and losses. Selling appreciated securities held for more than a year ensures they’re taxed at your lower long-term capital gains rate (typically 15% or 20%, plus the 3.8% net investment income tax at higher income levels), rather than your higher, ordinary-income rate (which may be as much as 37%). But selling investments at a loss can offset gains. If losses exceed gains, up to $3,000 can offset ordinary income, with the remainder carried forward. This flexibility can reduce taxes this year and in future years.

3. Gift Appreciated Assets to Loved Ones

If you want to support family members while cutting your tax bill, consider giving appreciated investments to adult children or other relatives in lower tax brackets. They can sell the assets at a lower capital gains rate, possibly even 0%. Just be cautious about the “kiddie tax," which generally applies to children under age 19 (24 if they’re full-time students), and potential gift tax implications.

4. Give Wisely to Charities

Instead of donating cash, consider giving highly appreciated stock or mutual fund shares that you’ve held more than one year. You avoid the capital gains tax you’d owe if you sold the shares, and you can deduct the full fair market value if you itemize. Alternatively, selling investments at a loss and donating the proceeds allows you to claim both the capital loss and the charitable deduction. With some tax rules set to tighten in 2026, making larger gifts before year-end could be especially advantageous. (But if you don’t itemize, you can look forward to the limited charitable deduction that will be available to nonitemizers beginning in 2026.)

5. Use Your IRA for Donations

For those age 70½ or older, making charitable donations directly from an IRA, called “qualified charitable distributions" (QCDs), offers unique advantages. You can donate up to $108,000 in 2025 directly to qualified charities, keeping those amounts out of your taxable income. This strategy reduces adjusted gross income, which may help preserve eligibility for other tax breaks.

Final Thought

The best tax strategies depend on your personal situation. Timing, income level and future expectations all matter. Before taking action, contact the office to tailor these approaches to your needs.

Throwing a Party for Your Workforce? Know the Tax Rules

The holiday season is here once again, and for some workplaces, that means holiday parties. Although the rules for deducting business entertainment expenses changed several years ago, you may still qualify for some holiday party write-offs for this year, possibly even the entire cost. As you plan, understand the rules so you can avoid potentially costly missteps.

The Rules Before and Since the TCJA

Before the Tax Cuts and Jobs Act (TCJA), businesses could deduct 50% of certain entertainment costs, such as tickets for clients after contract negotiations. Although the TCJA permanently eliminated deductions for entertainment expenses starting in 2018, a key exception remains: If your business holds a company-wide party for employees, you may be able to deduct 100% of the cost. Some examples of potentially eligible expenses are:

• Food and beverages,
• Decorations,
• Venue and furniture rentals,
• Prizes and giveaways, and
• DJ or live band fees

However, for such expenses to be deductible, the party must not be “lavish and extravagant,” and the entire staff must be invited, not just management. Also, if your staff consists only of family members, your party costs aren’t deductible. Under family attribution rules, the IRS views this as an event for owners or officers rather than employees.

Nonemployee Guests

Inviting friends, family, clients or business associates complicates matters. Here’s an example:

In December 2025, a company invites 60 employees and their partners to a holiday party. Forty employees and their plus-ones attend. In addition, the owner invites five friends, three business associates, and two independent contractors, who all attend with their plus-ones. The total party tab is $10,000, or $100 per person, for 100 guests.

On its 2025 corporate return, the company may deduct $8,000 (the $100 cost for each of the 40 employees and their 40 plus-ones). The $2,000 cost for the other 20 guests is considered personal and not deductible. Independent contractors are treated as nonemployees for this purpose, even if they perform similar work.

The takeaway is that the more nonemployees you invite, the less you can deduct.

Safeguarding Your Deductions

As always, keep detailed receipts and records. If the IRS questions your deductions, it may request documentation. Reduce audit risk by keeping expenses reasonable relative to company size and limiting personal guests.

Finally, contact the office with your questions. By seeking professional guidance in advance, you can show your workforce your holiday appreciation while maximizing your deductions and staying compliant with current tax law.

Make Sure Every Donation Counts

Charities obviously benefit when you donate to them. But you can also benefit by securing a tax deduction on your 2025 income tax return if you donate by Dec. 31, itemize deductions and comply with the tax rules. Here are a few rules to keep in mind:

• Ensure you’re donating to a qualified charitable organization. A tool on the IRS website, the Exempt Organizations Select Check, allows users to confirm a charity’s tax-exempt status.
• If you receive something in return for your donation, find out its fair market value (FMV). Suppose you donate $500, and, in return, you receive event tickets. You must subtract the FMV of the tickets from the $500 to arrive at your tax deduction.
• Substantiation rules apply when deducting charitable gifts, and they vary based on the type and amount of the donation. For example, some types of property donations may require a professional appraisal.

