# Suttle & Stalnaker PLLC > Suttle & Stalnaker, PLLC is a Certified Public Accounting firm providing accounting, tax, audit, and advisory services across West Virginia. This document contains the full text content of the site, flattened to plain text for language models. For a concise index of links, see /llms.txt. ## About URL: https://www.suttlecpas.com/about Community Involvement Our firm recognizes the importance of supporting the communities in which we work and live. With offices located in Charleston, Huntington, Parkersburg, and Morgantown, West Virginia, the firm and our team members contribute consistently through volunteerism and donations. The unique experience we offer our clients is born out of our culture of communication and years of experience. With deep roots in auto dealerships, construction, energy and natural resources, financial institutions, healthcare, nonprofit and government agencies, we have the right skills to monitor trends and provide best practices for your business. Suttle & Stalnaker, PLLC is a member of Allinial Global, an award-winning association of legally independent accounting and consulting firms whose members collaborate to bring their clients best-in-class solutions. As a member of Allinial Global, we have access to the expertise, resources, and advice of over 200 fellow firms in 100 countries throughout the world. This strategic affiliation allows us to offer you broader services, deeper niche expertise, and more complete geographic coverage—all with the prompt, personal attention you expect from a local firm. At Suttle & Stalnaker, our goal is to be your best-in-class strategic partner, both locally and globally. Allinial Global helps us deliver. Our Strength Is In Our People Our Value Comes From Our People. At Suttle & Stalnaker, PLLC our people are our number one asset. ## Services ### Audit and Review Services URL: https://www.suttlecpas.com/services/audit-and-review-services Understanding the financial landscape of your organization or business is the basis for making sound decisions for your growth. Whether you’re obtaining bid qualification or seeking the confidence of lenders and investors for additional funding, thorough and trusted audit or review of your financial statements is a powerful tool. The audit process may begin as a compliance requirement, but the quality of the information we provide is a proven strategic advantage. The Audit and Review Experience We pride ourselves on the relationships we’ve developed with over 300 nonprofit organizations, construction and manufacturing businesses, and financial institutions during our 50+ years in business. During your audit engagement, we observe and listen to identify potential gaps in internal controls and provide recommendations for improvement. We also keep in touch throughout the year to answer questions, inform you of new audit standards, and help implement standards before the audit to save you time. The Audit and Review Team When you engage Suttle & Stalnaker for your audit and review needs, you’ll experience a streamlined process with a familiar staff that will ease your burden. We take the time to communicate often and plan our engagement well in advance to ensure a process that is tailored to fit your needs. Our team is involved in numerous industry and service related associations to stay informed of industry trends and to maintain the highest level of technical knowledge. As a full-service CPA firm, many of our clients also rely on us for their tax planning needs. Our audit and tax professionals work closely to ensure awareness of activities throughout the year and pass on tax saving opportunities and strategic recommendations. AICPA Center for Audit Quality AICPA Not-for-Profit Quality Center AICPA Governmental Audit Quality Center AICPA Single Audit Certification AICPA Not-for-Profit Certification Contractors Association of West Virginia National Electrical Contractors Association Independent Oil and Gas Association West Virginia Coal Association West Virginia Land and Mineral Owners Association Allinial Global – an association of independent accounting firms with offices throughout North America and the world. This partnership uniquely positions us to respond to the many issues our clients face. Audit, reviews, and compilations Employee benefit plan audits Sarbanes Oxley section 404 compliance Agreed-upon procedures Examinations Internal control consulting Internal audit Information technology Cybersecurity Information security Consulting/other Budget assistance Cash flow forecasting New GASB standard implementation Financial statement assistance ### Client Accounting & Advisory Services URL: https://www.suttlecpas.com/services/client-accounting-and-advisory-services To make decisions for the health and growth of your business, you need an accurate and timely picture of your financial landscape. Not all businesses have the resources to hire a full-time professional to fill this need, and if they do, will they have the right skill-set? What happens if they get sick or quit with short notice? What will your software and overhead costs amount to? Don’t let the weight of ongoing management and supervision take you away from your true passion. With Suttle & Stalnaker, PLLC, you can feel at ease knowing you have a reliable team of professionals in your corner. Each of our clients comes to us with unique needs. We are committed to listening to your pain points and determining the best set of services to help you achieve your overall goals. Our large team and various service offerings allow multiple contact points, ensuring your questions are answered and critical information is available when you need it. As a full-service CPA firm, we monitor legislation and prepare our clients for changes that may affect them. Let us take care of the regulations, calculations, and deadlines so you can focus on your business! Medical Group Management Association Members National CPA Health Care Advisors Administrators Association Member Certified Nonprofit Accounting Professional Certification QuickBooks® ProAdvisor Certification Allinial Global – an association of independent accounting firms with offices throughout North America and the world. This partnership uniquely positions us to respond to the many issues our clients face. Audit, reviews, and compilations Employee benefit plan audits Sarbanes Oxley section 404 compliance Agreed-upon procedures Examinations Internal control consulting Internal audit (replace uppercase letters with lowercase letters) Information technology Cybersecurity Information security Consulting/other Budget assistance Cash flow forecasting New GASB standard implementation Financial statement assistance ### M&A/Succession URL: https://www.suttlecpas.com/services/m-a-succession With over two decades of experience, our Certified Valuation Analysts (CVA) specialize in helping closely-held businesses, partnerships, and corporations assess their value during pivotal moments such as ownership transitions, buy/sell agreements, and strategic growth initiatives. Our valuation process goes beyond standard methodologies by incorporating industry trends, local economic factors, and unique business considerations to deliver tailored insights. Our valuation services are designed to support businesses in identifying operational efficiencies, enhancing market appeal, and preparing for successful transitions. Whether you're contemplating retirement, grooming the next generation for leadership, or positioning your company for acquisition, our team provides the clarity and guidance needed to navigate complex decisions with confidence. We collaborate closely with legal professionals to offer financial analysis and expert testimony during litigation, ensuring our clients are well-supported in every scenario. As active members of the National Association of Certified Valuation Analysts, we uphold rigorous standards of education and training to deliver exceptional service. Our consultants build deep relationships by understanding your business history and future aspirations. This enables us to craft customized strategies that address challenges such as legislative changes, audit readiness, and process optimization. Our core services include: - Mergers and acquisitions advisory - Buy/Sell Agreements - Divorce - Succession and retirement planning - Estate, gift, and trust planning - Business valuation - Transactional consulting services With offices in Charleston, Parkersburg, Huntington, and Morgantown, West Virginia, and through our affiliation with Allinial Global—a network of independent accounting firms worldwide—we offer both domestic and international reach to address the diverse needs of our clients. Let Suttle & Stalnaker guide you through the complexities of business valuation and strategic planning, empowering you to achieve your goals with confidence and clarity. ### Estate Planning URL: https://www.suttlecpas.com/services/estate-planning Considering end-of-life financial strategies is daunting, but the relief gained from knowing your assets are allocated based on your preferences, maximized through tax savings strategies, and that your loved ones are cared for makes it all worth it. Taking the first step in developing an estate plan to guide the personal and business wealth you’ve spent your entire life accumulating is a big one, and our professionals are here to help. Estate Planning Experience At Suttle & Stalnaker, PLLC we ask the right questions, starting with the most important one, What do you want to happen to your assets? With over 52 years of experience, we’re able to guide individuals and businesses to determine their end-of-life goals. We don’t take a cookie cutter approach either; no two estate plans are the same because we create tailored strategies to achieve your objectives. Transferring wealth requires a holistic approach because of the importance of the outcome and the array of components involved. The strategies we consider go beyond estate planning to include retirement, succession, and financial planning. Your Estate Planning Team Our process begins when we understand the overall goals of your estate plan. Next, our team works on a determination of net worth (including the business value, if applicable), followed by an overall review and analysis of investments, insurance policies, wills, beneficiary designations, and bank accounts. Our professionals are then able to offer suggestions and tax saving strategies including charitable giving, gifting, and the creation of trusts. To ensure the process is seamless, we work closely with your financial professionals and attorneys. We also monitor legal and regulatory changes that would significantly affect the tax strategies employed in your estate plan. North Central West Virginia Estate Planning Council Allinial Global – an association of independent accounting firms with offices throughout North America and the world. This partnership uniquely positions us to respond to the many issues our clients face. Tax filing preparation Final tax filings Estate tax returns Gift tax returns Trust and estate tax returns Trust planning Review of: Past estate plans Wills Insurance policies Succession planning Charitable giving strategies Gifting strategies Tax strategies for minimizing estate tax ### Tax Services URL: https://www.suttlecpas.com/services/tax-services It is hard to run a business, keep up with compliance changes, and understand what possible benefits or downfalls apply to you. Every decision you make, big or small, can impact your overall tax picture. Tax laws are always in motion; you need someone in your corner who is looking out for your best interest, maximizing tax opportunities, mitigating risk, and providing year-round strategic and compliance-based advice. Our Tax Experience The tax specialists at Suttle & Stalnaker, PLLC provide tax preparation, planning, and consulting services to high-net-worth individuals, family owned and privately held businesses throughout many industries, including; energy and natural resources, physicians and medical practices, auto dealerships, construction operations, and nonprofit organizations. Our depth of services and years of experience enable us to take a comprehensive approach to tax planning and strategically tailor our process to fit your unique tax scenario. Our team analyzes and explains available tax benefits and consequences while keeping your specific needs and goals in mind. We provide specialty tax consulting on incentives, credits, and charitable giving while meeting your compliance needs through state, local, federal and international tax filings. Our tax professionals specialize in multi-state, gift, estate, and trust tax planning. Furthermore, we conduct cost segregation studies that give you the benefit of eligible tax deductions sooner, rather than later, which means more cash flow for your business. Your Tax Experience The Suttle & Stalnaker tax professionals are fully engaged with their clients and believe in a high level of communication and accessibility. Our proactive approach means we’re always looking for ways to strategically help our clients through writing and sharing relevant articles, speaking throughout the community on tax issues, or just picking up the phone to discuss an opportunity. Our team is involved in numerous industry and service related associations and maintain the highest level of technical knowledge. As a full-service CPA firm, many of our clients also rely on us for other services. Our tax knowledge, coupled with accounting, auditing, and advisory services allow us to analyze your tax situation from all angles and provide the most advantageous planning strategies to reach your overall business goals. AICPA Center for Tax West Virginia State Society of CPAs West Virginia Tax Institute Allinial Global – an association of independent accounting firms with offices throughout North America and the world. This partnership uniquely positions us to respond to the many issues our clients face. Individual tax Corporate and partnership tax International tax Gift, estate and trust tax Sales and use tax Multi-state tax filings Tax planning Cost segregation studies Nonprofit tax filings Pension and employee benefit plan filings Affordable healthcare reporting forms ## Industries ### Auto Dealerships URL: https://www.suttlecpas.com/industries/auto-dealerships Auto Dealerships are changing and so is the way people buy cars. Consolidation, consumer spending, an aging workforce, and manufacturer requirements make running a dealership a shape-shifting challenge. You need a partner you can rely on – someone who understands the unique challenges you face and can help guide the strategic direction of your dealership. Automotive Dealership Experience Suttle & Stalnaker, PLLC has been serving the automotive dealership industry for over 30 years. We understand the demands you face and can provide services and support to help. We coordinate and assist with cost segregation studies, analyze financials to identify break-even points and growth opportunities, consult on LIFO regulations and issues, and advise during sales/acquisition and transition situations. Our extensive background in the industry and diligent monitoring of trends allows us to provide insightful recommendations that help to streamline your day-to-day processes. Your Automotive Dealership Team Our members pride themselves on being accessible and responsive to our clients’ needs. Through years of service, we’ve developed strong and personal relationships with auto dealership owners and controllers in and around West Virginia. We monitor the industry through our active involvement in the National Alliance of Auto Dealers Advisors, a group of accounting firms serving over 1,000 dealerships across the country, and pass on proven best practices to our clients. National Alliance of Auto Dealers Advisors AICPA Annual Auto Dealership Conference Attendee Allinial Global – an association of independent accounting firms with offices throughout North America and the world. This partnership uniquely positions us to respond to the many issues our clients face. Employee benefit plan audits and consulting services Business plans and operational reviews Business valuation Buy/sell agreements Capital loan packages Cash flow analysis and management Compensation consulting and planning Cost segregation studies facilitation Department expense control analysis Employee compensation plans Estate, gift tax and fiduciary planning Financial statement analysis Franchise applications preparation assistance Internal control evaluations LIFO conversions and calculations Leasing operations analysis Mergers and acquisitions assistance Preparation of projections and forecasts Strategic planning assistance Succession planning assistance Tax planning ### Closely Held/Family Business URL: https://www.suttlecpas.com/industries/closely-held-family-business At the heart of every successful closely held or family-owned business is a trusted financial partner. Suttle & Stalnaker, PLLC specializes in serving these unique enterprises, offering tailored guidance that respects the values, legacy, and long-term vision of each client. With a deep understanding of the challenges and opportunities that come with family dynamics and private ownership, we provide strategic tax planning, financial reporting, and advisory services that empower businesses to thrive across generations. As the largest locally owned accounting firm in the state of West Virginia, we understand the importance of remaining independent and the direct impact to our communities. Experience At Suttle & Stalnaker, PLLC we understand how challenging private ownership can be. For over 52 years, our talented team has helped closely held & family businesses throughout West Virginia and beyond address challenging regulatory requirements, financial risks, increase profitability, and grow their business. We are devoted to monitoring and understanding the ever-changing laws and regulations that may impact your business. Your Closely Held & Family Business Team Our dedicated team brings a wealth of experience and a personalized approach to every client engagement. Specializing in the unique needs of closely held and family-owned businesses, we understand the importance of trust, continuity, and long-term planning. Through ongoing professional development and continuing education, our advisors stay ahead of evolving tax laws, financial strategies, and industry trends—ensuring that our clients receive the most current and effective guidance. This commitment to learning empowers us to help businesses not only meet their financial goals but also enhance profitability and preserve their legacy for future generations. Allinial Global – An association of independent accounting firms with offices throughout North America and the world. This partnership offers us the ability to help our clients no matter the issue. Tax Tax preparation Tax planning Audit Review Compilation Client Advisory Services Accounting Payroll Bookkeeping Cybersecurity Information Security Internal Audit Assurance and financial Benchmarking Buy/sell agreements Cash flow, budget analysis, and WIP job cost analysis Billing, collections, timely billing/collecting Compensation analysis Contractual audits Estate and succession planning Mergers and acquisitions (Due diligence) Multistate contractor pre-qualification rules and compliance Process reviews Strategic planning Valuations Fraud prevention & detection Allocation of overhead & equipment burdens Bonding & financing consultations Multi-state tax services Sales and use tax planning ### Construction URL: https://www.suttlecpas.com/industries/construction Construction in West Virginia is on the rise today, but may be on the decline tomorrow. These new opportunities can become tomorrow’s challenges. As a general or sub-contractor, your primary concern is winning the work, but obstacles, like finding and retaining a qualified labor force, accurately bidding jobs for maximum profit and continued importance on surety and banking relationships all take time. Experience in Construction At Suttle & Stalnaker, PLLC we understand the challenges you face. For over 30 years, our construction team has helped contractors throughout West Virginia address challenging regulatory requirements, financial risks, increase profitability, and grow their business. We are devoted to monitoring and understanding industry trends and are active in state and national construction associations. This saturation allows our construction team to proactively bring both opportunities and concerns to our client’s attention and help them think strategically about their day-to-day operations. We work alongside our clients through implementation and ensure their challenges don’t become obstacles. The state of your financials is a considerable piece of your success. When the time comes for bonding or loans, it’s vital that your financial statements are appropriately positioned. Through our close relationships with bonding companies and banks, we understand what sets good financial statements apart. Your Construction Team Our team doesn’t merely point out issues, we partner with our clients to find solutions. During an audit, we review and perform job cost analysis to ensure you’re achieving maximum profitability of your estimates. An allocation review of overhead and equipment burdens is also conducted to determine proper distribution and accuracy. We’re a business too, and we understand billing and collecting can be a struggle, which is why we make a point of reviewing and offering suggestions for outstanding billings that stand in the way of your cash flow. Tax legislation is continually changing, and construction is an area that can benefit from many of the provisions. Our team closely monitors the laws that affect our contractor clients and helps them to implement tax-saving strategies. Contractors Association of West Virginia National Electrical Contractors Association Parkersburg-Marietta Contractors Association Allinial Global – An association of independent accounting firms with offices throughout North America and the world. This partnership offers us the ability to help our clients no matter the issue. Tax Tax preparation Tax planning Audit Review Compilation Client Advisory Services Accounting Payroll Bookkeeping Cybersecurity Information Security Internal Audit Assurance and financial Benchmarking Buy/sell agreements Cash flow, budget analysis, and WIP job cost analysis Billing, collections, timely billing/collecting Compensation analysis Contractual audits Estate and succession planning Mergers and acquisitions (Due diligence) Multistate contractor pre-qualification rules and compliance Process reviews Strategic planning Valuations Fraud prevention & detection Allocation of overhead & equipment burdens Bonding & financing consultations Multi-state tax services Sales and use tax planning ### Energy/Natural Resources URL: https://www.suttlecpas.com/industries/energy-and-natural-resources Energy and natural resources are part of the rich history of our home in West Virginia and Suttle & Stalnaker’s commitment to serving that industry is long and deep. We know first-hand how the unpredictability of the industry can affect the economies in West Virginia and across the country. Market conditions and regulatory changes are everyday concerns for land owners, producers, and support providers. Preparedness during unexpected times of increase or decrease in demand can be a challenge, for even the most seasoned businesses. Having a partner that can help you make strategic decisions to ensure the longevity of your success is critical. Energy and Natural Resources Experience The Suttle & Stalnaker, PLLC energy and natural resources team has over 40 years of experience in the oil, gas, and