18 Feb 2024
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IRAs: Build a Tax-Favored Retirement Nest Egg

Roger Rossmeisl, CPA
Individual Tax Briefs
IRAs: Build a Tax-Favored Retirement Nest Egg

Although traditional IRAs and Roth IRAs have been around for decades, the rules involved have changed many times. The Secure 2.0 law, which was enacted at the end of 2022, brought even more changes that made IRAs more advantageous for many taxpayers. What hasn’t changed is that they can help you save for retirement on a tax-favored basis. Here’s an overview of the basic rules and some of the recent changes. Rules for traditional IRAs You can make an annual deductible contribution to a traditional IRA if: You (and your spouse) aren’t active participants in employer-sponsored retirement plans, or You (or your spouse) are active participants in an employer plan, and your modified adjusted gross income (MAGI) doesn’t exceed certain levels that vary annually by filing status. For...

18 Feb 2024
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Ready, Set, Value!

Roger Rossmeisl, CPA
Valuation Briefs
Ready, Set, Value!

When the parties know what to expect at each phase of a business valuation project, it makes the process easier for everyone. This awareness promotes collaboration and timeliness, as well as minimizes potential surprises, misunderstandings and rework. Here’s the five-step process that’s used when valuing a business or interest in a business. Engaging a valuation expert The first step is retaining a business valuation professional and agreeing on the price, deliverables and scope of the assignment. Typically, the valuator and client sign an engagement letter, which serves as a legally binding contract that helps the parties understand such parameters as the: Company being valued, Percentage or number of shares to appraise, Effective valuation date, Standard of value (such as fair market value, fair value or...

18 Feb 2024
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Answers to Your Tax Season Questions

Roger Rossmeisl, CPA
Individual Tax Briefs
Answers to Your Tax Season Questions

The IRS announced it opened the 2024 income tax return filing season on January 29. That’s when the tax agency began accepting and processing 2023 tax year returns. Here are answers to seven tax season questions we receive at this time of year. (1)  What are this year’s deadlines? The filing deadline to submit 2023 returns or file an extension is Monday, April 15, 2024, for most taxpayers. Taxpayers living in Maine or Massachusetts have until April 17, due to state holidays. If taxpayers reside in a federally declared disaster area, they may have additional time to file. (2) When is my return due if I request an extension? If you’re requesting an extension, you’ll have until October 15, 2024, to file. Keep in mind that an extension of time...

18 Feb 2024
0

Generative AI Can Help Prevent, Detect and Investigate Fraud

Roger Rossmeisl, CPA
Fraud Briefs
Generative AI Can Help Prevent, Detect and Investigate Fraud

You may already be familiar with artificial intelligence (AI) and even use it in business applications. What about generative AI (Gen AI)? Gen AI typically is used to create new content (such as text, images, code and video) from raw data and includes such popular systems as Grok, ChatGPT and DALL-E. Gen AI can also help reduce, uncover and combat fraud. However, there may be ethical and legal implications of using these applications. Digital decisions Fraud can occur when a perpetrator finds one or more weaknesses in a company’s defenses and exploits them, creating patterns of activity. Finding these patterns quickly is critical to minimizing losses. Traditional fraud detection engines rely on rules to detect suspicious activity. Once the technology detects a transaction that fits a pattern, the...

13 Feb 2024
0

Tax-Favored Qualified Small Business Corporation Status Could Help Your Thrive

Roger Rossmeisl, CPA
Small Business Tax Briefs
Tax-Favored Qualified Small Business Corporation Status Could Help You Thrive

Operating your small business as a Qualified Small Business Corporation (QSBC) could be a tax-wise idea. Tax-free treatment for eligible stock gains QSBCs are the same as garden-variety C corporations for tax and legal purposes — except QSBC shareholders are potentially eligible to exclude from federal income tax 100% of their stock sale gains. That translates into a 0% federal income tax rate on QSBC stock sale profits! However, you must meet several requirements set forth in Section 1202 of the Internal Revenue Code, and not all shares meet the tax-law description of QSBC stock. Finally, there are limitations on the amount of QSBC stock sale gain that you can exclude in any one tax year (but they’re unlikely to apply). Stock acquisition date is key The 100% federal...

13 Feb 2024
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The Kiddie Tax Could Affect Your Children Until They’re Young Adults

Roger Rossmeisl, CPA
Individual Tax Briefs
The Kiddie Tax Could Affect Your Children Until They're Young Adults

The so-called “kiddie tax” can cause some of a child’s unearned income to be taxed at the parent’s higher marginal federal income tax rates instead of at the usually much lower rates that a child would otherwise pay. For purposes of this federal income tax provision, a “child” can be up to 23 years old. So, the kiddie tax can potentially affect young adults as well as kids. Kiddie tax basics Perhaps the most important thing to know about this poorly understood provision is that, for a student, the kiddie tax can be an issue until the year that he or she turns age 24. For that year and future years, your child is finally kiddie-tax-exempt. The kiddie tax is only assessed on a child’s (or young adult’s)...

13 Feb 2024
0

Timing Counts When Valuing a Business

Roger Rossmeisl, CPA
Valuation Briefs
Timing Counts When Valuing a Business

In today’s uncertain markets, the value of a business may change significantly over time. So it’s important to choose the valuation date carefully. Often, the date is prescribed by law or a judge. But sometimes attorneys or others, such as the executor in an estate valuation, are allowed to decide between different dates. A fundamental decision The valuation date serves as a cutoff for the information that can be used to estimate value. In general, valuators can’t consider any events that happen after the valuation date, unless the information was “reasonably known or knowable” on the valuation date. However, there’s a key distinction between events that affect value and those that are indicators of value. For example, a valuator may consider an arm’s-length sale or bona fide third-party...

13 Feb 2024
0

Does Your Business Have Employees Who Get Tips? You May Qualify for a Tax Credit

Roger Rossmeisl, CPA
Small Business Tax Briefs
Does Your Business Have Employees Who Get Tips? You May Qualify for a Tax Credit

If you’re an employer with a business where tipping is routine when providing food and beverages, you may qualify for a federal tax credit involving the Social Security and Medicare (FICA) taxes that you pay on your employees’ tip income. Credit fundamentals The FICA credit applies to tips that your staff members receive from customers when they buy food and beverages. It doesn’t matter if the food and beverages are consumed on or off the premises. Although tips are paid by customers, for FICA purposes, they’re treated as if you paid them to your employees. As you know, your employees are required to report their tips to you. You must: Withhold and remit the employee’s share of FICA taxes, and Pay the employer’s share of those taxes. How the...

04 Feb 2024
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It’s Possible (But Not Easy) to Claim a Medical Expense Tax Deduction

Roger Rossmeisl, CPA
Individual Tax Briefs
It's Possible (But Not Easy) to Claim a Medical Expense Tax Deduction

One of your New Year’s resolutions may be to pay more attention to your health. Of course, that may cost you. Can you deduct your out-of-pocket medical costs on your tax return? It depends. Many expenses are tax deductible, but there are several requirements and limitations that make it difficult for many taxpayers to actually claim a deduction. The rules Medical expenses can be claimed as a deduction only to the extent your unreimbursed costs exceed 7.5% of your adjusted gross income. Plus, medical expenses are deductible only if you itemize, which means that your itemized deductions must exceed your standard deduction. Due to changes in the Tax Cuts and Jobs Act, which generally went into effect in 2018, many taxpayers no longer itemize. Eligible medical costs include...

ROGER ROSSMEISL, CPA

Kho & Patel CPAs
160 E. Arrow Highway
San Dimas, CA 91773

(714) 325-0442
roger@khopatel.com

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