Contact the office with any questions about the charitable deduction rules.

Making Tax-Free Gift in 2025 and 2026

As the year winds down, you may be hoping to combine smart estate tax planning with tax savings using the annual gift tax exclusion. For 2025 and 2026, this exclusion is $19,000, which you may give in cash or property to any number of family members or friends, without gift tax implications. Married couples may be able to give up to $38,000 to any recipient.

Generally, married taxpayers can also gift an unlimited amount to their spouse without gift tax implications. However, if the spouse isn’t a U.S. citizen, the 2025 gift exclusion is limited to $190,000 (rising to $194,000 for 2026). Gifts exceeding that amount may require filing a federal gift tax return.

Each year you need to use your annual exclusions by Dec. 31. They don’t carry over from year to year. For example, if you don’t make an annual exclusion gift to your granddaughter this year, you can’t add this year’s unused exclusion to next year’s exclusion to make a $38,000 tax-free gift to her in 2026. Contact the office with questions.

Easier Reporting Rules for Some Forms

A pesky reporting burden for businesses will be eased by legislation signed into law on July 4. Currently, businesses must issue a Form 1099-MISC to any payee (and to the IRS) when transactions reach $600 in a calendar year. And businesses that pay $600 or more for services rendered by an independent contractor must issue a Form 1099-NEC (Nonemployee Compensation).

Beginning with payments made in 2026, the threshold rises from $600 to $2,000 and will be adjusted for inflation in subsequent years. This change simplifies compliance and reduces the risk of penalties for missed 1099 filings. However, businesses must continue to maintain accurate records of all payments.

Upcoming Tax Due Dates

November 17

Employers: Deposit Social Security, Medicare and withheld income taxes for October if the monthly deposit rule applies.

Employers: Deposit nonpayroll withheld income tax for October if the monthly deposit rule applies.

Calendar-year exempt organizations: File a 2024 information return (Form 990, Form 990-EZ or Form 990-PF) if a six-month extension was filed. Pay any tax, interest and penalties due.

December 10

Individuals: Report November tip income of $20 or more to employers (Form 4070).

Why Fiduciary Accounting Standards Matter for Trusts & Estates

When it comes to managing trusts and estates, accuracy and transparency aren’t just good habits; they’re legal and ethical responsibilities. Fiduciary accounting standards exist to ensure that trustees, executors, and administrators handle assets in a way that protects the beneficiaries’ best interests. If you’ve ever been involved in managing or benefiting from a trust or estate, understanding these standards can help you feel confident that everything is being handled with integrity and professionalism.

Understanding Fiduciary Accounting Standards

Before diving into why they matter, it’s important to know what fiduciary accounting standards actually are. In simple terms, they’re a set of guidelines that govern how financial transactions are reported and managed by fiduciaries, those entrusted with managing assets for someone else. These standards determine how income, expenses, gains, and losses are tracked and reported to beneficiaries and the courts.

The goal of proper fiduciary accounting is to make sure every dollar is properly accounted for and that beneficiaries have a clear view of how the estate or trust is being managed. By following these standards, fiduciaries can demonstrate that they’ve acted in good faith and fulfilled their legal duties

How Fiduciary Accounting Differs from Regular Accounting

If you’re familiar with standard accounting practices, fiduciary accounting might seem similar on the surface. However, the priorities and reporting methods are quite different. Unlike traditional business accounting, fiduciary accounting focuses on transparency and accountability rather than profit. It centers on the separation of principal and income, ensuring that each is allocated correctly based on the terms of the trust or will. Regular accounting, by contrast, emphasizes net income and financial performance.

A few key differences include:

• Purpose: Fiduciary accounting ensures compliance with legal duties, while business accounting tracks profitability.
• Beneficiaries vs. Owners: Fiduciary reports are designed for beneficiaries and courts, not shareholders.
• Regulations: Fiduciary accounting must align with state laws and court requirements, which vary across jurisdictions.

These distinctions highlight why professional accounting support is often essential for trust and estate management. A certified accountant with experience in fiduciary reporting can help ensure that every transaction complies with the relevant laws and standards.

Why Accuracy and Transparency Are Essential

When you think about the relationship between a fiduciary and a beneficiary, trust is the foundation. Beneficiaries rely on fiduciaries to manage assets responsibly and to report financial information honestly. Fiduciary accounting standards create a structured way to maintain that trust.