coal industries. Our in-depth knowledge of land owners, royalties, and production, combined with our diligent monitoring of ever-changing regulations and market fluctuations, allows us to bring both opportunities and potential concerns to our clients’ attention. Land owners, producers, operators, drillers, and other service providers rely on our professionals to advise on key structural decisions and assist with day-to-day operational questions. Our regional, national, and international clients benefit from our ability to serve them from inception to implementation, and beyond. Your Energy and Natural Resources Team Our team doesn’t merely point out issues; we partner with our clients to find solutions. We believe in developing deep relationships with our clients by asking the right questions and listening to their responses. Through these conversations, we’re able to offer tax saving strategies, assist with cash flow management, and consult on merger and acquisition opportunities. Our partners pride themselves on being accessible and responsive; we don’t have layers of personnel to get through to get your questions answered. Independent Oil and Gas Association West Virginia Coal Association West Virginia Land and Mineral Owners Association Allinial Global – an association of independent accounting firms with offices throughout North America and the world. This partnership uniquely positions us to respond to the many issues our clients face. Audits, reviews, and compilations in accordance with USGAAP, IFRS, or PCAOB Financial reporting conversion from IFRS to USGAAP Financial reporting consulting and preparation of financial statements Development of projections and forecasts Federal, state and local tax return preparation and projections Tax consulting and planning Operational improvement analysis Merger and acquisition consulting Due diligence reviews and assistance Consulting services ### Financial Institutions URL: https://www.suttlecpas.com/industries/financial-institutions State and federal regulatory landscapes are continuously changing, and the challenge to keep up with these changes has never been greater. We understand the steep expectation to grow your assets while managing complex regulations, and we can help. Experience with Financial Institutions At Suttle & Stalnaker PLLC, we have deep roots in the banking industry, with nearly 50 years of experience serving community banks, publicly traded banks, and savings and loan associations throughout West Virginia, Southeast Ohio, and Kentucky. We are active in state and national banking associations, which allows us to identify trends and help our clients be on the forefront of change while remaining in compliance. Your Financial Institution Team We are committed to providing a team of banking professionals that work with clients throughout the year by offering guidance, when requested, to enhance their understanding of complex issues when making their day-to-day decisions. We collaborate with a variety of banks in addressing challenges and identifying opportunities, which allows us to pass along best practices for improvement and provide tailored solutions to meet your needs. Our clients appreciate that we’re eager to answer their questions, flexible to work with their schedules, and willing to go the extra mile to help them stay profitable and in compliance. West Virginia Bankers Association Community Bankers of West Virginia Community Bankers Association of Ohio Allinial Global – an association of independent accounting firms with offices throughout North America and the world. This partnership offers us the ability to help our clients no matter the issue. Regulatory Compliance Reviews BSA/AML review Lending compliance Deposit compliance Other compliance regulations review Audit Independent external audit Financial statement audits SEC filings Internal audit Internal audit services Risk assessment Financial operations ACH/electronic payment review Loan review Call report SOX compliance Information Technology Cybersecurity Online banking/online bill pay Gramm-Leach-Bliley Act Vendor management Business continuity planning IT governance and strategic planning Tax Services Preparation of federal and state income tax returns Preparation of property tax returns Tax planning and consulting Consulting Mergers and acquisitions Business valuations Assistance with initial public offerings CECL validation CFO Services ### Government URL: https://www.suttlecpas.com/industries/government Government entities are shouldered with an array of challenges. Budget cuts, strained revenue sources, increased overhead costs, and continual changes to accounting standards are just the tip of the iceberg. We understand the demand you face to structure and efficiently utilize your resources. Your Governmental Services Experience At Suttle & Stalnaker, PLLC, our government professionals are skilled in providing regulated compliance services and consulting on special situations. We go beyond traditional audit services to help our government clients find ways to improve profits and cut costs, create seamless operations, and minimize risk. With extensive roots in government, we know how to benchmark our clients and provide time and resource-saving best practices around internal controls, fraud prevention, and accounting systems. We have experience serving Boards of Education Cities and Towns Colleges and Universities Conservation Districts County Commissions Public Employee Retirement Systems Public Service Districts State Departments and Agencies Transportation Authorities and more Your Government Team We take the time to get to know your organization inside and out; it’s what allows us to provide a quality product and exceptional service. The care and attention we provide is year-round; through notifying you of changes to accounting standards or with helpful industry trends, we consider ourselves a partner to your success. AICPA Governmental Audit Quality Center Government Finance Officers Association West Virginia Department of Education Association of School Business Officials AGA Association of Government Accountants Allinial Global – an association of independent accounting firms with offices throughout North America and the world. This partnership offers us the ability to help our clients no matter the issue. Audit & Attest Services Financial statement audits Compliance audits including Single Audits performed in accordance with the Uniform Guidance Agreed-upon procedures Financial statement reviews Operations audits Internal audits Audit Preparation Assistance Financial statement preparation assistance Schedule of Expenditures of Federal Awards (SEFA) preparation assistance New GASB Standard implementation GASB 34 conversions Calculation and preparation of schedules required by GASB 68, GASB 75, GASB 87, and GASB 96 Assistance with preparation of annual comprehensive financial reports and submission to GFOA Certificate Program General Operations & Consulting Technical research Strategic planning Assistance with development and installation of internal controls Physical inventory counts Monitoring for pass-through/sub-recipient funding Cash flow forecasting Budgeting assistance Outsourced CFO services Bookkeeping Bank reconciliation preparation Assistance with the bid process Cybersecurity Information security Special Engagements Fraud investigations ### Healthcare URL: https://www.suttlecpas.com/industries/healthcare Healthcare organizations in and around West Virginia and across the country face a wide range of rapidly changing issues – increasing state and federal regulations, rising overhead costs, reductions in insurance reimbursements, and recruiting and retaining qualified staff. These challenges stand in the way of your passion – treating patients. You need a trusted partner that understands these issues and can provide creative solutions to help you and your practice prosper. Healthcare Experience Suttle & Stalnaker PLLC has been committed to serving the healthcare industry for decades. Our experienced professionals help group practices, ambulatory surgery centers, and sole practitioners by going beyond the standard tax preparation to provide guidance on maximizing tax saving benefits and decreasing operating expenses. Our professionals conduct cash flow, revenue cycle, and financial statement analysis and offer insightful recommendations for the profitability of your practice. Your Healthcare Team As a full-service CPA firm, we offer tax, accounting and advisory services to clients in the medical field. Our background in the healthcare industry allows us to draw on years of experience to guide you during times of succession/transition, retirement planning, estate planning, and merger/acquisition. We are actively involved in industry-related associations and continuously monitor trends, so we can pass best practices on to you. Medical Group Management Association Members West Virginia Medical Group Management Association Members National CPA Health Care Advisors Association Allinial Global – an association of independent accounting firms with offices throughout North America and the world. This partnership uniquely positions us to respond to the many issues our clients face. Consulting Financial and Operational Benchmarking Financial Feasibility Studies Estate Planning Retirement Planning Succession/Transition Planning Business Valuation Tax Tax preparation Tax planning Audit, Review and Compilation Agreed upon procedures Internal control engagements Information Technology Cybersecurity Information Security Internal Audit Client Account Services Payroll Payroll processing and tax payments W2 and 1099 preparation 401k reports and calculations Accounts payable Accounts receivable Bookkeeping Reconcile bank accounts Record and maintain depreciation schedules Review general ledger Financial statements Sales and use tax reporting QuickBooks® Set-up, training and consulting CFO for hire Human resources outsourcing and consulting ### Nonprofit Organizations URL: https://www.suttlecpas.com/industries/nonprofit-organizations Nonprofit organizations rely on a variety of funding sources to ensure they have adequate resources to achieve their missions. As governmental funding sources are reduced or eliminated, many nonprofits have been forced to seek new or increased private funding. All nonprofit organizations face increasingly difficult challenges with securing adequate funding, personnel management, governance policies, accounting, marketing, reporting to stakeholders, and managing cash flow while simultaneously carrying out their mission. We understand the challenges you face, and we can help. Experience with Nonprofit Organizations At Suttle & Stalnaker PLLC we have over 52 years of experience in providing audit, accounting, and tax services to nonprofit organizations. We work with a variety of nonprofits, including foundations, research and development corporations, and business/trade associations, as well as charitable, religious and social service organizations to provide sound financial advice to promote sustainability in the ever-changing West Virginia economy. With offices located in Charleston, Parkersburg, Huntington,and Morgantown, our clients receive face-to-face attention from partners and managers who are familiar with their organization. Your Nonprofit Team Our team of nonprofit professionals is actively involved in the communities where we live and work. We serve on boards of nonprofits, so we understand the financial and operational challenges you face and can provide tailored solutions to meet your needs. Accounting and financial reporting can take time away from fulfilling your organization’s mission. We offer solutions to meet your day-to-day accounting needs. By partnering with our bookkeeping and payroll professionals, your organization will experience both time and cost savings, and have peace of mind that things are done right. Our depth and experience working with a variety of nonprofits allows us to pass along industry best practices to move your organization forward. Our clients appreciate that we provide recommendations, are eager and available to answer their questions throughout the year, and are flexible to work with their schedules. Presentations to board of directors Presentations to community groups Specialized nonprofit credentials AICPA Single Audit Certificates Allinial Global – an association of independent accounting firms with offices throughout North America and the world. This partnership uniquely positions us to respond to the many issues our clients face. Audit and Accounting Financial statement audits Single audits performed under the requirements of Uniform Guidance Compilations and reviews Cost allocation services Indirect cost plans Bookkeeping services Payroll and related payroll tax services Monthly financial statement preparation Pension audit services Tax Preparation of Federal Form 990 Preparation of Federal Form 5500 Tax planning and consulting Consulting Internal control evaluations Quickbooks support Implementation of various systems Operations analyses Business advisory services Investment consulting Human resources support Pension operations and compliance Information Technology Cybersecurity Information Security Internal Audit ## Insights ### Educators may be able to claim 2 deductions for 2026 classroom expenses URL: https://www.suttlecpas.com/insights/educators-may-be-able-to-claim-2-deductions-for-2026-classroom-expenses Published: 2026-09-16 Key Points: Educators can claim an above-the-line deduction. Eligible K-12 educators may deduct up to $350 of qualifying unreimbursed classroom expenses for 2026, whether or not they itemize. Itemizers may qualify for an additional deduction. A new deduction allows eligible to itemize qualifying expenses exceeding the $350 limit, without a specific dollar cap or 2%-of-an-AGI threshold. Careful record-keeping is essential. Educators should save receipts and document each expense because the two deductions have different eligibility and expense rules. Teachers and other educators often spend their own money on books, supplies, equipment and other classroom needs. For 2026, eligible educators may have two ways to deduct qualifying unreimbursed expenses. One deduction is available whether or not they itemize, and a new deduction under the One Big Beautiful Bill Act (OBBBA) is available to itemizers. The long-time deduction for nonitemizers and itemizers Eligible educators can deduct some of their unreimbursed out-of-pocket classroom costs under the educator expense deduction. This is an “above-the-line” deduction, which means you don’t have to itemize to claim it and it reduces your adjusted gross income (AGI), which has an added benefit: AGI-based limits affect a variety of tax breaks, so lowering your AGI might help you maximize your tax breaks overall. To be eligible, taxpayers must be kindergarten through grade 12 teachers, instructors, counselors, principals or aides. Also, they must work at least 900 hours a school year in a school that provides elementary or secondary education as determined under state law. For 2026, up to $350 of qualified expenses paid during the year that weren’t reimbursed can be deducted. (The deduction limit is $700 for married couples filing a joint return if both spouses are eligible educators, but they can’t deduct more than $350 each.) The limit is annually indexed for inflation and was $300 for 2025. But it typically doesn’t go up every year. Examples of qualified expenses include books, classroom supplies, computer equipment (including software), other materials used in the classroom, and professional development courses. For courses in health and physical education, the costs for supplies are qualified expenses only if related to athletics. The new deduction for itemizers The OBBBA made permanent the Tax Cut and Jobs Act’s (TCJA’s) suspension of miscellaneous itemized deductions subject to the 2% of AGI floor. This had included unreimbursed employee business expenses such as teachers’ out-of-pocket classroom expenses. The suspension had been in place since 2018. But the OBBBA created a new miscellaneous itemized deduction for educator expenses. And this deduction isn’t subject to the 2% of AGI floor or a specific dollar limit. The new deduction is available for eligible expenses incurred after December 31, 2025. This is in addition to the $350 above-the-line deduction. So educators eligible for both deductions can first claim the above-the-line deduction and reap the benefits of reducing their AGI and, if they have eligible expenses in excess of $350, claim the itemized deduction for those excess expenses. (Educators can’t claim both deductions for the same expenses.) Who is eligible and what expenses qualify are a little broader for the itemized deduction than for the above-the-line deduction. For example, interscholastic sports administrators and coaches are also eligible. And, for courses in health and physical education, the supplies don’t have to be related to athletics. Before deciding to claim the itemized deduction, you need to determine whether itemizing makes sense for you overall. Taxpayers can choose to itemize this and certain other deductions (such as mortgage interest, property tax and charitable donations) or to take the standard deduction based on their filing status. Itemizing deductions saves tax only when the total is greater than the standard deduction. The OBBBA made the nearly doubled standard deductions under the TCJA permanent, so fewer taxpayers benefit from itemizing. For 2026, the standard deduction is $16,100 for singles and married taxpayers filing separately, $24,150 for heads of household and $32,200 for married couples filing jointly. Keeping good records Do you expect to qualify for one or both of these deductions? Be sure to track your qualifying expenses carefully. Save your receipts to document the date and amount of each purchase, and note the purpose. Good records are especially important now that there are two educator deductions with differing rules. Suttle & Stalnaker, PLLC is ready to help. If you would like more information on how this applies to you, contact our office at 304.343.4126. © 2026 ### How can you avoid and correct common payroll tax mistakes? URL: https://www.suttlecpas.com/insights/how-can-you-avoid-and-correct-common-payroll-tax-mistakes Published: 2026-09-15 Key Points: Handle payroll taxes accurately and on time. Include all taxable compensation not just regular wages and salaries. Correct errors on payroll taxes promptly. Payroll administration can be challenging for small business owners — and mistakes can create problems for both employers and employees. Incorrect paychecks can frustrate employees and require time and resources to fix. Errors involving tax withholding, deposits or reporting can also expose your business to interest and penalties. Mistakes can happen even with payroll software or an outside payroll provider. Here are some steps you can take to reduce your risk. Withhold and deposit taxes properly Employers generally must withhold income tax and employees’ share of Social Security and Medicare taxes from their wages, as well as pay the employer’s share of Social Security and Medicare taxes. You’re also responsible for depositing these amounts with the IRS and reporting them on the appropriate payroll tax returns. Additional rules may apply to the 0.9% additional Medicare tax, federal unemployment tax, and various state and local taxes. Errors when entering information from an employee’s Form W-4, “Employee’s Withholding Certificate,” can result in incorrect federal income tax withholding. Changes to an employee’s name, address or visa status can create problems, too. Perhaps the most dangerous mistake is failing to deposit withheld federal income tax, Social Security and Medicare taxes and the employer’s share of Social Security and Medicare taxes on time. IRS penalties accrue quickly because they increase with the length of the delay. That is: If a deposit is one to five calendar days late, the penalty is 2% of the unpaid deposit, If a deposit is six to 15 calendar days late, the penalty is 5% of the unpaid deposit, and If a deposit is more than 15 calendar days late, the penalty is 10% of the unpaid deposit. The penalty rate may increase to 15% if more than 10 calendar days elapse after the date of the first notice or letter from the IRS. Alternatively, a 15% penalty may apply on the day a notice or letter for immediate payment is received. If the IRS can make the case that a failure to deposit withheld taxes (income tax and the employee’s share of Social Security and Medicare taxes) was willful, a 100% penalty may apply. Such penalties can also be levied personally against all responsible individuals in an organization. To reduce the risk of withholding and deposit errors, establish procedures for reviewing employee withholding information and monitoring deposit deadlines. Even if you use an outside payroll provider, your business generally remains responsible for making sure federal taxes are deposited and paid — and payroll tax returns are filed — on time. Regularly reconcile your payroll records with amounts reported and deposited, and promptly investigate any discrepancies. Report all forms of taxable compensation Remember, salaries or wages aren’t the only items that must be included in employees’ taxable income. You must also include the value of bonuses, awards and certain fringe benefits. Failing to withhold sufficient amounts from employees’ total reportable income can also result in noncompliance with IRS rules. In turn, this could lead to penalties for failing to properly withhold or deposit payroll taxes. What’s more, the employer could be subject to information return penalties for incorrect Forms W-2, “Wage and Tax Statement.” To minimize your exposure, review the tax treatment of bonuses, awards and fringe benefits before processing them through payroll. This is particularly important when adding a new benefit or revising a compensation arrangement because the rules for federal income tax withholding, Social Security and Medicare taxes aren’t always the same. Correct mistakes promptly Despite your best efforts, mistakes can happen. When you discover one, first determine: What went wrong, Which employees and payroll periods are affected, and Whether the error involves taxable wages, withholding, deposits or information reporting. Then determine the appropriate correction. It’s important to act promptly because available correction procedures may vary based on when you discovered the error. Depending on the mistake, you may need to adjust an employee’s pay, correct your payroll records, make an additional tax deposit or correct a previously filed employment tax return. For example, certain errors reported on Form 941, “Employer’s Quarterly Federal Tax Return,” may need to be corrected using Form 941-X, “Adjusted Employer’s Quarterly Federal Tax Return or Claim for Refund.” An incorrect Form W-2 may require Form W-2c, “Corrected Wage and Tax Statement.” Keep records explaining the error and the steps taken to correct it. If employees’ pay or tax information is affected, communicate with them promptly so they understand what happened and what, if anything, they need to do. Keep your payroll on track Payroll mistakes can be costly, but strong review procedures can reduce the likelihood that they’ll occur — and prompt action can limit the damage when they do. If you discover a payroll error or have questions about your payroll tax obligations, Suttle & Stalnaker, PLLC can help. If you would like more information on how this applies to you, contact our office at 304.343.4126. © 2026 ### Behind on bookkeeping? Here’s how to get back on track URL: https://www.suttlecpas.com/insights/behind-on-bookkeeping-here-s-how-to-get-back-on-track Published: 2026-09-14 Key Points: Falling behind in bookkeeping is fixable. Accurate bookkeeping reduces risk. Better records support growth for your business. Running a business requires juggling countless responsibilities. Not surprisingly, bookkeeping tasks often end up on the bottom of to-do lists. The good news is that falling behind doesn’t necessarily mean your financial records are beyond repair. With a disciplined approach and the right support, you can regain control. How do you recognize the issue in your bookeeping? Many business owners don’t realize how far behind they’ve fallen until they need, for example, to file a tax return or complete a loan application. Take notice if you: Haven’t reconciled bank and credit card accounts in months, Have unfiled tax returns or unanswered tax notices, Are missing receipts or have incomplete expense records, Are uncertain about cash flow or profitability, Can’t generate accurate, timely financial reports, or Spend significant time searching for basic financial information. If these issues sound familiar, you’re not alone. Growing businesses often outpace the systems and processes that once worked well. Acknowledging the problem is the first step toward solving it. Start with the basics When recordkeeping lags and you try to catch up, it’s tempting to focus on everything at once. A more effective approach is to prioritize the essentials, starting with key financial documents. First, gather bank and credit card statements, invoices, payroll records, and tax filings. Organizing these records by month can make the cleanup process more manageable. Next, identify which bookkeeping tasks are incomplete. For instance, you may need to reconcile accounts, categorize transactions, record outstanding invoices or update payroll information. Creating a checklist can help you tackle the work systematically and avoid overlooking important items. Technology may also help streamline the process. QuickBooks® and other accounting platforms can automate routine tasks and simplify account reconciliations. Address tax issues promptly If your tax filings or payments aren’t up-to-date, address the situation as soon as possible. Delays can increase IRS penalties and interest, as well as complicate administration. Begin by determining which returns have been filed and which obligations remain outstanding. If you’ve received notices from the IRS or other taxing authorities, review them carefully and respond within the required time frame. This can help limit penalties and prevent small problems from becoming major ones. Accurate bookkeeping plays an important role here. If your records are current, it will be easier to prepare returns, substantiate deductions and respond to questions. View cleanup as an opportunity Updating records does more than fix past issues. The process can also provide valuable insight into your business’s current financial position and future growth opportunities. Once your books are current, you’ll be better equipped to evaluate cash flow, monitor profitability and make informed business decisions. Clean books provide the foundation for reliable budgeting and planning. Updating records may also reveal opportunities to improve efficiency and focus your business strategy on the most profitable activities. Ask for help You might be able to address minor bookkeeping issues yourself, but more complex situations call for professional assistance. Don’t wait until the next tax deadline or business opportunity exposes the problem. Suttle & Stalnaker, PLLC is ready to help. If you would like more information on how this applies to you, contact our office at 304.343.4126. © 2026 ### Can remote work complicate your state taxes? URL: https://www.suttlecpas.com/insights/can-remote-work-complicate-your-state-taxes Published: 2026-09-09 Key Points: Remote work can create multi-state tax obligations. Residency depends on more than the permanent home. Check tax obligations before changing your work location to remote. Working remotely may broaden your job options and make daily life easier. But working from a different state than your employer — or spending part of the year working from a second home in a different state than where you normally reside — can create state tax issues. Because the rules vary by state, work arrangements that cross state lines warrant a closer look. Convenience-of-the-employer rule If your employer is located in a state that applies a convenience-of-the-employer rule and you work remotely from a different state, you may need to file income tax returns in more than one state. Under such a rule, days worked from another state for your own convenience (rather than for the convenience of your employer) may be treated as days worked in your employer’s state. This might occur if, say, you choose to work from home across the state border from the city where your employer has an office. Your employer doesn’t require you to work remotely, but you prefer to do so to save yourself the time and cost of commuting. So your employer allows you to work from home for your convenience. A state with an income tax generally can tax all income of its residents and income earned within its borders by nonresidents. So if your employer’s state considers your days worked remotely to be days worked in that state because of the convenience-of-the-employer rule, you could be subject to taxes and filing requirements in both your employer’s state and your own. Domicile and residency Your state tax obligations can also be affected if you spend enough time working in two states that both consider you to be a resident. Residency rules vary, but many states consider your domicile, the days you spend in the state and whether you maintain a home there. Your domicile is generally your “true, fixed, permanent home” — the place you intend to return to. Some states also will treat you as a resident if you maintain a home and spend a specified number of days there. It’s possible to be domiciled in one state and be a resident of another. For example, let’s say you have a permanent home in one state where your job is located and a vacation home in another state. Your employer allows employees to work remotely, so now you spend more than 200 days per year living and working at your vacation home. The state where your permanent home is located considers you to be domiciled there, but the state where your vacation home is located might view you as a resident. So if both states have an income tax, you may be subject to taxes on the same income in both states. A credit for taxes paid to another state may reduce or eliminate double taxation, depending on the states’ rules. But your tax bill may still increase if, for example, the vacation home state’s income tax rate is higher than your permanent home state’s rate. What are the employer obligations for remote workers? From an employer’s perspective, allowing employees to work remotely may create obligations to withhold and remit income and payroll taxes in multiple states. (These requirements can also affect how much state income tax is withheld from an employee’s pay.) Plus, having employees in other states may be sufficient to establish “nexus” with those states, potentially triggering liability for their income, franchise, gross receipts or sales and use tax. In addition to the expense of tax reporting in multiple states, this may increase an employer’s overall tax liability. There are other complications as well. As a result, some employers may not allow remote employees to work for extended periods from other states. They also might prohibit remote employees from moving to a state where the employer doesn’t already have employees or nexus. Review your arrangement If you’re a remote employee, before changing where you work, check with your employer to make sure it will allow you to work from that state. Also find out how a move or extended stay could affect your state taxes and withholding. If you’ve already worked from more than one state during 2026, consider addressing the potential tax consequences before year end. Suttle & Stalnaker, PLLC is ready to help. If you would like more information on how this applies to you, contact our office at 304.343.4126. © 2026 ### How do I Coordinate Marketplace Premiums, Expected Income, and the Self-Employed Health Insurance Deduction? URL: https://www.suttlecpas.com/insights/how-do-i-coordinate-marketplace-premiums-expected-income-and-the-self-employed-health-insurance-deduction Published: 2026-08-24 Key Points: Marketplace premium tax credits and self-employed health insurance deduction are interconnected. Income estimated matter because final eligibility is determined at tax filing. Year-round planning can help avoid tax surprises. Marketplace health insurance can provide meaningful tax benefits, but it can also create surprises when income changes during the year. This is especially true for self-employed individuals because the Premium Tax Credit (PTC) and the self-employed health insurance deduction are connected. One can affect the other, and both may affect the final tax result. How are Marketplace premiums determined? When you apply for Marketplace coverage, you generally estimate your household income, household size, and other coverage information for the upcoming year. That estimate helps determine whether you may qualify for advance payments of the Premium Tax Credit, which can lower monthly premiums. The final amount is not determined until your income tax return is prepared using actual year-end information. What is the Premium Tax Credit? The Premium Tax Credit, often called the PTC, is a refundable tax credit that helps eligible individuals and families pay for health insurance purchased through the Marketplace. The credit may be paid in advance to the insurance company during the year, but it must be reconciled on the federal income tax return, generally using Form 8962. If advance credit payments are higher than the final allowable credit, the excess may have to be repaid with the tax return. For tax years beginning after December 31, 2025, IRS guidance indicates the prior repayment limitation caps no longer apply, making accurate income estimates and timely Marketplace updates more important. The PTC rules are found under IRC Sec. 36B and related regulations. In general, eligibility depends on Marketplace enrollment, household income, filing status, family size, and whether the taxpayer or family member is eligible for other minimum essential coverage, such as affordable employer coverage or certain government coverage. What is the 100%–400% federal poverty level rule? The PTC is generally limited to taxpayers with household income of at least 100% and not more than 400% of the applicable federal poverty level (FPL). Temporary expanded eligibility allowed some households above 400% of FPL to qualify through 2025. Unless the law changes, for 2026 and later, taxpayers above 400% of the applicable FPL generally will not qualify for the federal PTC. This creates a practical planning issue. A self-employed taxpayer whose income is close to the 400% FPL threshold may lose the entire PTC if final household income is even slightly too high. Income changes, retirement contributions, business deductions, and health insurance deductions may all affect that calculation. What is the self-employed health insurance deduction? The self-employed health insurance deduction allows certain self-employed taxpayers to deduct eligible health insurance premiums as an above-the-line deduction. This means it may reduce adjusted gross income, or AGI, even if the taxpayer does not itemize deductions. The deduction is governed by IRC Sec. 162(l). The deduction may be available to a sole proprietor, partner, or more-than-2% shareholder of an S corporation, but it is subject to important limitations. The plan must generally be connected to the self-employed trade or business, and the deduction generally cannot exceed earned income from that business. How is the self-employed health insurance deduction different from the Premium Tax Credit? How do the PTC and the deduction affect each other? For self-employed taxpayers with Marketplace coverage, the two benefits can create a circular calculation. The self-employed health insurance deduction reduces AGI, which can affect household income for PTC purposes. At the same time, the PTC reduces the amount of premiums that may be deductible because a taxpayer generally cannot receive both a credit and a deduction for the same premium dollars. IRS Publication 974 recognizes this interaction and provides optional calculation methods, including an iterative calculation method and a simplified calculation method. This is one reason tax software results, income projections, and year-end tax planning should be reviewed carefully when a self-employed taxpayer receives advance PTC payments. Why does year-round planning matter? Marketplace assistance is based on estimates during the year but reconciled using actual income on the tax return. Self-employed income can fluctuate significantly because of business profits, large projects, investment income, retirement distributions, or changes in household size. A change in income may affect the PTC, the health insurance deduction, or both. Planning may also include reviewing retirement contribution options, such as SEP or other self-employed retirement plan contributions, because they may reduce AGI and allow for a larger PTC. These strategies are subject to plan rules, deadlines, and contribution limits, so they should be reviewed before year-end whenever possible. What should taxpayers do? If you purchase Marketplace insurance and are self-employed, it is important to monitor income throughout the year, report significant changes to the Marketplace, and discuss planning opportunities with your firm representative. Coordinating income projections, retirement contributions, the PTC, and the self-employed health insurance deduction before year-end may help reduce surprises when your tax return is filed. Suttle & Stalnaker, PLLC is ready to help you. If you would like more information on how this applies to you, please contact our office at 304.343.4126 or Ryan Mink, CPA at rmink@suttlecpas.com. *Our articles are generally prepared internally, but could contain AI assistance. All articles are reviewed by Suttle & Stalnaker, PLLC professionals for accuracy and completeness and reflect the knowledge of our team. ### FAQs about resolving small business tax issues URL: https://www.suttlecpas.com/insights/faqs-about-resolving-small-business-tax-issues Published: 2026-08-12 Key Points: Act promptly on tax notices and un-filed returns. Several tax-debt relief options may be available. Prevention and payroll compliance are critical. Tax problems can happen to even the most organized small business owners. A cash flow crunch, an unexpected tax notice, a missed filing deadline or a payroll tax oversight can be stressful — especially when penalties and interest begin to add up. Fortunately, businesses can get back on track by addressing tax issues promptly and strategically. What should I do if I receive a tax notice? If you or your business receives a tax notice from the IRS or a state agency, don’t ignore it. Start by reviewing the notice carefully. It may relate to: A balance due, A missing tax return, A proposed tax adjustment, A payroll tax deposit issue, or A request for documentation. Be aware that tax notices typically include response deadlines — and missing them can limit your options and lead to additional penalties and interest. Tax authorities may eventually pursue collection measures (such as liens or levies) on unpaid amounts. A lien is a legal claim against property, which can affect your ability to secure credit or complete financial transactions. A levy allows the tax agency to seize assets to satisfy the debt. Before making a payment or sending a response, confirm that the notice is accurate. We can help you compare the notice with your business records, gather supporting documentation and prepare an appropriate response. How far back can I file unfiled tax returns? If you have unfiled tax returns, it’s important to address them as soon as possible. In many cases, you’ll need to file past-due returns before you can qualify for certain resolution options, such as a payment plan or settlement program. How far back you need to file depends on your circumstances, the type of return involved and the tax agency’s requirements. There generally isn’t a simple time limit that makes an unfiled return “go away.” For federal income taxes, the statute of limitations for the IRS to assess additional tax for a particular tax year generally starts only after a valid return is filed. It’s typically three years, but it’s six years if you understate your gross income by more than 25%. If you fail to file a return (or you file a false or fraudulent return), the IRS has an unlimited amount of time to assess tax for the tax year. So filing past-due returns can help reduce the risk of penalties, interest and collection activity — as well as the risk that the taxing authority could create a “substitute for return” for you. (This is generally undesirable because the return likely will include your income but not all the deductions, credits and other tax breaks you may be eligible for.) If you’re owed a refund, filing promptly is especially important because you may lose the ability to receive an otherwise valid refund if you wait too long. Federal income tax refunds and credits generally must be claimed by the later of three years from the date you filed the return or two years from the date you paid the tax. What are my options if I owe back taxes? Some business owners who owe tax can’t immediately pay the full balance due. If you owe back taxes, you may have several options depending on the amount owed, the type of tax involved and your financial situation. Ways to manage tax debt may include: Making a payment, Asking for a temporary delay in collection due to financial hardship, Participating in a settlement program (see below), and Setting up an installment agreement or payment plan. An installment agreement or payment plan may give qualifying taxpayers extra breathing room to pay the balance over time. However, you must generally stay current with future tax filings and payments. Falling behind again can cause you to default on your payment plan and potentially lead to additional collection actions. Can I settle my tax debt for less than the full amount owed? Some tax agencies offer settlement programs that allow eligible taxpayers to settle tax debt for less than the full amount owed. For federal tax debt, the offer in compromise (OIC) program may be available in limited circumstances. However, an OIC isn’t available to all taxpayers and may not be the best option in every situation. The IRS reviews income, expenses, asset equity and ability to pay when determining whether to approve an OIC request. Before applying, you’ll generally need to have all required tax returns filed. You also must be current with ongoing tax obligations, including estimated tax payments and federal tax deposits. Can tax penalties be reduced or removed? Penalty relief may be available in certain circumstances. Depending on the penalty and the facts involved, you may qualify for administrative relief, such as an automatic exemption from penalty, first-time penalty abatement or relief based on reasonable cause. Reasonable cause may apply when you made a good-faith effort to meet your tax obligations but were unable to do so because of circumstances beyond your control, such as: A serious illness, A death in your immediate family, A natural disaster, or Loss of records. Penalty abatement isn’t automatic. You must follow the instructions in the notice. You might need to call the IRS or submit a written request with a clear explanation and supporting documentation. Even if penalties are reduced, interest may still apply, so it’s advisable to respond as soon as possible. Why are payroll tax-withholding problems so serious? Payroll tax-withholding problems are among the most urgent tax issues small business owners can face. If you have employees on your payroll, you’re responsible for withholding federal income tax, state income tax (if applicable), Social Security tax and Medicare tax from their wages and remitting those amounts to the government. Tax agencies closely monitor these tax remittances because you’re withholding money on behalf of your employees and holding it in trust until you deposit it with the taxing authority. In some cases, business owners or other responsible individuals may be held personally liable for unremitted taxes through the Trust Fund Recovery Penalty. The penalty can apply to individuals who are responsible for collecting, accounting for or depositing the taxes and who willfully fail to do so. If your business falls behind on these tax deposits, professional guidance is critical. How can I avoid future tax problems? For small business owners, preventing future tax issues starts with strong accounting systems, accurate bookkeeping and timely tax filings. You should also engage in proactive tax planning by reviewing financial reports regularly, setting aside funds for taxes, and making estimated income tax payments and depositing withheld taxes by the required deadlines. Suttle & Stalnaker, PLLC is ready to help. If you would like more information on how this applies to you, contact our office at 304.343.4126. © 2026 ### How do donations impact your tax deduction? URL: https://www.suttlecpas.com/insights/how-do-donations-impact-your-tax-deduction Published: 2026-08-10 Key Points: Cash Gifts: Once itemized cash contributions exceed the 0.5% floor, they’re generally deductible up to 60% of adjusted gross income (AGI). Keep proper records—donations of $250 or more require timely written acknowledgment from the charity. Property gifts: Donating appreciated investments held longer than one year may allow you to deduct their fair market value without paying tax on the appreciation, generally subject to a 30% of AGI limit. Other property deductions depend on how the charity uses or sells the asset. Benefits and volunteering: If you receive something in return for a donation, you may deduct only the amount exceeding that benefit’s value. Volunteer time isn’t deductible, but eligible expenses such as supplies and charitable mileage—at 14 cents per mile—may be. How what you donate impacts your tax deductions you do itemize deductions, you can generally deduct the full amount of cash contributions once you’ve surpassed the new 0.5% floor. But, your annual deduction is generally limited to 60% of your AGI. Any excess may be carried forward for up to five years. Be aware that the IRS imposes strict record-keeping rules for cash contributions. For instance, for cash donations of $250 or more, you must obtain a contemporaneous written acknowledgment from the charity before filing your income tax return. Donating property Several special rules apply to charitable gifts of property. For starters, property donations are subject to lower annual deduction limits (which we’ll detail shortly). On the plus side, there’s a big tax break if you donate certain appreciated property you’ve held longer than one year that would have qualified for long-term capital gains rates had you sold it instead of donating it. In this case, you can deduct the property’s current fair market value. Thus, any appreciation in value while you owned the property will be untaxed. Examples of eligible property include publicly traded securities and mutual funds. However, your annual deduction for such donations is typically limited to 30% of AGI. For tangible property, how the charity uses the property may affect the amount of your deduction. For