Here’s why these standards are so crucial:

• They protect beneficiaries’ rights: Clear, consistent reporting ensures that beneficiaries understand where the money is going and how decisions are being made.
• They reduce disputes: Transparent financial records make it easier to resolve misunderstandings before they escalate into legal conflicts.
• They build confidence in the fiduciary: When reports are accurate and timely, beneficiaries can see that the fiduciary is acting with professionalism and care.

For fiduciaries, adhering to these standards as much about compliance as it is about maintaining credibility. Inaccurate or incomplete accounting can raise red flags, even when there’s no wrongdoing. By keeping meticulous records, fiduciaries demonstrate accountability and reinforce the trust placed in them.

The Value of Professional Guidance

Managing a trust or estate can be complex, especially when multiple beneficiaries, assets, or tax considerations are involved. Even a small oversight in accounting can create confusion or legal complications later on. Working with a professional accountant who understands fiduciary standards helps prevent these issues and ensures that reports meet court and beneficiary expectations.

A qualified professional can assist you with every aspect of fiduciary accounting, from preparing account statements that comply with state requirements to ensuring that income and principal are allocated correctly. They also make sure all tax obligations are met promptly and that financial updates are communicated clearly to beneficiaries. With expert guidance, you can fulfill your fiduciary duties confidently, knowing that every financial detail is properly managed and documented.

Upholding Integrity and Peace of Mind

Ultimately, fiduciary accounting standards exist to promote fairness, transparency, and trust. When you adhere to these principles or work with a professional who does, you protect both the assets under your care and the relationships among everyone involved. By maintaining clear, accurate records and prioritizing accountability, you uphold the integrity of the process and provide peace of mind for beneficiaries who depend on your diligence. Fiduciary accounting may seem technical, but at its core, it’s about one simple idea: doing the right thing the right way, every time.

Best Practices for Handling Petty Cash in Your Business

If you run a small business or manage a growing team, you’ve likely encountered the need for petty cash. It’s a simple tool that makes covering small expenses easy, but without proper oversight, it can quickly become a source of confusion or even financial loss. Understanding how to manage petty cash effectively helps you maintain accurate records, stay organized, and build trust within your team. Just as importantly, learning how a trial balance fits into your accounting process ensures your financial records are complete and reliable.

Managing Petty Cash the Smart Way

Petty cash is a small fund kept on hand for minor business expenses, such as office supplies or postage. It’s convenient because it allows your team to handle quick purchases without going through lengthy approval processes. However, this convenience can become risky if proper controls aren’t in place.

When managing petty cash, you should always start with a clear policy. Decide how much cash will be kept on hand, who will be responsible for managing it, and what types of purchases it can be used for. Transparency is key here. Everyone involved should understand how to request funds and document their expenses. You should also agree on how often the petty cash balance will be reconciled.

Keeping accurate records ensures that the petty cash fund stays balanced and prevents misuse. Each transaction should be logged immediately, with receipts attached to every withdrawal. Periodically, the fund should be reconciled by adding up the cash on hand and the total of receipts to confirm that it matches the starting amount. This habit helps you catch errors quickly while reinforcing accountability among your team.

Best Practices for Controlling Petty Cash

Having a petty cash system doesn’t have to be complicated. A few straightforward habits can make the process both efficient and secure. Start by designating one person as the petty cash custodian. This individual will handle all transactions, track receipts, and maintain the log. Limiting access helps prevent confusion and ensures that only authorized expenses are made. It’s also wise to set a maximum limit for single purchases to discourage unnecessary spending.

When replenishing the petty cash fund, review all receipts and records before issuing new funds. This helps verify that each transaction aligns with your company’s policy. Additionally, consider using petty cash vouchers or forms for every transaction to maintain consistency and accuracy. To further protect your business, perform periodic audits of the petty cash fund. These reviews can be unannounced and are a simple way to ensure transparency and detect any discrepancies early.

Understanding the Trial Balance

Once your petty cash is well managed, you’ll need a system to verify that your overall accounting records are accurate. This is where the trial balance comes in. A trial balance is a report that lists all your accounts and their balances at a given point in time. Its main purpose is to ensure that total debits equal total credits in your bookkeeping system.

The trial balance acts as a checkpoint before you prepare formal financial statements. It helps identify any errors, such as double entries or omissions. If the trial balance doesn’t balance, it’s a signal that something in your records needs attention. Think of it as your business’s internal accuracy test, helping you confirm that your books are reliable and ready for analysis or reporting.

Why the Trial Balance Matters

A well-prepared trial balance provides you with a clearer picture of your financial health. It allows you to spot inconsistencies, monitor account balances, and ensure that every transaction has been recorded properly. For small teams that may not have a full-time accountant, reviewing the trial balance regularly is a simple way to stay proactive about financial accuracy.

By maintaining balanced records, you also make it easier to file taxes, prepare reports, and make informed decisions about budgeting and growth. If errors go unchecked, they can carry forward into future reports and distort your understanding of the company’s performance. A reliable trial balance helps you avoid these pitfalls and keeps your financial data trustworthy.

Building Confidence Through Good Accounting Habits

Thorough accounting processes reflect and reinforce your company’s commitment to financial responsibility and transparency. When you manage petty cash carefully and verify your accounts through a trial balance, you show that your business values integrity and precision.

These habits might seem small, but together they create a strong foundation for financial stability. By taking the time to establish clear systems and review your records regularly, you avoid costly mistakes and build trust among your team and your clients. In the world of small business finance, those habits are what set successful organizations apart.

How to Avoid Tax Scams and Fraud as a Taxpayer in Trouble

Falling behind on your taxes can be stressful. Between confusing notices, mounting penalties, and the pressure to fix the issue quickly, it’s easy to feel vulnerable. Unfortunately, scammers know this and often target taxpayers who are already feeling anxious. They use fear and urgency to trick people into sharing personal information or paying fake debts. Knowing how to spot and avoid these scams is one of the best ways to protect yourself and your finances.

Understanding Why Tax Scams Work

When you’re facing tax problems, it’s natural to want a quick solution. Scammers use that urgency to their advantage. They often impersonate the IRS, claiming you owe money or face immediate legal action. They might send convincing emails, make aggressive phone calls, or create fake websites that look official. Their goal is to make you panic so you’ll act before thinking.

Recognizing that these tactics are emotional manipulation helps you take a step back and respond rationally. The IRS rarely makes first contact by phone or email and will never demand payment through gift cards, wire transfers, or prepaid debit cards. Understanding how legitimate tax communication works gives you a powerful defense against fraudsters.

Common Tax Scams to Watch Out For

Scammers are constantly evolving their methods, but most tax-related fraud falls into a few familiar patterns. Knowing what to look for makes it easier to spot red flags before they cost you money or personal information.

• Impersonation Calls: You receive a phone call claiming to be from the IRS or a tax agency, threatening immediate arrest or legal action if you don’t pay. Real tax authorities don’t operate this way.
• Phishing Emails and Texts: Fraudulent messages often contain links to fake IRS websites designed to steal your personal data. Always check the sender’s address carefully and never click suspicious links.
• Fake Tax Resolution Services: Some scammers pose as legitimate tax professionals, promising to “erase” your tax debt for an upfront fee. They take your money and disappear, leaving your real tax problems unresolved.
• Refund or Stimulus Scams: Messages claiming you’re owed extra refunds or stimulus payments are often bait to collect your Social Security number or banking information.

If any message or call feels off, take the time to verify it through official channels before taking action. A quick check can save you from significant financial loss.

How to Protect Yourself from Tax Fraud

Staying informed and cautious is your best line of defense. Always confirm the legitimacy of any communication that claims to be from the IRS or a tax professional. The IRS communicates primarily through written mail, and any legitimate tax correspondence will include clear identifying information.

Keep your personal information secure by using strong passwords and avoiding sharing sensitive details through email or text. Shred old tax documents instead of throwing them away, and store current records in a safe location. If you hire a tax preparer, check their credentials and reputation before sharing financial information. A trustworthy accountant or enrolled agent will never pressure you to act immediately or request unusual forms of payment.

You should also report suspicious messages or calls to the IRS or the Federal Trade Commission. These reports help prevent others from becoming victims of the same scams.

The Role of a Trusted Professional

If you’re already struggling with back taxes or financial stress, working with a certified tax professional can bring peace of mind. An experienced accountant understands the legitimate channels for resolving tax issues and can help you navigate them safely. They can verify which communications are real and which are scams while ensuring your information stays protected. A professional can also help you create a plan to address your tax debt, negotiate with the IRS if necessary, and stay compliant moving forward. Having someone in your corner can reduce your risk of being scammed while helping you regain control of your finances.

Protecting Your Future Through Awareness

Avoiding tax scams starts with awareness. When you know what scammers look for and how they operate, you’re far less likely to fall into their traps. Staying calm, verifying information, and seeking professional guidance will help you handle tax challenges confidently and securely.

Even if you’re behind on your taxes, you still have rights and options. Scammers prey on fear, but knowledge is your best defense. By learning how to recognize and avoid fraud, you’re taking an important step toward financial recovery and peace of mind.

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