example, if you donate a car, unless it’s being used by the charity to further its charitable mission (such as a social services charity using a van to deliver meals to the elderly), you generally may deduct only the amount the charity receives when it sells the vehicle. But a 50% of AGI limit typically applies to deductions for donations where you can’t deduct the fair market value, rather than the 30% limit. These are just a few examples of rules that apply to deductions for property donations. Contact us to find out the rules for specific property you’re considering giving to charity. Making quid pro quo contributions Generally, if you receive a benefit in return for making a donation, your deduction amount is reduced. For such a “quid pro quo contribution,” the charity must provide a good-faith estimate of the goods and services you received. You can deduct the difference between the amount you donated and the value of the benefit you received — nothing more. For example, let’s say you attend a fundraising dinner cruise costing $300. If the charity values the meal and boat ride at $100 per person, your deduction is limited to $200. However, most low-cost items and nominal gifts, like coffee mugs or pens featuring the charity’s logo, don’t have to be subtracted from your deduction. Volunteering You can’t deduct the value of the time you spend helping a charity. But you can write off related out-of-pocket expenses, such as supplies and mileage, if you itemize deductions. The deductible mileage rate for charitable miles driven is 14 cents per mile. Travel and lodging expenses can qualify, such as if you attend a convention as a delegate for the charity. However, travel expenses can’t be deducted if the trip is merely a disguised vacation. Achieving your goals If you itemize deductions, charitable donations can be a powerful tax-saving tool. But, as you can see, there’s much to consider as you plan your giving for the rest of the year. Suttle & Stalnaker, PLLC is ready to help. If you would like more information on how this applies to you, please contact our office at 304.343.4126. © 2026 ### Tax tips for parents with kids heading to college this fall URL: https://www.suttlecpas.com/insights/tax-tips-for-parents-with-kids-heading-to-college-this-fall Published: 2026-08-05 Key Points: Explore available education tax credits. Coordinate education funding carefully. Consider the wider tax impact of college funding. A higher education is expensive, and many parents spend years saving up. Others haven’t had the financial bandwidth to save or have hit unexpected financial roadblocks along the way. Regardless of your situation, current tax breaks may be available to you (or to your children or even their grandparents) once your child begins attending college or other post-secondary school. Here are some tax tips. How do you claim tax credits while your children are in school? If you have one or more children in college — or graduate school — you might be eligible for valuable tax credits. Remember, credits reduce your tax liability dollar-for-dollar, so they’re more valuable than deductions of the same amount, which only reduce the amount of income subject to tax. So it’s important to see if you’re eligible for one or both of these credits: American Opportunity Tax Credit (AOTC). You may be able to take this credit of up to $2,500 for the first four years of postsecondary education in pursuit of a degree or recognized credential — a 100% credit for the first $2,000 in tuition, fees and books, and a 25% credit for the second $2,000. The AOTC is 40% refundable, meaning you can get a refund if the credit amount is greater than your tax liability. The credit is available on a per-student basis. For example, if you have a child who’s a freshman and another who’s a fourth-year senior, you can claim a credit of up to $2,500 for each child — as long as you otherwise qualify. Lifetime Learning Credit (LLC). If your child is beyond the first four years of college or in graduate school, you may be able to take the LLC. It can be up to $2,000 for every additional year of college or graduate school — a 20% credit for up to $10,000 in tuition and fees. However, only one LLC is available per tax return. If, say, you have one child in the fifth year of college finishing up his or her bachelor’s degree and another child in grad school, you can claim only one LLC of up to $2,000. But if the first child instead is in his or her first four years of college, you can potentially claim the AOTC for that child and the LLC for your child in graduate school, as long as you otherwise qualify for both credits. Speaking of qualifying, both credits are phased out for married couples filing jointly with modified adjusted gross income (MAGI) between $160,000 and $180,000, and for singles and heads of household with MAGI between $80,000 and $90,000. (Married taxpayers filing separately can’t claim either credit.) If your income is too high for you to qualify, your child might be able to qualify on his or her own tax return. Finally, only one education credit can be claimed for the same student in any given tax year. For instance, if your child graduated from college (in four years) in May of 2026 and starts graduate school in September of 2026, you can’t claim both the AOTC for the last semester of your child’s undergraduate education and the LLC for his or her first semester of graduate education. Other rules also apply to these credits. How can you take advantage of tax-free 529 plan and ESA distributions? Does your child have a tax-advantaged education account, such as a Section 529 plan or Coverdell Education Savings Account (ESA)? Tax-free withdrawals can be taken to pay qualified expenses. Section 529 plan distributions used to pay most postsecondary school expenses are income-tax-free for federal purposes and potentially for state purposes as well. Qualified expenses include tuition, mandatory fees, books, supplies, computer equipment, software, internet, and, for students enrolled at least half-time, room and board. The postsecondary expenses that qualify for tax-free 529 plan distributions generally also qualify for tax-free ESA distributions. However, you can’t take tax-free distributions from both accounts for the same expenses. Also, expenses paid with tax-free distributions from a 529 plan or ESA can’t be used to claim education credits. (If you have younger children and are deciding whether to contribute to a 529 plan or an ESA, keep in mind that there are other important differences to consider, such as the rules for using the funds for K-12 expenses, age-related limits for beneficiaries, and contribution limits — including income-based limits. Contact us to learn more.) Think twice before tapping your retirement accounts You can take money out of your traditional IRA or Roth IRA to pay college costs without incurring the 10% early withdrawal penalty that usually applies to distributions before age 59½. However, the distributions are subject to tax to the extent otherwise applicable. You also may be able to borrow against your employer retirement plan, such as a 401(k) plan, or take withdrawals from it to pay for college. But before you do so, make sure you understand the tax implications, including any penalties you may incur. And any time you make a withdrawal or take a loan from a retirement account, you’re sacrificing the tax-deferred (or tax-free in the case of a Roth account) potential growth on that money. So first think carefully about the future impact on your retirement security. Be aware of scholarship tax treatment Has your child been awarded a scholarship? Congratulations! But it’s also important to understand the tax impact. Scholarships are exempt from income tax if certain conditions are satisfied. The three most significant are that, generally, the scholarship: Must be for a student who is a degree candidate at an eligible educational institution, Can’t be compensation for services, and Must be used for tuition, fees, books and supplies (not for room and board). Also, a tax-free scholarship reduces the amount of expenses that may be taken into account in computing the AOTC and LLC and may reduce or eliminate those credits. Advise grandparents and others to pay tuition directly If someone gives you or your child money to pay some or all of your child’s college expenses, it’s generally treated as a taxable gift to the extent the payments exceed the gift tax annual exclusion of $19,000 per recipient for 2026. Married couples who split gifts may exclude gifts of up to $38,000 for 2026. (Gift tax generally applies to the giver, not the recipient.) However, if the person (say, a grandparent) pays your child’s tuition directly to an educational institution, it won’t be treated as a taxable gift regardless of the amount. This applies only to payments of direct tuition costs (not room and board, books, supplies, etc.). Consider your specific situation Additional rules apply to many of these tax breaks, and there are other tax consequences to consider when it comes to your children and their post-secondary education. Contact us for more information about these breaks and to discuss your specific situation. Suttle & Stalnaker, PLLC is ready to help. If you would like more information on how this applies to you, contact our office at 304.343.4126. © 2026 ### When Should and Employee's Form W-4 Raise Red Flags? URL: https://www.suttlecpas.com/insights/when-should-and-employee-s-form-w-4-raise-red-flags Published: 2026-08-03 Key Points: Reject invalid W-4s: Altered forms, employee-created substitutes, or forms indicating false information shouldn’t be accepted. Request a valid replacement and use the prior valid form—or default withholding rules if none exists. Follow IRS lock-in letters: Withhold according to the IRS-mandated settings. Employees must dispute the determination directly with the IRS, and withholding can’t be reduced without IRS authorization. Maintain consistent payroll procedures: Train payroll staff to identify invalid forms, document how W-4s are reviewed and retained, and direct employees to the IRS estimator or a personal tax advisor instead of providing individualized tax advice Your employees use Form W-4, “Employee’s Withholding Certificate,” to tell you how much federal income tax to withhold from their pay. Most forms are routine, but an altered certificate, unusual accompanying statement or IRS lock-in letter may require special handling. Knowing how to respond can help your business meet its withholding obligations without becoming involved in an employee’s personal tax dispute. How do I recognize an invalid W-4 form? An employee is responsible for the information provided on Form W-4 and signs the form under penalties of perjury. Businesses generally aren’t required to verify whether the employee’s filing status, credits, deductions or other adjustments are accurate. However, a Form W-4 may be invalid if the employee: Alters the official form, Deletes or crosses out the penalties-of-perjury declaration, or Indicates that information on the form is false. You must also reject any substitute form created by an employee. An electronic or substitute form developed by your business may be acceptable if it meets IRS requirements. If an employee submits an invalid Form W-4, you should explain that you can’t accept it and should request a valid replacement. You can generally continue using any valid Form W-4 already in effect until you receive the replacement. If you don’t have a valid form already on file, withhold as if the employee selected “single or married filing separately” and made no entries in Steps 2, 3 or 4. Similarly, a claim of exemption from withholding isn’t automatically invalid. Beginning with the 2026 Form W-4, employees claiming exemption from withholding use the exemption checkbox on the form. For 2026, an employee generally may claim exemption only if the employee had no federal income tax liability in 2025 and expects to have none in 2026. The employee — not the employer — is responsible for determining whether those requirements are met. Responding to IRS instructions Businesses aren’t required to routinely send Forms W-4 to the IRS. You generally must submit these forms only when directed to do so in a written IRS notice or in specific published guidance. The IRS uses information reported on Forms W-2 and other records to identify employees who may have inadequate withholding. If the IRS determines that an employee’s withholding needs to be increased, it may send you a “lock-in letter” specifying the filing status and adjustments that must be used. Before these instructions take effect, the employee receives a separate notice and an opportunity to dispute the determination with the IRS. Once the lock-in instructions take effect, you generally must disregard a Form W-4 that would reduce withholding below the IRS-mandated amount. However, you must honor a new form that results in more withholding. If your business accepts Forms W-4 electronically, its system must prevent an employee subject to a lock-in letter from reducing withholding below the locked-in amount. An employee who disagrees with a lock-in determination must work directly with the IRS. The employee may submit a new Form W-4 and supporting information to the address provided in the IRS notice. Don’t reduce withholding unless the IRS authorizes the change. Businesses that fail to follow lock-in instructions may be liable for the additional tax that should have been withheld. How do I establish consistent payroll procedures? Your payroll procedures should explain how Forms W-4 are submitted, reviewed and retained. Train payroll personnel to recognize altered or unauthorized forms, but don’t ask them to evaluate whether an employee has calculated the proper amount of withholding. That determination generally belongs to the employee and, when necessary, the IRS. For questions about completing Form W-4, direct employees to the IRS Tax Withholding Estimator or suggest consulting their personal tax advisors. Avoid giving individualized tax advice unless your business is qualified and authorized to provide it. Know when to seek assistance Unusual Forms W-4 and IRS lock-in letters can create compliance risks if they aren’t handled correctly. We can guide you through the withholding rules to help reduce the risk of costly errors. Suttle & Stalnaker, PLLC is ready to help. If you would like more information on how this applies to you, contact our office at 304.343.4126. © 2026 ### New West Virginia Sales Tax Exemption for Contractors Working in Public Schools URL: https://www.suttlecpas.com/insights/new-west-virginia-sales-tax-exemption-for-contractors-working-in-public-schools Published: 2026-07-24 Construction companies working within public schools in West Virginia have a new tax consideration, which became effective on July 1, 2026.The West Virginia Legislature passed an amendment to WV Code §11-15-8d during the 2026 legislative session. The amendment allows a sales tax exemption on the purchase of qualifying services and building materials that will be consumed or installed into a public-school facility. The legislation is designed to reduce construction costs associated with public education facilities by exempting qualifying purchases from state sales tax. What Materials are Eligible? The exemption applies to building materials that become secured to or installed into a public-school facility as part of construction, renovation, repair, or improvement projects. The exemption does not apply to: Gasoline Special Fuels Tools Construction equipment Any property or device that does not become permanent in the facility. A property or device is generally considered permanent in the facitlity when its removal would substantially damage or deface the property. What Qualifies as a Public-School Facility? Under the statute, a “school-facility” is defined as real property used primarily for instructional, administrative, or extracurricular functions by a public elementary, secondary, or vocational school. Under WV Code §11-15-9(a)(6)(B), the exemption applies to “an elementary school or secondary school” that maintains a regular faculty and curriculum and has a regularly enrolled body of pupils or students in attendance at the place in this state where its educational activities are carried on. What are Important Considerations for Contractors? Construction companies working in public schools should pay close attention to the July 1, 2026, effective date. As the law is currently written, any purchases made on or before June 30, 2026, remain subject to West Virginia sales tax. Contractors with projects spanning the effective date should work closely with suppliers to ensure purchases made on or after July 1, 2026, are properly treated as exempt when invoiced. The change may also impact the bidding process. Contractors preparing for current or future bids for public-school projects should factor the sales tax exemption into material cost calculations to ensure accurate pricing and maintain competitiveness. Documentation is Critical To support the exemption, contractors should obtain and maintain proper documentation from the contracting entity. The documentation should verify that the facility meets the statutory definition of an eligible public-school facility. Additionally, proper recordkeeping will be essential in demonstrating compliance and supporting tax-exempt treatment of qualifying purchases. The exemption represents a valuable opportunity to reduce the tax burden on eligible construction projects. While the savings could be substantial, contractors must carefully manage the transition, identify qualifying purchases, and secure appropriate documentation to ensure compliance. Suttle & Stalnaker, PLLC is ready to help. If you would like more information on how this applies to you, contact Bart Scott, CPA, CVA, MBA, CCIFP at 304.343.4126 or bscott@suttlecpas.com. *Our articles are generally prepared internally, but could contain AI assistance. All articles are reviewed by Suttle & Stalnaker, PLLC professionals for accuracy and completeness and reflect the knowledge of our team. ### What Tax Accounting Method Should You Select for Your Small Business? URL: https://www.suttlecpas.com/insights/what-tax-accounting-method-should-you-select-for-your-small-business Published: 2026-07-13 Key Points: Eligibility depends largely on gross receipts. Each tax accounting method offers different tax advantages. Switching tax accounting methods requires careful evaluation. Small business owners must answer an important question: Should we use the cash or accrual accounting method for federal income tax purposes? Larger entities are required to use the accrual method. But certain small businesses can elect to use the cash method. You may want to consider this option if it will help lower your taxes. However, it’s not right (or even available) for every situation. Does your business qualify for the cash method? Under Internal Revenue Code Section 448(c), your business may be eligible for the cash accounting method if it had average annual gross receipts that don’t exceed a specific, inflation-adjusted threshold for the prior three-year period. For 2026, businesses with average annual gross receipts up to $32 million are eligible. Some businesses may be eligible for cash accounting even if their gross receipts are above the threshold. Examples include S corporations, partnerships without C corporation partners, farming businesses and certain personal service corporations. In addition, the Sec. 448(c) gross receipts test serves as the eligibility standard for several other tax provisions available to qualifying small businesses, such as: Simplified inventory accounting, An exemption from the uniform capitalization rules, An exemption from the business interest deduction limit, and The option to use the completed contract method (rather than the percentage-of-completion method) for certain long-term contracts. When determining your business’s gross receipts, you may need to include those earned by certain related entities, such as those under common control. Special rules apply to organizations that have existed for less than three years. Also, tax shelters, including syndicates, don’t qualify for small business status, even if their gross receipts are below the threshold. How do the methods differ? The cash method often provides significant tax advantages. Because cash-basis businesses recognize income when received and deduct expenses when paid, they have greater control over the timing of income and deductions. For example, toward the end of the year, they can defer income by delaying invoices until the following tax year or shift deductions into the current year by accelerating expense payments. In contrast, accrual-basis businesses recognize income when earned and deduct expenses when incurred, regardless of the timing of cash receipts or payments. Therefore, they have little flexibility to time the recognition of income or expenses for tax purposes. The cash method also provides cash flow benefits. Because income is taxed in the year received, it helps ensure that a business has the funds needed to pay its tax bill. However, for some businesses, the accrual method may be preferable. For instance, if your accrued income tends to be lower than your accrued expenses, the accrual method may result in a lower tax liability. Other potential advantages of the accrual method include the ability to deduct year-end bonuses paid within the first 2½ months of the following tax year and the option to defer taxes on certain advance payments. Is it time for a change? Even if your business would benefit from switching its accounting method, you should consider the administrative costs. Changing accounting methods for tax purposes may require IRS approval. And, if your business prepares its financial statements in accordance with U.S. Generally Accepted Accounting Principles, using the cash method for tax purposes would require you to maintain two sets of books (cash-basis tax records and accrual-basis financial reporting records). Fortunately, you don’t have to make this decision by yourself. Suttle & Stalnaker, PLLC is ready to help. If you would like more information on how this applies to you, contact our office at 304.343.4126. © 2026 ### Will your Social Security benefits be taxable? URL: https://www.suttlecpas.com/insights/will-your-social-security-benefits-be-taxable Published: 2026-07-08 Key Points: The new “senior deduction” is not the same as eliminating taxes on Social Security. The taxability of Social Security benefits is determined by provisional income. Up to 85% of Social Security benefits may be taxable for higher-income retirees. Last year, the new tax deduction for taxpayers 65 and older was sometimes referred to as “no tax on Social Security.” In actuality, this up-to-$6,000-per-individual deduction, also known as the “senior” deduction, is generally available whether or not someone receives Social Security benefits. (But other limits do apply, such as an income-based phaseout.) Of course, the senior deduction can help reduce taxes on Social Security benefits. However, some retirees are already exempt from tax on Social Security, while others may have to report benefits that far exceed their senior deduction. How much of your Social Security benefits must be reported as taxable income depends on your provisional income, your overall income and IRS thresholds. How much is your provisional income? The first step in calculating provisional income is subtracting your Social Security benefits from your adjusted gross income (AGI). AGI is your income from taxable sources after certain so-called “above-the-line” adjustments but before the standard deduction or itemized deductions and certain other deductions, such as the senior deduction, are applied. Examples of above-the-line adjustments include traditional IRA contributions, Health Savings Account contributions and student loan interest. Because many Social Security recipients have fewer of these adjustments (or none at all), their AGI is often close to (or even the same as) their total income from taxable sources. After your Social Security benefits have been subtracted from your AGI, the following are added to it: 50% of Social Security benefits, Any tax-free municipal bond interest income, Any tax-free interest on U.S. Savings Bonds used to pay college expenses, Any tax-free adoption assistance payments from your employer, Any deduction for student loan interest, and Any tax-free foreign earned income and housing allowances, and certain tax-free income from Puerto Rico or U.S. possessions. The result is your provisional income. Once you know your provisional income, you can see what portion, if any, of your Social Security benefits will be subject to income tax. Will all your benefits be tax-free? Generally, your Social Security benefits will be federal-income-tax-free if: Your provisional income is $32,000 or less and you file a joint return with your spouse, or Your provisional income is $25,000 or less and you don’t file jointly — unless you’re married and file separately from your spouse who lived with you at any time during the year (in which case, see “Will up to 85% of your benefits be taxable?” below). These thresholds went into effect in 1984 and have never been adjusted for inflation. As a result, the number of retirees subject to federal tax on some of their Social Security benefits has been increasing over the years. Also keep in mind that you might owe state income tax even if you don’t owe federal tax, depending on your state. Will up to 50% of your benefits be taxable? Generally, up to 50% of Social Security benefits must be reported as taxable income on Form 1040 if: Your provisional income is over $32,000 but not more than $44,000 and you file jointly, or Your provisional income is over $25,000 but not more than $34,000 and you don’t file a joint return (again — unless you’re married and file separately from your spouse who lived with you at any time during the year). In general, the taxable portion of Social Security benefits gradually increases as provisional income rises. So if your provisional income is near the bottom of the range, you may have to report only a small portion of your benefits as taxable income. If your provisional income is near the top, you may have to report close to 50%. However, the reportable percentage also is affected by the amount of your Social Security benefits relative to other income. Will up to 85% of your benefits be taxable? Generally, up to 85% of Social Security benefits must be reported as taxable income on Form 1040 if: Your provisional income is over $44,000 and you file jointly, or Your provisional income is over $34,000 and you don’t file a joint return (unless you file a separate return from your spouse who lived with you at any time during the year, in which case you must report up to 85% of your benefits if your provisional income is above $0). The exact percentage depends on the amount by which your provisional income exceeds the applicable threshold and the size of your Social Security benefits relative to other income. Project provisional income and plan If you have to report a portion of your Social Security benefits as taxable income, smart tax planning can potentially reduce or even eliminate the liability. Suttle & Stalnaker, PLLC is ready to help you accurately project your provisional income, assess your eligibility for the senior deduction and review your overall tax situation to identify strategies that make sense for you. If you would like more information on how this applies to you, contact our office at 304.343.4126. © 2026 ### Midyear tax planning: Review opportunities to save taxes this year (or next) URL: https://www.suttlecpas.com/insights/midyear-tax-planning-review-opportunities-to-save-taxes-this-year-or-next Published: 2026-07-06 Key Points: Review your tax situation midyear to identify tax-saving opporutnities. The One Big Beautiful Bill Act (OBBBA) introduced important tax changes. Strategic timing of expenses and investment can lower taxes. Summer is a good time to see whether your income, deductions and investment activity are lining up as expected. Let’s take a look at a few areas that commonly provide tax-saving opportunities. What is your tax bracket? The legislation commonly known as the One Big Beautiful Bill Act (OBBBA), which was signed into law on July 4, 2025, retained federal income tax rates ranging from 10% to 37%. For tax planning purposes, it’s important to look at your marginal rate, which is the rate that will apply to your next dollar of income (generally after any adjustments, deductions and exclusions have been applied). For single filers, the brackets above the 10% rate begin at the following income levels: 12% bracket: $12,401 22% bracket: $50,401 24% bracket: $105,701 32% bracket: $201,776 35% bracket: $256,226 37% bracket: $640,601 For head-of-household filers, the brackets begin at the same income levels as those for singles — except that the first two brackets above the 10% rate begin at the following income levels: 12% bracket: $17,701 22% bracket: $67,451 For married couples filing jointly, the brackets above the 10% rate begin at the following income levels: 12% bracket: $24,801 22% bracket: $100,801 24% bracket: $211,401 32% bracket: $403,551 35% bracket: $512,451 37% bracket: $768,701 For married taxpayers filing separately, the brackets begin at half the amount for joint filers. (They’re the same as those for singles except for the 37% bracket.) If you expect this year’s income to be near the threshold for a higher bracket, consider strategies for reducing your taxable income and staying out of that bracket. For example, you could accelerate some deductible expenses. But carefully consider how the OBBBA will impact your deductions this year. For instance, it kept the standard deduction at high levels, and itemizing deductions saves you taxes only if your total itemized deductions for the year exceed the standard deduction for your tax bracket. For 2026, the standard deduction is $16,100 for singles (and separate filers), $24,150 for heads of household and $32,200 for joint filers. The OBBBA also affects itemized deductions. For example, some deductions now offer greater potential benefits (such as the state and local tax deduction), while others are now more limited (such as the charitable deduction). In addition, the OBBBA created some new deductions that can be claimed whether or not you itemize. These include deductions for qualified tips and overtime, the “senior” deduction for taxpayers age 65 or older, and the deduction for qualified auto loan interest. Medical expenses If you expect to benefit from itemizing on your 2026 return, see whether you can benefit from accelerating deductible medical expenses into this year. You can deduct only medical expenses that exceed 7.5% of your adjusted gross income (AGI). AGI is your income from taxable sources after certain so-called “above-the-line” adjustments but before the standard deduction or itemized deductions and certain other deductions, such as the new OBBBA deductions noted earlier, are applied. Deductible medical expenses may include: Health insurance premiums, Long-term care insurance premiums, Medical and dental services and prescription drugs, and Mileage driven for health care purposes. If it’s looking like your deductible medical expenses will be close to exceeding the 7.5% of AGI floor, you may be able to control the timing of additional medical expenses so you can bunch them into 2026 and exceed the floor. If your expenses already exceed the floor, bunching additional medical expenses into 2026 can maximize your deduction. But if it looks like you won’t be itemizing for 2026 or your medical expenses will be far from exceeding 7.5% of your AGI this year, you may want to take the opposite approach: Bunch medical expenses into 2027. Of course, your and your family’s health is more important than tax savings. So don’t accelerate or delay medical services if it would be harmful health-wise. Also consider how the timing will affect what’s covered by health insurance, especially if you have a high deductible. Investment gains (and losses) The OBBBA didn’t change the long-term capital gains rates, so they remain at 0%, 15% and 20%. The long-term gains rate applies to gains on investments held more than one year. Short-term gains are subject to your ordinary-income tax rate, which will be substantially higher. However, be aware that the top long-term gains rate kicks in before the top ordinary-income tax rate. For singles, the long-term gains brackets above the 0% rate begin at the following income levels: 15% bracket: $49,451 20% bracket: $545,501 For heads of household, the brackets above the 0% rate begin at the following income levels: 15% bracket: $66,201 20% bracket: $579,601 For joint filers, the brackets above the 0% rate begin at the following income levels: 15% bracket: $98,901 20% bracket: $613,701 For separate filers, the brackets begin at half the amount for joint filers. If you’ve realized, or expect to realize, significant capital gains this year, consider selling some depreciated investments to generate losses you can use to offset those gains. It may be possible to repurchase those investments, so long as you wait at least 31 days to avoid the “wash sale” rule. You also may need to plan for the 3.8% net investment income tax (NIIT). It can affect taxpayers with modified AGI (MAGI) over $200,000 for singles and heads of household, and over $250,000 for joint filers (half that for separate filers). You may be able to lower your tax liability by reducing your MAGI, reducing net investment income or both. Don’t wait until year end Planning opportunities often become more limited as the end of the year approaches. Reviewing your tax picture now gives you more time to take steps to reduce or defer taxes. Suttle & Stalnaker, PLLC is ready to help you. If you would like more information on how this applies to you, contact our office at 304.343.4126. © 2026 ### What’s the right entity type for your new business? URL: https://www.suttlecpas.com/insights/what-s-the-right-entity-type-for-your-new-business Published: 2026-07-03 Key Points: Both S corporations and multimember LLCs offer pass-through taxation and liability protection. S corporations may offer self-employment tax savings. LLCs provide greater tax flexibility. Start-ups must choose a legal entity for their business activities. The type of entity you select affects how the business is taxed and who may be held personally liable for its debts and obligations, among other things. Two popular options — assuming you’re going into business with one or more other people — are S corporations and multimember LLCs treated as partnerships for tax purposes. Both are pass-through entities, meaning tax items pass through to the individual owners and are reported on their personal federal income tax returns. And both offer liability protection. But there are subtle differences to factor into your decision. Here’s a closer look at the pros and cons of each. Multimember LLCs A multimember LLC essentially combines the legal advantages of corporations with the tax benefits of partnerships. If you operate your business as an LLC, your personal assets are generally protected from exposure to entity-related liabilities under applicable state law. In addition, all LLC members can participate in management without losing their liability protection (unlike partners in a limited partnership). Members of this type of LLC are subject to the federal income tax rules for partners. That means your share of the LLC’s taxable income items, gains, losses, deductions and credits will pass through to you and be reported on your personal return. The LLC itself doesn’t owe federal income tax. In addition to paying income taxes on your share of the LLC’s income, you may owe self-employment tax on that income. This includes Social Security tax at a rate of 12.4% on the first $184,500 of self-employment income in 2026 and Medicare tax of 2.9% on all self-employment income. However, half of your self-employment tax is deductible on your return. It’s also important to note that this business structure isn’t available to all businesses. Certain types of professional practices may be prohibited from operating as LLCs under the laws of some states or applicable professional standards, such as state bar association rules. S corporations An S corporation is a special tax designation available to qualifying domestic corporations. Like a traditional C corporation, an S corporation shields its shareholders from personal liability for the corporation’s debts. At the same time, it provides many — though not all — of the tax benefits associated with partnerships. If you structure your start-up as an S corporation, your share of the business’s taxable income items, gains, losses, deductions and credits will pass through to you and be reported on your personal return. The entity itself doesn’t owe federal income tax. S corporations have one important advantage over LLCs treated as partnerships: Shareholder-employees aren’t required to pay self-employment tax on their shares of the profits, provided they receive “reasonable” compensation that’s subject to Social Security and Medicare taxes. However, there are some downsides to consider. Notably, some partnership tax rules that apply to multimember LLCs and their members are significantly more favorable than the rules that apply to S corporations and their shareholders. Here are some examples: LLC members receive additional tax basis for loss deduction purposes from entity-level liabilities, but S corporation shareholders receive additional tax basis only from loans they make to the corporation. This difference allows LLC members to deduct more losses. When an LLC member purchases an interest from another member, the tax basis of the new member’s share of LLC assets can be stepped up. This lowers the new member’s tax obligation when LLC assets are sold or converted to cash. LLCs and their members have greater flexibility to arrange tax-free transfers of assets (including cash) between themselves. In addition, LLCs can make disproportionate allocations of taxable income, losses and other tax items among their members. In contrast, S corporations must allocate all pass-through tax items among the shareholders strictly in proportion to their stock ownership percentages. Also, be aware that not all entities are eligible to make a Subchapter S election. S corporations must comply with strict requirements that limit the number and types of shareholders, prohibit complex capital structures, and impose other restrictions (such as transfers to ineligible shareholders). Make a tax-smart choice Choosing your business entity requires careful consideration. Taxes play a pivotal role in this decision. Electing S corporation status or forming an LLC that’s treated as a partnership for tax purposes can provide tax advantages, but only if you structure the entity correctly. Before making your decision, consult with us. We can work with you and your legal advisors to determine the optimal setup for your situation. © 2026 ### Is Your Sideline Business at Risk of Being Classified as a Hobby by the IRS? URL: https://www.suttlecpas.com/insights/don-t-let-the-irs-treat-your-sideline-as-a-hobby Published: 2026-07-01 Key Points: The IRS treats businesses and hobbies differently for tax purposes. A profit motive is key to qualifying as a business. Proper planning and documentation can strengthen your position. Do you operate a side gig in addition to your regular day job? Whether you’ve turned a love for crafting into an online store or you play the guitar at a local venue, you’ll need to report the income from your sideline activity on your tax return. But can you deduct the related expenses? The answer depends on whether the IRS classifies your activity as a business or a hobby. Let’s take a closer look. Why the distinction matters If your activity incurs significant expenses — or even losses in some years — how the IRS classifies it can have a major impact on your taxes. For-profit businesses can deduct “ordinary and necessary” business expenses. So, if you operate an unincorporated for-profit business activity that generates a net tax loss for the year (deductible expenses in excess of revenue), you can use the loss to offset income from other sources, such as salary and self-employment income, subject to annual limits. In 2026, the limit is $256,000 ($512,000 for married couples filing jointly). You can carry any excess losses forward to later tax years. Conversely, hobbies receive less favorable treatment. Before 2018, hobby expenses could be claimed as miscellaneous itemized deductions subject to the 2% of adjusted gross income floor. Recent tax law changes permanently repealed itemized deductions for miscellaneous business expenses. So you generally can’t deduct hobby-related expenses for federal income tax purposes — even though you’re still required to report 100% of hobby-related income. Potential safe harbors for profitable ventures If you can show a profit motive for your sideline activity, the IRS will classify it as a for-profit business, and you can generally write off related expenses as the cost of doing business. Two safe harbors create a presumption that an activity is engaged in for profit: Your activity produces positive taxable income (revenues in excess of deductions) for at least three out of every five years. You’re engaged in a horse racing, breeding, training or showing activity, and your activity produces positive taxable income in at least two out of every seven years. Proactive tax planning can help you qualify for these safe harbors — and earn the right to deduct your losses in unprofitable years. Factors that demonstrate a profit motive If you aren’t eligible for one of the safe harbors but can demonstrate an honest intent to make a profit, you may still be able to treat your side gig as a for-profit business. After all, many start-ups take years to become profitable. Questions the IRS considers when determining whether your activity is a business or a hobby include: Do you carry on the activity in a business-like manner? Does the time and effort put into the activity indicate an intention to make a profit? Do you depend on income from the activity? If there are losses, did they occur due to circumstances beyond your control or in the start-up phase of the business? Have you changed methods of operation to improve profitability? Do you (or your advisors) have the knowledge needed to carry on the activity as a successful business? Have you made a profit in similar activities in the past? Does the activity make a profit in some years? Do you expect to make a profit in the future from the appreciation of assets used in the activity? The degree of personal pleasure you derive from the activity is also a factor. For example, most people would say that woodworking is more fun than working in a high-stress executive position — so the IRS is far more likely to classify the former is a hobby if you start claiming recurring losses on your tax returns. Year-by-year determination The IRS tests each year separately when determining whether an activity is a for-profit business or a hobby. So what once was considered a hobby can become a business — and vice versa. However, you generally bear the burden of proving your profit motive each year. For example, you might be able to persuade the IRS that you’ve established a profit motive by keeping more detailed records, advertising and devoting more time to your side gig. It also helps to report profits for a few years, rather than just recurring losses. In fact, a pattern of losses over multiple years can sometimes trigger IRS scrutiny of whether an existing business is operating with a profit motive. Start planning now If you have a side business that isn’t yet profitable, we can evaluate your situation and offer suggestions to help improve your odds of business tax treatment. But don’t wait until year end — many factors the IRS considers when evaluating your profit motive require proactive planning throughout the year. We can help strengthen your position in case the IRS questions your deductions. Suttle & Stalnaker, PLLC is ready to help you. If you would like more information on how this applies to you, contact our office at 304.343.4126. © 2026 ### Demystifying like-kind exchanges URL: https://www.suttlecpas.com/insights/demystifying-like-kind-exchanges Published: 2026-06-29 Key Points: Like-kind exchanges can defer taxes on gains when investment or business real estate is exchanged for qualifying replacement property rather than sold outright. The definition of "like-kind" is broader than many realize, allowing most investment or business real estate to be exchanged for other qualifying real property. Strict rules and deadlines apply, including identifying a replacement property within 45 days and completing the exchange within 180 days to maintain tax-deferred treatment. If you’re a real estate developer or a small business owner who owns commercial real estate, you might be thinking about selling a property. If it has appreciated significantly, a Section 1031 like-kind exchange may allow you to defer tax on some or all of the gain. With this transaction, you exchange one property for another qualifying property rather than sell the property outright. You generally don’t pay tax on the gain on the relinquished property until you sell the replacement property. You may be familiar with the basics of a Sec. 1031 exchange, but you might not understand all the rules and restrictions. Here are four common myths to be aware of so you can avoid missing planning opportunities or facing unexpected taxes. Myth 1: The replacement property must be identical to the property you give up The definition of like-kind property is surprisingly broad. To qualify for Sec. 1031 exchange treatment, you may exchange any real property held for investment or productive use in your trade or business (relinquished property) for like-kind investment, trade or business real property (replacement property). For these purposes, most real property is considered like-kind with other real property. However, neither the relinquished property nor the replacement property can be real property held primarily for sale. Myth 2: You never have to pay current-year tax in a like-kind exchange A properly structured Sec. 1031 exchange can defer gain. But that doesn’t mean every exchange is completely tax-free. If it’s a straight property-for-property exchange, you generally won’t have to recognize any gain from the exchange. You’ll take the same basis (your cost for tax purposes) in the replacement property that you had in the relinquished property. Even if you don’t have to recognize any gain on the exchange, you must report it on Form 8824, “Like-Kind Exchanges.” However, the properties aren’t always equal in value. In these situations, some cash may be added to the deal. This cash is known as “boot.” If you receive boot, you’ll have to recognize gain up to the amount of boot received. For example, let’s say you exchange a building with a basis of $100,000 for a building valued at $125,000, plus $10,000 in cash. Your realized gain on the exchange is $35,000 because you received $135,000 in value for an asset with a basis of $100,000. However, because it’s a Sec. 1031 exchange, you have to currently recognize (and pay tax on) only $10,000 of your gain — the amount of cash (boot) you received. It’s also important to remember that no matter how much boot you receive, you’ll never recognize more than your actual realized gain on the exchange. In addition, your basis in the like-kind replacement property you receive equals the basis you had in the relinquished property reduced by the amount of boot you received but increased by the amount of any gain recognized. Myth 3: Cash is the only type of boot Boot can take forms other than cash. If the property you’re exchanging is subject to debt from which you’re being relieved, the amount of the debt is generally treated as boot. The reason is that if someone takes over your debt, it’s equivalent to that person giving you cash. Of course, if the replacement property is also subject to debt, then you’re treated as receiving boot only to the extent of your net debt relief — the amount by which the debt you become free of exceeds the debt you pick up. Myth 4: You must have the replacement property lined up immediately It’s possible — but rare — to find someone who wants to simultaneously swap like-kind properties with you. Fortunately, you don’t have to acquire the replacement property from the same party you relinquish your property to. And you don’t have to acquire the replacement property on the same day you transfer the relinquished property. In most Sec. 1031 exchanges, the relinquished property is sold first, and the taxpayer uses the exchange proceeds to acquire a replacement property. However, a qualified intermediary must hold the proceeds from the relinquished property until they’re transferred to acquire the replacement property. And deadlines apply: Generally, you must 1) identify a potential replacement property within 45 days after transferring the relinquished property, and 2) complete the acquisition of the replacement property within 180 days. These deadlines are strictly enforced. Missing either one can cause the entire transaction to lose tax-deferred treatment. While you don’t need to have the replacement property lined up immediately, you do need a plan. Begin evaluating replacement property options as early as possible and work closely with your professional advisors throughout the process. Don’t let misconceptions derail your Sec. 1031 exchange Like-kind exchanges can be a tax-savvy way to dispose of investment or business real property — and retain working capital for your business or investment activities. But you’ll need to meet all the requirements. Suttle & Stalnaker, PLLC is ready to help. If you’re considering selling investment or business real estate, contact our office at 304.343.4126 to discuss this strategy further. © 2026 ### What’s a “small business,” and why does it matter? URL: https://www.suttlecpas.com/insights/what-s-a-small-business-and-why-does-it-matter Published: 2026-06-15 Key Points: There is no single tax definition of a “small business.” Business with average annual gross receipts of $32 million or less (for 2026) may qualify for valuable tax benefits. Eligibility can be complex and change over time. Although your business may seem big to you, you may wonder how the government classifies it for tax purposes. If your organization qualifies as a “small business,” you may enjoy several important tax advantages. But the rules for specific tax provisions vary. So, depending on your size, you might be eligible for some so-called small business breaks but not others. Here’s a closer look. What is the definition of a small business? Under federal tax law, there’s no one definition of a small business. Instead, several definitions apply depending on the context, various criteria and certain thresholds. Criteria may include a business’s: Gross assets, Gross receipts, and Number of shareholders and employees. Even if a criterion such as gross receipts is the same across definitions, different thresholds may apply. Also, for some purposes, the tax code might define a small business in more than one way. Depending on how your performance and operations change over time, you might meet the government’s definition of a small business one year but not the next year. What are 5 special breaks for certain small businesses? The Section 448(c) gross receipts test serves as a common eligibility standard for several tax provisions available to qualifying small businesses. Under this test, your business may qualify for five potential tax breaks if it had average annual gross receipts of $25 million or less for the prior three-year period. This threshold is adjusted for inflation — for 2026, businesses that had average gross receipts up to $32 million are eligible for: 1. Cash accounting. You’re generally permitted to use the cash method of accounting for tax purposes even if you have inventories or use the accrual method for financial reporting. With certain exceptions, larger businesses — particularly those that carry inventory — must use accrual accounting. Using the cash method will likely allow you to defer more taxable income than you could under the accrual method. 2. Inventory simplification. You’re generally exempt from complex inventory accounting rules and may account for inventories by: Treating them as nonincidental materials and supplies, or Conforming to the inventory method you use in your financial statements or books and records. Treating inventories as nonincidental materials or supplies allows you to deduct their cost when they’re “used or consumed.” Final IRS regulations clarify that materials aren’t used and consumed until the inventory is sold. So businesses can’t treat raw materials as used and consumed when converted into work-in-progress or finished goods. 3. Relief from UNICAP rules. You’re exempt from the uniform capitalization (UNICAP) rules, which require taxpayers to capitalize certain direct and indirect production costs to inventory, rather than deduct them when incurred. Not only can these rules increase your tax liability, but they also make tax reporting more complex. 4. Exemption from the business interest deduction limitation. You’re not subject to the cap on business interest write-offs, which generally limits deductions of net business interest expense to 30% of adjusted taxable income. 5. The completed contract method. If your business is in construction, manufacturing or another industry where long-term contracts are common, you may use the completed contract method rather than the percentage-of-completion method to account for long-term contracts expected to be completed within two years. The completed contract method allows you to defer tax until the contract is substantially complete, while the percentage-of-completion method can accelerate the tax. When determining your business’s gross receipts, you may need to include those earned by certain related entities, such as those with common control. Special rules apply to organizations in existence for less than three years. Also, tax shelters, including syndicates, don’t qualify for small business status, even if their gross receipts are below the threshold. Sizing up your business Of course, these five relief measures aren’t the only tax-saving opportunities for small business owners at the federal and state levels. And determining eligibility can be more complicated than it appears. We can help evaluate your eligibility for these breaks and others — and develop a long-term plan that’s tailored to your situation. Suttle & Stalnaker, PLLC is ready to help. If you would like more information on how this applies to you, contact our office at 304.343.4126. © 2026 ### Are you self-employed? Don’t overlook valuable tax deductions URL: https://www.suttlecpas.com/insights/self-employed-don-t-overlook-valuable-tax-deductions Published: 2026-06-05 Key Points: Self-employed individuals can deduct many business expenses that employees cannot. Several commonly overlooked deductions can provide meaningful tax savings for self-employed individuals. Good record-keeping is essential to claiming deductions. If you’re self-employed, you probably have questions about deducting business expenses on your federal income tax return. Here’s a quick overview of the filing requirements for sole proprietors and independent contractors, and five examples of expense deductions that are commonly overlooked or misunderstood. What are the filing basics? Sole proprietors and independent contractors must report their business activity on Schedule C, “Profit or Loss From Business,” of their personal tax returns (Form 1040). Business income includes money earned from customers, side gigs, online sales and other self-employment activities. Income may be reported on Forms 1099-NEC or 1099-K, but you must report all taxable business income, even if you don’t receive a tax form. Although employees can no longer deduct unreimbursed business expenses, self-employed individuals can offset their business income with various deductions for business-related expenses. This is a major tax advantage for the self-employed. When evaluating whether costs are deductible, follow this golden rule: Business expenses must be ordinary (common in your industry) and necessary (helpful and appropriate for the business). Of course, you’ll need to keep detailed records to support your business deductions. Obvious examples of potentially deductible expenses are supplies, materials, and, if you have employees, payroll and benefits. Other business-related expenses may also be deductible on Schedule C, though the rules are sometimes confusing. Below are five common examples. 1. Home office Unlike employees who work remotely, you can deduct the costs for a workspace in your home that’s used regularly and exclusively as your principal place of business. This can include a portion of actual indirect home expenses — such as rent or mortgage interest, insurance, utilities and repairs — based on your business-use percentage. For instance, if you use 10% of your apartment’s square footage for business, you can deduct 10% of your rent. You can also fully deduct direct expenses (for example, the cost of painting your office) and, if you own your home, claim a depreciation allowance under IRS tables. In lieu of tracking your actual expenses, the IRS also offers a simplified method of $5 per square foot for up to 300 square feet. 2. Education The costs of refresher courses, continuing education classes, vocational training and other education programs may be deductible if you’re required to take them to maintain or improve skills required for your current trade or business. Qualifying expenses include tuition, books, supplies and fees, and potentially travel costs to attend education programs. However, costs of education that’s needed to meet the minimum requirements for a trade or business or that qualifies you for a new trade or business generally aren’t deductible. For example, you can’t claim the cost to obtain an undergraduate degree as a business expense. 3. Business meals You generally can deduct 50% of the costs of business meals if they aren’t “lavish or extravagant.” This applies to food and beverages provided to customers, clients, suppliers, employees, agents, partners or professional advisors — whether established or prospective. Although entertainment costs aren’t deductible under current law, food and beverages might be deductible even if they’re provided at a nondeductible entertainment activity. But such a deduction is available only if: The food and beverage items are separately purchased or identified from the entertainment costs on bills, invoices or receipts, and The amount charged for food or beverages reflects the venue’s usual selling price for those items if purchased separately from the entertainment or approximates the reasonable value of those items. Say, for example, that you take a customer to a World Cup match this summer. The ticket costs aren’t deductible. But if you buy the customer popcorn, nachos and drinks while there, you can deduct half of those costs as long as you have proper documentation, such as the itemized receipt, and records showing who attended and the business purpose. 4. Business travel If you travel to a temporary location for business purposes, you can deduct your travel expenses, including round-trip airfare, hotel costs and other incidentals (such as tips and cab fares). However, the primary purpose of your trip must be business related. For instance, you might travel to a different city or country to attend a trade show or educational conference. Beware: Some allocations may be required if a trip combines business and pleasure — for example, if you fly to a location for four days of business meetings and stay for an additional three days of vacation. Only the reasonable cost of lodging and 50% of meals incurred during the business days are deductible. Lodging and meal costs incurred for the personal vacation days aren’t deductible. On the other hand, with respect to the cost of the travel itself (for example, plane fare), if the trip is primarily for business purposes, the travel cost can be deducted in its entirety, and no allocation is required. Conversely, if the trip is primarily personal, none of the travel costs are deductible. If your spouse joins you, his or her travel expenses generally aren’t deductible, unless your spouse is your employee and has a bona fide business reason to be there. But the restrictions apply only to additional costs incurred by having your non-employee spouse travel with you. For example, the expense of a hotel room or for traveling by car would likely still be fully deductible because the cost to rent the room or travel by car alone vs. with another person would be the same, even in a rented car. 5. Business vehicle expenses If you drive your personal vehicle for business purposes, you may be eligible to deduct some auto-related expenses on Schedule C. The amount of your deduction is based on the percentage of business use. For example, suppose you use your car 60% for business driving in 2026. That means you can deduct 60% of your vehicle costs — such as gas, repairs and insurance — plus a generous depreciation allowance, subject to certain limits for “luxury cars.” And, if you buy the vehicle in 2026, you may also qualify for a Section 179 deduction and 100% bonus depreciation, subject to applicable eligibility requirements and limitations. Be aware that the IRS is a stickler for documentation. Briefly stated, you must keep a contemporaneous log listing every business trip and proof of your expenses. Alternatively, you can cut down on recordkeeping by using the standard mileage rate of 72.5 cents per business mile (plus business-related tolls and parking fees) in 2026. Don’t leave tax savings on the table Many self-employed taxpayers miss legitimate deductions because they fail to keep adequate records or misunderstand the rules. Tracking expenses throughout the year can make tax filing easier, help ensure you don’t miss legitimate deductions and strengthen your position if the IRS questions a deduction. We can help you identify qualifying business expense deductions and establish record keeping practices that support them. Suttle & Stalnaker, PLLC is ready to help you. If you would like more information on how this applies to you, contact our office at 304.343.4126. © 2026 ### How do I protect myself from fraudsters impersonating the IRS and other scams? URL: https://www.suttlecpas.com/insights/protect-yourself-from-fraudsters-impersonating-the-irs-and-other-tax-scams Published: 2026-06-03 Key Points: The IRS rarely initiates contact through email, text, or social media. Tax scams are becoming more sophisticated and target sensitive financial information, stay vigilant. Vigilance and proactive protection are essential. Tax scammers continue to target taxpayers through email, text messages, phone calls and regular mail. They often try to create urgency or fear to trick victims into sharing sensitive information or sending money. The IRS warns taxpayers to remain cautious because scammers continually change tactics to steal personal and financial information. What are IRS impersonation scams? First and foremost, know that the IRS will never contact you by email, text or social media channels about a tax bill or refund. Most IRS initial communications are sent through regular mail. So if you get a call or message saying it’s the IRS and asking for your Social Security number, it’s someone trying to steal your identity and defraud you. Remember that the IRS already has your Social Security number. Here are some common impersonation-related schemes to be aware of: Phone calls. AI-generated voices and spoofed caller IDs to impersonate IRS agents are becoming more common. Scammers may leave urgent messages threatening arrest, penalties or legal action unless immediate payment is made. The IRS stresses that it won’t demand immediate payment over the phone. Text messages and emails. Scammers use text messages and emails containing fake IRS links or QR codes to direct taxpayers to fraudulent websites designed to steal personal or financial information. These messages often claim there’s a problem with a refund, tax return or IRS account to try to create panic and pressure taxpayers into responding quickly. Fake IRS notices. One current scheme takes advantage of growing confusion about the IRS CP53E notice. This is a notice related to tax refunds and bank account information. As the IRS shifts from paper checks to direct deposit, it’s mailing these notices to taxpayers who may need to add or update their banking details. Unfortunately, the IRS is sometimes mistakenly sending the notices when a taxpayer has already provided this information, creating confusion. Now fraudsters are sending fake versions of the notice in an attempt to steal taxpayers’ sensitive information. If you receive an IRS CP53E notice, verify its authenticity before acting. Don’t click links or scan QR codes. Malware. In scams to infect computers and phones with malicious software, a phony email claims to come from the IRS. The subject line often states that the message is a notice of underreported income or a refund. There may be an attachment or a link to a bogus web page with your “tax statement.” When you open the attachment or click on the link, malware is downloaded to your device. This malware can give criminals remote access to your device and allow them to search for passwords, banking information and other sensitive data to help them steal your assets or your identity. Other tax scams The IRS recommends that taxpayers create an account to securely access their tax information. The account lets you view your refund status, make payments, check your balance and more. But be cautious. Scammers may offer account setup “help” so they can collect your sensitive data. Or they may use stolen personal information to access your account without authorization. Once inside an account, they may attempt to redirect refunds, obtain tax records or use the information to commit additional identity theft. Create and always access your account directly through IRS.gov, don’t share your information with unsolicited third parties, and check your account regularly. Also watch out for fake online tax deduction calculators. These digital tools are intended to steal personal information and money from unsuspecting users. They’re often accompanied by false promises about new or expanded tax credits and deductions. The IRS says you should use calculators only on sites that end in .gov (such as irs.gov) or of well-known tax software companies. Also, be wary of any calculator that guarantees its result. Legitimate calculators can only produce estimates. And, as always, be suspicious of claims that seem “too good to be true,” such as unusually large tax savings. The IRS also warns taxpayers to avoid other schemes involving questionable refund claims or credits promoted online or through social media. Promoters may encourage taxpayers to file inaccurate forms or claim credits they don’t qualify for. Improper claims can lead to refund delays, audits, penalties and other enforcement actions. How do I report fraud? The IRS has launched a “Report fraud” webpage to simplify confidential reporting of suspected tax fraud or scams. It consolidates multiple IRS fraud-reporting options into a single location, allowing taxpayers to report suspected scams, tax evasion or other tax-related misconduct in one place: irs.gov/help/report-fraud. If you’ve been a victim of identity theft, consider obtaining an Identity Protection Personal Identification Number (IP PIN). Issued by the IRS, this unique six-digit number helps prevent criminals from filing a fraudulent tax return using your Social Security number. It’s valid for one year and is automatically replaced after expiration. You can expect to receive a new one each year in mid-December to early January. You can apply online or get one at a Taxpayer Assistance Center. Once you receive your IP PIN, be sure to safeguard it. Use it only on Forms 1040. Stay alert Tax-related scams continue to evolve, so it’s important to be cautious when receiving unexpected phone calls, messages or even letters involving taxes, refunds or financial information. If you receive a questionable communication related to a tax return we prepared, contact us before responding. We can also answer other questions you have about protecting yourself from tax-related fraud. © 2026 ### FASB Makes Refinements to CECL for Purchased Loans URL: https://www.suttlecpas.com/insights/fasb-makes-refinements-to-cecl-for-purchased-loans Published: 2026-06-02 Key Points: ASU 2025-08 changes how banks account for many purchased loans under CECL. The update is expected to simplify accounting and reduce earnings volatility. Banks should begin preparing implementation now. In November 2025, the FASB issued Accounting Standards Update (ASU) No. 2025-08, Financial Instruments - Credit Losses (Topic 326): Purchased Loans. The standard represents one of the most significant modifications to CECL accounting since the adoption of ASC 326, Current Expected Credit Losses and is expected to impact banks that acquire loans through mergers, branch acquisitions, or portfolio purchases. For banks, this new guidance changes how certain purchased loan portfolios are accounted for under CECL, with the goal of reducing front-loaded “Day 1” loss recognition. Why is “Day 1” Loss Recognition is an issue? Under the original CECL framework, acquired loans were separated into two categories: Purchased Credit Deteriorated (PCD) loans and Non-PCD acquired loans. PCD loans used the “gross-up” approach, where expected credit losses were added to the loan’s amortized cost basis rather than immediately recognized through earnings. Non-PCD loans, however, required banks to record an allowance for credit losses immediately through provision expense at acquisition. This treatment can create an artificial “Day 1” earnings impact because expected credit losses are effectively recognized twice: Through the fair value discount embedded in the purchase price, and Again through the allowance for credit losses recorded upon acquisition. This issue is particularly important for banks engaged in acquisition activity. What does ASU 2025-08 change? ASU 2025-08 expands the “gross-up” approach to a broader category called Purchased Seasoned Loans (PSLs). Under the new guidance, acquired loans that are more than 90 days old and were not originated by the acquiring institution will now receive treatment similar to PCD assets. The update applies to: Loans acquired in business combinations Loans acquired in asset purchases Loans obtained through consolidation of certain variable interest entities Loans purchased more than 90 days after origination where the buyer had no substantive involvement in underwriting or origination. The ASU eliminates the immediate provision expense for many acquired non-PCD loans. Instead, banks add an allowance to the purchase price at acquisition to determine the initial amortized cost basis. For loans acquired in pools, the allowance and any premium or discount are allocated to the individual loans. After acquisition, changes in expected credit losses on PSLs are recognized through the allowance and recorded in earnings. Why does the standard matter to banks? 1. Simplification of CECL Accounting Community banks have consistently expressed concerns regarding the operational complexity of CECL, particularly in distinguishing between PCD and non-PCD acquired loans. ASU 2025-08 simplifies the framework by broadening the use of a single accounting methodology for acquired seasoned loans. As a result of adopting the ASU, benefits may include easier loan accounting integration after acquisitions, fewer classification judgments, and lower compliance and audit burden. This simplification could be especially valuable for smaller institutions with limited accounting and risk management resources. 2. Reduced Earnings Volatility Banks often rely on acquisitions to achieve growth, expand geographically, or increase scale. Under prior CECL rules, acquisitions could produce significant upfront provision expense that negatively affected earnings immediately after closing. ASU 2025-08 reduces this volatility by allowing banks to recognize acquired loans using the “gross-up” method instead of recording a large “Day 1” provision charge. For banks, this means more stable post-acquisition earnings, less pressure on short-term profitability metrics, and improved comparability between acquired and originated loans resulting in simplified acquisition-related financial reporting. 3. Potential Capital and Strategic Implications Because provision expense directly affects earnings and regulatory capital, eliminating large “Day 1” CECL charges can benefit capital ratios following acquisitions. Banks may gain more flexibility in structuring transactions and face less pressure on post-merger capital levels. Although the ASU does not change the underlying credit economics, it changes how they appear in financial statements, which may affect investor perception and regulatory discussions. Implementation Considerations Despite the benefits, implementation will still require planning. Banks will need to: Update acquisition accounting policies Modify CECL models and assumptions Establish processes to identify “purchased seasoned loans” Document whether the bank had involvement in loan origination Coordinate with auditors and regulators regarding adoption. The ASU also adds financial statement disclosures to improve transparency about how purchased loans affect the allowance. Specifically, the allowance rollforward must separately present the initial allowance recognized for PSLs and PCD loans by portfolio segment and major asset type. Conclusion ASU 2025-08 represents a meaningful shift in accounting for purchased loans. By expanding the “gross-up” approach previously reserved for only PCD loans to PSLs, the standard reduces CECL-related earnings distortions and simplifies accounting treatment. For community banks pursuing growth through mergers and loan acquisitions, the ASU could lower operational complexity and improve transaction economics. The overall effect is expected to be favorable for institutions active in acquisition strategies and portfolio expansion. The standard becomes effective for fiscal years beginning after December 15, 2026, although early adoption is permitted. Suttle & Stalnaker, PLLC is ready to help. If you would like more information on how this applies to you, contact Kelly Shafer, CPA at 304.343.4126. *Our articles are generally prepared internally, but could contain AI assistance. All articles are reviewed by Suttle & Stalnaker, PLLC professionals for accuracy and completeness and reflect the knowledge of our team. ### Can the "kiddie tax" apply after childhood? URL: https://www.suttlecpas.com/insights/the-kidddie-tax-can-apply-long-after-childhood Published: 2026-06-01 Key Points: The kiddie tax can apply beyond childhood. Unearned income above certain thresholds may be taxed at the parent’s rate. Investment and tax planning can help reduce kiddie tax exposure. Many parents don’t know that the so-called “kiddie tax” exists. Others assume it affects only minor children. But it also can apply to full-time students through age 23 and 18-year-olds even if they aren’t full-time students. When it applies, most of the child’s unearned income may be taxed at the parent’s higher tax rate. The purpose of the kiddie tax is to minimize the ability of parents to significantly reduce their family’s taxes by transferring income-producing assets to their children in lower tax brackets. If your child has investment income from custodial accounts or other assets, understanding these rules can help you avoid unexpected tax consequences. Who does the kiddie tax affect? The kiddie tax generally applies to most unearned income of individuals who, at the end of the tax year, are: Under age 18, Age 18 (unless they provide more than half of their own support from earned income), or At least age 19 but under age 24 and full-time students (unless they provide more than half of their own support from earned income). So, 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, even full-time students who are still supported by their parents are kiddie-tax-exempt. How does the kiddie tax work? Earned income from a job or self-employment is never subject to the kiddie tax. And the tax is assessed on a child’s (or young adult’s) unearned income only to the extent that it exceeds the applicable threshold, which is $2,700 for 2026. Unearned income usually means interest, dividends and capital gains. These types of income often come from custodial accounts that parents and grandparents set up and fund for younger children. For 2026, the first $1,350 of unearned income is taxed at 0%. The second $1,350 is taxed at the child’s (or young adult’s) rate. This might also be 0% for some or all of the second $1,350, depending on 1) how much of the unearned income is made up of long-term capital gains and qualified dividends, and 2) whether the child’s (or young adult’s) taxable income is low enough for him or her to qualify for the 0% rate. Then the excess is taxed at the parent’s rate. This could be up to 20% on long-term capital gains and qualified dividends and as much as 37% on interest, short-term capital gains and nonqualified dividends — depending on the parent’s taxable income. When does the kiddie tax apply? For 2026, Form 8615, “Tax for Certain Children Who Have Unearned Income,” must be filed and kiddie tax paid for any child (or young adult) who: Has more than $2,700 of unearned income, Is required to file Form 1040, As of December 31, 2026, is under age 18, is age 18 and didn’t have earned income in excess of half of his or her support, or is age 19, 20, 21, 22 or 23 and a full-time student and didn’t have earned income in excess of half of his or her support, Has at least one living parent, and Isn’t married and filing a joint return for the year. The kiddie tax threshold is annually adjusted for inflation, but generally only in increments of at least $100. So it doesn’t necessarily go up every year. It didn’t increase for 2026, so it may be more likely to increase for 2027. Planning opportunities The kiddie tax can increase a family’s overall tax liability if investment income is generated in a child’s name. In some situations, it may make sense to review the types of investments owned in custodial accounts and the timing of investment sales. For example, growth-oriented investments that generate little current income may help reduce exposure to the kiddie tax until your child is old enough that this tax no longer applies. At that time, appreciated investments can begin to be sold, with the gains taxed at your child’s own, potentially lower, rate. Suttle & Stalnaker, PLLC is ready to help you. If you’d like help evaluating your family’s situation or how this applies to you, contact our office at 304.343.4126. We can assess potential kiddie tax exposure and suggest tax-efficient investment strategies. © 2026 ### How Can a Virtual CFO Provide Strategic Financial Leadership in Construction? URL: https://www.suttlecpas.com/insights/the-role-of-a-virtual-cfo Published: 2026-05-08 Key Points: A vCFO provides strategic financial leadership beyond traditional accounting. A vCFO helps construction firms tackle their biggest financial challenges. Proactive financial planning can improve profitability and reduce risk. The construction industry’s complexity—long project cycles, volatile cash flows, and balancing risk—creates financial management challenges that impact growth and sustainability.Adding a virtual CFO (vCFO) to your management team can help companies be successful at addressing all these areas and more. Understanding the Financial Landscape in Construction Construction companies face a set of financial challenges distinct from many other industries: Cash Flow Volatility: Payment schedules are often unpredictable, with retainage, change orders, and slow client payments creating gaps between when expenses are incurred and when revenue is received. Project-Based Accounting: Each project is essentially its own business, requiring careful tracking of costs, revenues, and profitability. Capital Intensity: Equipment purchases, technology investments, and working capital needs require significant planning and foresight. Risk Management: Customer concentration, contract risk, and market fluctuations can have outsized impacts on financial stability. While traditional accounting focuses on historical reporting, a vCFO on the team provides a forward-looking, strategic perspective to help companies plan for the future. The vCFO Approach: Beyond the Numbers A vCFO steps into the business as a true financial leader, working alongside ownership and management to drive strategy, improve processes, and deliver actionable insights. The approach is structured, phased, and tailored to the unique needs of each client: Assessment and Onboarding: The engagement starts with a thorough review of financials, systems, and objectives to align the vCFO’s work with strategic goals and identify process gaps early. 2. Building the Financial Foundation: During onboarding, the vCFO may restructure accounts, integrate technology, and standardize processes to ensure timely, accurate, actionable financial information. 3. Ongoing Strategic Support: The vCFO participates in regular leadership meetings, provides monthly and quarterly financial reviews, and supports annual strategic planning. This ongoing engagement ensures that financial management remains proactive and aligned with the company’s evolving needs. Key Areas Where a vCFO Adds Value Let’s explore three areas where a vCFO’s expertise can make a measurable difference for construction firms: 1. Cash Flow Management: Navigating Uncertainty Cash flow is the lifeblood of any construction business but managing it is notoriously difficult. A vCFO addresses this challenge by: Developing multi-week and multi-month cash flow forecasts that incorporate project schedules, billing cycles, and payment terms. Analyzing working capital metrics such as Days Sales Outstanding (DSO), Days Payable Outstanding (DPO), and Days Inventory Outstanding (DIO) to identify bottlenecks and opportunities for improvement. Implementing processes for more accurate and timely billing, collections, and vendor payments. Stress-testing cash flow under different scenarios (e.g., delayed payments, unexpected expenses) to ensure the business can withstand shocks. 2. Project Profitability Analysis: Knowing Where You Win (and Lose) Not all projects contribute equally to the bottom line. A vCFO brings clarity to project and division-level profitability by: Building driver-based financial models that link project assumptions (labor, materials, overhead) to actual results. Analyzing margins by project, division, or customer to identify which types of work are most (and least) profitable. Providing regular reporting and dashboards that allow management to monitor project performance in real time. Supporting pricing strategy and contract negotiations with data-driven insights. 3. Capital Purchase Planning: Investing for the Future Construction is a capital-intensive business, and decisions about equipment, technology, and infrastructure can have long-term impacts. A vCFO supports these decisions by: Modeling the return on investment (ROI) for major purchases, factoring in financing costs, tax implications, and projected cash flows. Assessing the impact of capital investments on financial covenants and overall liquidity. Helping prioritize investments based on strategic goals and available resources. Providing scenario analysis to evaluate the risks and benefits of different options. A Structured, Collaborative Approach The value of a vCFO lies not just in technical expertise, but in the structured, collaborative approach to financial leadership. Regular meetings, clear deliverables, and ongoing process improvement ensure that financial management is not an afterthought, but a driver of business success. By focusing on strategy, process, and insight, a vCFO helps construction companies navigate uncertainty, make better decisions, and build a foundation for sustainable growth. Suttle & Stalnaker, PLLC is ready to help you. If you would like more information on how this applies to you, please contact Steve Morgan, CPA at smorgan@suttlecpas.com or 304-343-4126. *Our articles are generally prepared internally, but could contain AI assistance. All articles are reviewed by Suttle & Stalnaker, PLLC professionals for accuracy and completeness and reflect the knowledge of our team. ### Your post-tax-filing checklist URL: https://www.suttlecpas.com/insights/your-post-tax-filing-checklist Published: 2026-04-17 After you’ve filed your 2025 tax return, what’s next? It’s easy to move on to other things, but taking a little time to address some tax-related items now can help you stay organized and avoid issues later. Here are a few to-dos. Check your refund status If you’re getting a tax refund and haven’t received it yet, the IRS offers a couple of ways to check the status. Begin by visiting irs.gov and going to “Where’s my refund?” If you’ve already set up an IRS account, you can sign in to check your refund. You also can request email notifications for status updates. Alternatively, you can use the refund tracker. You’ll need your Social Security number or Individual Taxpayer Identification Number, filing status, and the exact refund amount on your return. File an amended return if needed Let’s say you find receipts for some deductible 2025 expenses you didn’t report on your return. You can file an amended return to claim those deductions and potentially increase your refund. But there’s more to consider than just reporting the additional deductions. The change could affect other aspects of your return as well as your state return, if applicable. We can review the impact and assist you with properly filing an amended return. In general, you can file an amended tax return on Form 1040-X and claim a refund within three years of the date you filed your original return or within two years of the date you paid the tax, whichever is later. So for a 2025 tax return that you file on April 15, 2026, your deadline for filing an amended return to claim a refund generally will be April 15, 2029. However, in certain situations you’ll have more time to file an amended return. For example, the statute of limitations for bad debt deductions is longer than the usual three-year time limit for most items on your tax return. In general, you can amend your tax return to claim a bad debt for seven years from the due date of the tax return for the year that the debt became worthless. Tidy up your tax records After you’ve filed your 2025 return, be sure to store your return and all supporting documents in a secure place where you’ll easily be able to find them in the future if needed. Now is also a good time to tidy up previous years’ records. Although retaining the appropriate tax records is important, you don’t have to keep everything forever. You should hold on to records related to your filing for as long as the IRS can audit your return or assess additional taxes. The statute of limitations is generally three years after you file your return. So you potentially can dispose of records related to your 2022 income tax return if you filed it by the April 2023 deadline. (Be aware that the statute of limitations extends to six years for taxpayers who understate their gross income by more than 25%.) However, you should keep certain tax-related records longer. For example, keep copies of your tax returns and other proof of filing indefinitely to document that you filed. (There’s no statute of limitations for an audit if you didn’t file a return or you filed a fraudulent one.) Retain records related to real estate or investments for as long as you own the asset, plus at least three years after you sell it and report the sale on your tax return. Similarly, keep records associated with a retirement account until you’ve depleted the account and reported the last withdrawal on your tax return, plus three years. Turn your tax focus to 2026 planning Once you’ve received your 2025 refund or filed an amended return (if applicable) and organized your tax records, it’s time to focus on 2026 planning. You can potentially maximize tax savings and minimize last-minute scrambling by planning now, rather than waiting until year end. We can help project your income, deductions and credits for the year and propose strategies you can implement in the coming months to reduce your taxes. Suttle & Stalnaker, PLLC is ready to help you. If you would like more information on how this applies to me © 2026 ### Three Suttle & Stalnaker PLLC Members Recognized by Forbes Best-in-State CPAs URL: https://www.suttlecpas.com/insights/three-suttle-and-stalnaker-pllc-members-recognized-by-forbes-best-in-state-cpas Published: 2026-04-16 Suttle & Stalnaker, PLLC is proud to announce that three of our Members were named by Forbes to its 2026 Best-In-State CPAs list. This list recognizes outstanding certified public accountants that exemplify professional excellence, leadership, integrity, and community involvement. The Forbes Best‑in‑State CPAs list is compiled through a thorough research and evaluation process that includes industry nominations, editorial analysis, and assessment by an independent advisory panel. The selection process focuses on recent professional accomplishments, leadership, and contributions to both the accounting profession and local communities. You can view the complete national list here. “This recognition is a tremendous honor and a reflection of the hard work, expertise, and client-first mindset our partners bring to everything they do,” said Tricia Clark, Managing Member of Suttle & Stalnaker, PLLC. “While this list highlights individual achievements, it is the collective dedication and collaboration of all our Members that drives our firm’s continued success. I am proud of all our Members – both those recognized and those that were not – as this acknowledgment reflects our culture, our people, and our long-standing commitment to serving our clients at the highest level.” Suttle & Stalnaker, PLLC is the largest locally owned accounting firm in West Virginia. The firm has served clients across the globe for 52 years and continues to rank nationally as an Inside Public Accounting Top 300 Firm. In addition, the firm was recognized by Inside Public Accounting as one of the fastest growing firms in the nation in 2025. In choosing to work with Suttle & Stalnaker, you are gaining local expertise with a global experience. ### Why does Material Participation Matter for LLLP and LLC owners? URL: https://www.suttlecpas.com/insights/material-participation-why-it-matters-for-llp-and-llc-owners Published: 2026-04-15 Key Points: Passive activity loss rules can limit when business losses are deductible. Material participation can unlock greater tax benefits. Tracking your involvement is critical. The passive activity loss (PAL) rules may limit your ability to deduct losses from a business structured as a limited liability partnership (LLP) or limited liability company (LLC). Depending on how your ownership interest is treated under these rules, you may have more or less flexibility to claim losses in the current year. Here’s a closer look. The basics Under the PAL rules, you generally can use passive activity losses only to offset income from other passive activities. (Keep in mind that other limitations, such as basis and at-risk rules, may apply before the PAL rules.) There are two types of passive activities: 1) trade or business activities in which you don’t materially participate during the year, and 2) rental activities, even if you do materially participate (unless you qualify as a real estate professional under the PAL rules). Disallowed losses may be carried forward to future years and deducted from passive income or recovered when the passive business interest is sold. If you’re an LLP or LLC owner, you can avoid passive treatment by materially participating in the business’s activities. This allows you to use LLP or LLC losses to offset nonpassive income, such as wages, interest, dividends and capital gains. 7 factors Material participation in this context means participation on a “regular, continuous and substantial” basis. Unless you’re treated as a limited partner, you’re deemed to materially participate in a business activity during the year by meeting one of the following seven criteria: You participate in the activity more than 500 hours during the year. Your participation constitutes substantially all the participation for the year by anyone, including nonowners. You participate more than 100 hours and as much or more than any other person. The activity is a “significant participation activity” — that is, you participate more than 100 hours — but you participate less than one or more other people yet your participation in all your significant participation activities for the year totals more than 500 hours. You materially participated in the activity for any five of the preceding 10 tax years. The activity is a personal service activity in which you materially participated in any three previous tax years. Regardless of the number of hours, based on all the facts and circumstances, you participate in the activity on a regular, continuous and substantial basis. Limited partners face more restrictive rules; they can establish material participation only by satisfying criterion 1, 5 or 6. Supporting your deductions If you’re an LLC or LLP owner, it’s important to track the time you spend on business activities. In addition, if your spouse also participates in an activity, you can combine your hours to meet the material participation standards. Contact us for additional guidance on documenting your hours, applying the material participation test and maximizing business loss deductions. © 2026 ### April 15 is the deadline for more than just your income tax return URL: https://www.suttlecpas.com/insights/april-15-is-the-deadline-for-more-than-just-your-income-tax-return Published: 2026-03-23 Key Takeaways: April 15 is more than just Tax Day. You still have opportunities to reduce your 2025 tax bill. Extensions provide more time to file - but not more time to pay. You know your 2025 federal income tax return is due April 15, 2026. But do you know what else has an April 15 deadline? If you don’t, you could miss out on valuable tax-saving opportunities or become subject to interest and even penalties. Making 2025 contributions to an IRA It may be 2026, but you can still make a 2025 contribution to a traditional or Roth IRA until April 15. For 2025, eligible taxpayers can contribute up to $7,000 ($8,000 if they’re age 50 or older). The limit applies to traditional and Roth IRAs on a combined basis. If you contribute to a traditional IRA, you may be able to deduct the amount on your 2025 income tax return. But if you (or your spouse, if applicable) participate in a work-based retirement plan such as a 401(k) and your income exceeds certain limits, your deduction will be subject to a phaseout. Roth contributions aren’t tax-deductible, but qualified distributions will be tax-free. Roth contributions are subject to an income-based phaseout, whether or not you (or your spouse) participate in a 401(k) or similar plan. If your Roth IRA contribution is partially or fully phased out, you can make nondeductible traditional IRA contributions instead, assuming you’re otherwise eligible. Be aware that the 2025 IRA contribution deadline is April 15 regardless of whether you file for an income tax return extension. Making 2025 contributions to a SEP If you own a business or are self-employed, you still can reduce your 2025 tax liability by making deductible contributions to a Simplified Employee Pension (SEP) plan by April 15. If you don’t already have a SEP in place, you can contribute for 2025 as long as you set up the plan by the contribution deadline. The 2025 contribution limit is 25% of your eligible compensation up to $70,000 (though special rules apply if you’re self-employed). Keep in mind that, if you have employees who work enough hours and meet other qualification requirements, generally they must be allowed to participate in the plan. And you’ll have to make contributions on their behalf at the same percentage you contribute for yourself. If you file to extend your 2025 return, you have until the extended October 15 deadline to set up your plan and make deductible 2025 contributions. Filing for an automatic six-month extension If you’re unable to file your individual return by April 15, you generally must file for an extension (Form 4868) by April 15 to avoid failure-to-file penalties. But this isn’t an extension of the tax payment deadline. If you expect to owe taxes, you should project and pay the amount due by April 15 to minimize interest and late payment penalties. If you live outside the United States and Puerto Rico or serve in the military outside these two locations, you’re allowed an automatic two-month extension without filing for one. But you still must pay any tax due by April 15. Paying the first installment of 2026 estimated taxes If you make estimated tax payments, the first 2026 payment is due April 15. You can be subject to penalties if you don’t pay enough tax during the year through estimated tax payments and withholding. Generally, you’ll need to make estimated tax payments if you have taxable income without withholding, such as self-employment income, interest, dividends or capital gains from asset sales, and will likely owe $1,000 or more when you file your 2026 tax return next year. For you to avoid penalties, your estimated payments and withholding must equal at least 90% of your tax liability for 2026 or 110% of your tax for 2025 (100% if your adjusted gross income for 2025 was $150,000 or less or, if married filing separately, $75,000 or less). Paying the appropriate amount of estimated taxes on time can help you avoid or reduce interest and penalties. Filing a 2025 income tax return for a trust or estate If you’re the trustee of a trust or the executor of an estate that follows a calendar tax year, you may be required to file an income tax return (Form 1041) for the trust or estate — and pay any tax due — by April 15. Filing is required when a trust or estate has gross income of $600 or more during the tax year or if any beneficiary is a nonresident alien. For the year of death, a Form 1041 must also be filed for the deceased to report any income, as well as deductions and credits, up until the date of death. If the deceased’s assets immediately passed to the heirs, a Form 1041 generally won’t be required because the estate won’t have any post-death income. If you’re not ready to file Form 1041 by April 15, you can file an automatic five-and-a-half-month extension (Form 7004) to September 30, 2026 (or a six-month extension to October 15, 2025, if it’s a bankruptcy estate). Any tax due still needs to be paid by April 15. Meet your deadlines As you can see, depending on your situation, you may have more to do by April 15 than just file your Form 1040. And this isn’t a complete list. For example, April 15 is also the deadline for individuals to file a federal gift tax return and a Report of Foreign Bank and Financial Accounts (FBAR). Suttle & Stalnaker, PLLC is ready to help. If you would like more information on how this applies to you, contact our office at 304.343.4126. We can help you determine which April 15 deadlines apply to you and assist you with meeting them so you can stay in compliance and potentially save taxes and avoid becoming subject to interest and penalties. © 2026 ### It’s your last chance to claim these clean energy tax breaks URL: https://www.suttlecpas.com/insights/it-s-your-last-chance-to-claim-these-clean-energy-tax-breaks Published: 2026-03-19 Last year’s One Big Beautiful Bill Act (OBBBA) terminated several clean energy tax incentives earlier than previously scheduled. But if you bought an electric vehicle or made certain green home improvements last year, you might be eligible for a tax credit on your 2025 individual income tax return. Remember, tax credits reduce your tax liability dollar-for-dollar (unlike deductions, which reduce the amount of income subject to tax). So tax credits are especially valuable. Did you buy an electric vehicle? If you bought an eligible clean vehicle by September 30, 2025, you may be able to claim one of these tax credits on your 2025 return: New clean vehicle credit. Buyers of new electric and fuel cell vehicles may be able to claim a credit up to $7,500, depending on how the battery components and critical minerals were sourced. Vehicles that meet only one of the sourcing criteria may be eligible for a $3,750 credit. This credit was originally set to expire after 2032. But, under the OBBBA, it expired on September 30, 2025. The maximum manufacturer’s suggested retail price for a vehicle to be eligible for the credit is $55,000 for cars and $80,000 for SUVs, trucks and vans. The vehicle also must have undergone final assembly in North America. In addition, the credit isn’t allowed for vehicles with any battery components from a “foreign entity of concern.” For you to qualify, your 2025 adjusted gross income (AGI) must not exceed $150,000 ($300,000 if you’re married filing jointly and $225,000 if you’re filing as a head of household). Used clean vehicle credit. Buyers of used electric or fuel cell vehicles may be able to claim a credit of up to $4,000 or 30% of the purchase price — whichever is lower — if they bought the vehicle from a dealer. Like the new clean vehicle credit, this credit had been set to expire after 2032 but, under the OBBBA, it expired on September 30, 2025. The maximum purchase price for a vehicle to be eligible for the credit is $25,000. For you to qualify, your 2025 AGI must not exceed $75,000 ($150,000 if you’re a joint filer and $112,500 if you’re a head-of-household filer). Did you make green home improvements? If you made certain home upgrades in 2025, you may be eligible for one of these tax credits on your 2025 return: Energy-efficient home improvement credit. This nonrefundable credit equals up to 30% of qualified expenses to make your home more energy efficient. The maximum credit you can claim for 2025 generally is $1,200. There are no AGI-based limits, but there are credit caps that vary by item. Some examples of 2025 credit limits are $150 for energy audits, $250 per exterior door ($500 total), $600 for windows and $2,000 for heat pumps (superseding the usual $1,200 limit). Before the OBBBA, this credit was scheduled to end after 2032. Residential clean energy credit. This nonrefundable credit equals 30% of the cost of eligible renewable energy systems such as solar, wind and geothermal installations. There generally are no caps or AGI-based limits. Before the OBBBA, this credit was set to end after 2034. Are you eligible for a tax credit? One more clean energy credit you might be able to claim on your 2025 return is the alternative fuel vehicle refueling property credit. You may be eligible if last year you installed equipment at your home to recharge electric vehicles. The credit equals 30% of the installation cost, up to $1,000 per charging port. If you didn’t install a charging port in 2025, it’s not too late. If you install one by June 30, 2026, you potentially can claim the credit on your 2026 return next year. (Before the OBBBA, this credit was also scheduled to expire after 2032.) If you purchased a clean vehicle or made green home improvements and aren’t sure whether you’re eligible for one or more of these credits, contact us. Suttle & Stalnaker, PLLC is ready to help you. If you would like more information on how this applies to you, contact our office at 304.343.4126. © 2026 ### 4 types of interest expense you may be able to deduct URL: https://www.suttlecpas.com/insights/4-types-of-interest-expense-you-may-be-able-to-deduct Published: 2026-03-11 Key Points: Most personal interest isn’t deductible, but there are important exceptions. The One Big Beautiful Bill Act introduced a new auto loan interest deduction. Many interest deductions come with restrictions and phaseouts. Personal interest expense generally can’t be deducted for federal tax purposes. There are, however, exceptions. Here are four, one of which is a new break under the One Big Beautiful Bill Act (OBBBA), which was signed into law in 2025. 1. Mortgage interest Perhaps the most well-known interest expense deduction, home mortgage interest may be deductible if you itemize deductions rather than claiming the standard deduction. You generally can deduct interest on mortgage debt incurred to purchase, build or improve your principal residence and a second residence. Points paid related to your principal residence also may be deductible. The OBBBA made permanent the Tax Cuts and Jobs Act’s (TCJA’s) reduction of the mortgage debt limit from $1 million to $750,000 for debt incurred after December 15, 2017, with some limited exceptions. But the OBBBA also generally made mortgage insurance premiums deductible as mortgage interest — though not until the 2026 tax year. So you can’t deduct these premiums on your 2025 return. 2. Auto loan interest The OBBBA allows eligible individuals — whether or not they itemize — to deduct some or all of the interest paid on a loan taken out after 2024 to purchase a qualifying new car, minivan, van, SUV, pickup truck or motorcycle with a gross vehicle weight rating under 14,000 pounds. For 2025 through 2028, you can potentially deduct up to $10,000 each year. But various requirements and limits apply. One of the most significant requirements is that the vehicle’s “final assembly” must occur in the United States. An important limit to be aware of is that the deduction is phased out starting at $100,000 of modified adjusted gross income (MAGI) or $200,000 for married couples filing jointly. The deduction is completely phased out when MAGI reaches $150,000 ($250,000 for joint filers). 3. Student loan interest If you have student loan debt, you may be able to deduct the interest, subject to various rules and limits. You don’t have to itemize to claim the deduction, and the maximum deduction is $2,500. The interest must be for a “qualified education loan,” which means a debt incurred to pay tuition, room and board, and related expenses to attend a post-high-school educational institution, including certain vocational schools. Post-graduate programs may also qualify. For 2025, the deduction begins to phase out for single taxpayers when MAGI exceeds $85,000 ($175,000 for joint filers). The deduction is unavailable for single taxpayers with MAGI of more than $100,000 ($205,000 for joint filers). Married taxpayers must file jointly to claim this deduction. Taxpayers who can be claimed as a dependent on another tax return aren’t eligible. 4. Investment interest Investment interest — interest on debt used to buy assets held for investment, such as margin debt used to buy securities — may be deductible. But you can’t deduct interest you incurred to produce tax-exempt income. For example, if you borrow money to invest in municipal bonds, which are exempt from federal income tax, you can’t deduct the interest. Perhaps more significant, your investment interest deduction is limited to your net investment income, which, for the purposes of this deduction, generally includes taxable interest, nonqualified dividends and net short-term capital gains, reduced by other investment expenses. In other words, qualified dividends and long-term capital gains aren’t included (unless you elect to treat them as nonqualified dividends or short-term capital gains subject to the higher tax rates that apply to those types of income). Any disallowed interest is carried forward. You can then deduct the disallowed interest in a later year if you have excess net investment income. What interest can you deduct? If you’re wondering whether you can claim any interest expense deductions on your 2025 return, please contact us. We can calculate your potential deductions and help you determine if there are steps you can take this year to maximize your deductions when you file your 2026 return next year. © 2026 ### What’s your potential business vehicle deduction? URL: https://www.suttlecpas.com/insights/what-s-your-potential-business-vehicle-deduction Published: 2026-03-10 Key Points: Businesses can choose between two methods for deducting vehicle expenses. Vehicle type and business use percentage can significantly impact deductions. Accurate record-keeping is essential regardless of method use. If you used one or more vehicles in your business during 2025, you may be eligible for valuable tax deductions on your 2025 income tax return. Businesses can generally deduct expenses attributable to business use of a vehicle plus depreciation. However, the rules are complicated, and your deduction may be affected by factors such as the vehicle’s weight, business vs. personal use, and whether you use the actual expense method or the cents-per-mile rate. Actual expenses plus depreciation The year you place a vehicle in service, you can choose to deduct the actual expenses attributable to your business vehicle use or, if the vehicle is a car, SUV, van, pickup or panel truck, claim the cents-per-mile deduction (discussed later). Deductible expenses include gas, oil, tires, insurance, repairs, licenses and vehicle registration fees. You’ll need to track and substantiate these expenses. If you use the actual expense method, you also can claim a depreciation deduction for the vehicle by making a separate depreciation calculation for each year until the vehicle is fully depreciated. According to the general rule, you calculate depreciation over a six-year span for a percentage of the purchase cost as follows: Year 1 — 20% Year 2 — 32% Year 3 — 19.2% Year 4 — 11.52% Year 5 — 11.52% Year 6 — 5.76% If a vehicle is used 50% or less for business purposes, you must use the straight-line method (10% in Years 1 and 6 and 20% in Years 2 through 5) to calculate depreciation deductions instead of the percentages listed above. Depending on the cost of a passenger auto, your deduction may be less than the percentage of cost above because “luxury auto” annual depreciation ceilings apply. These are indexed for inflation and may change annually. For a passenger auto placed in service in 2025, generally the ceilings are as follows: Year 1 — $20,200 ($12,200 if you don’t claim first-year bonus depreciation) Year 2 — $19,600 Year 3 — $11,800 Each remaining year until the vehicle is fully depreciated — $7,060 These ceilings are proportionately reduced for any nonbusiness use. More favorable depreciation rules apply to heavier SUVs, pickups and vans. For example, 100% bonus depreciation or the normal Section 179 expensing limit ($2.5 million for 2025) generally is available for vehicles with a gross vehicle weight rating (GVWR) of more than 14,000 pounds. A reduced Sec. 179 limit of $31,300 applies to vehicles (typically SUVs) rated at more than 6,000 pounds but no more than 14,000 pounds. Again, this favorable tax treatment is available only if the vehicle is used more than 50% for business. The cents-per-mile method The 2025 cents-per-mile rate for the business use of a car, SUV, van, pickup or panel truck is 70 cents (increasing to 72.5 cents for 2026). This rate applies to gasoline- and diesel-powered vehicles as well as electric and hybrid-electric vehicles. A depreciation allowance is built into the rate, so you can’t claim both the depreciation deductions discussed earlier and the cents-per-mile rate for the same vehicle. The rate is adjusted annually. It’s based on an annual study commissioned by the IRS about the fixed and variable costs of operating a vehicle, including gas, maintenance, repairs and depreciation. Occasionally, if there’s a substantial change in average gas prices, the IRS will change the cents-per-mile rate midyear. The cents-per-mile rate is beneficial if you don’t want to keep track of actual vehicle-related expenses or worry about depreciation calculations. Although you don’t have to account for all your actual expenses, you still must record certain information, such as the mileage for each business trip, the date and the destination. Choosing or changing your method There’s much to consider before deciding whether to use the actual expense method or cents-per-mile method to deduct expenses for a vehicle your business placed in service in 2025. For a vehicle placed in service earlier, if you previously deducted actual expenses for the vehicle, you can’t use the cents-per-mile rate for 2025 (or any other future year). However, if you previously used the cents-per-mile rate, you can switch to the actual expense method in a later year — but you can claim only straight-line depreciation. If you lease a business vehicle, there also are deduction opportunities but the rules are different. Suttle & Stalnaker, PLLC is ready to help you. If you would like more information on how this applies to you, contact us. We can also answer questions about claiming 2025 business vehicle expenses on your 2025 return or planning for and tracking 2026 expenses. © 2026 ### Parents: Claim all the tax credits you’re entitled to URL: https://www.suttlecpas.com/insights/parents-claim-all-the-tax-credits-you-re-entitled-to Published: 2026-03-06 Key Points: Family-related tax credits can significantly reduce your tax bill. Parents may qualify for valuable education tax credits. Eligibility rules and income phaseouts matter. Raising a family comes with plenty of expenses, but it may also make you eligible for various tax breaks. Some of the most valuable are tax credits, because they reduce your tax liability dollar for dollar (unlike deductions, which only reduce the amount of income subject to tax). Here’s what you need to know. Child, dependent and adoption credits You may be eligible for one or more of these tax credits for families: Child credit. The maximum child credit is $2,200 for 2025. You may be able to claim it for each qualifying child under age 17 at the end of 2025. The credit begins to phase out when 2025 modified adjusted gross income (MAGI) reaches $400,000 for married couples filing jointly and $200,000 for head of household filers. The credit is refundable up to $1,700 per qualifying child. Credit for other dependents. You may be able to claim a credit of up to $500 for each qualifying dependent other than a qualifying child (such as a dependent child over the age limit or a dependent elderly parent). This credit is subject to the same income-based phaseout as the child credit, but it’s not refundable. Child and dependent care credit. For children under age 13 or other qualifying dependents, you may be eligible for a credit for a portion of your 2025 dependent care expenses. For middle-income-and-higher taxpayers, the credit generally equals 20% of the first $3,000 of qualified 2025 expenses for one child or 20% of up to $6,000 of such expenses for two or more children. So, the maximum 2025 credit for these taxpayers generally will be $600 for one child or $1,200 for two or more children. But you can’t claim the credit for expenses reimbursed through an employer-sponsored child and dependent care Flexible Spending Account. Adoption credit. If you incurred eligible adoption expenses in 2025, you may qualify for the adoption credit. The maximum credit per child is $17,280 for 2025. It begins to phase out at MAGI of $259,190, regardless of filing status. New for 2025, up to $5,000 of the credit is refundable. Any nonrefundable portion can be carried forward for up to five years. Higher education credits If you had a child in college in 2025, you may be eligible for one of these credits: American Opportunity credit. This credit covers 100% of the first $2,000 of tuition and related expenses and 25% of the next $2,000 of expenses. The maximum credit, per student, is $2,500 per year for the first four years of postsecondary education in pursuit of a degree or recognized credential. Lifetime Learning credit. If you paid postsecondary education expenses that don’t qualify for the American Opportunity credit, check whether you’re eligible for this credit (up to $2,000 per tax return). Both a credit and a tax-free Section 529 savings plan or Coverdell Education Savings Account distribution can be taken as long as expenses paid with the distribution aren’t used to claim the credit. However, income-based phaseouts also apply to these credits. They begin to phase out at MAGI of $160,000 for joint filers and $80,000 for heads of household. If you don’t qualify for one of the credits on your tax return because your income is too high, your child might. Maximize your tax savings Child, dependent, adoption and education tax credits can provide significant tax savings, but the rules are complex. If you’d like help determining which family-related credits you may qualify for on your 2025 return, contact us. We can help ensure you maximize your tax savings from these and other tax breaks you’re eligible for. Contact our office at 304.343.4126.© 2026 ### Bart Scott Earns Certified Construction Industry Financial Professional (CCIFP) Credential URL: https://www.suttlecpas.com/insights/bart-scott-earns-CCIFP-designation Published: 2026-03-04 Suttle & Stalnaker, PLLC is proud to announce that Bart Scott, CPA, MBA, CVA, has earned the highly distinguished Certified Construction Industry Financial Professional (CCIFP) designation. By achieving this credential, Bart has positioned himself among the construction industry’s most respected financial professionals. The CCIFP designation represents a significant professional achievement and emphasizes his deep commitment to serving both current and future construction industry clients. Earning the CCIFP designation requires not only passing a comprehensive examination but also demonstrating advanced knowledge and substantial experience in construction specific accounting, taxation, financial management, and business strategy. Ongoing continuing education is required to maintain the designation, ensuring CCIFP professionals remain at the forefront of industry developments. Bart’s achievement further accelerates Suttle & Stalnaker’s construction practice and enhances the firm’s ability to deliver specialized guidance to contractors navigating increasingly complex financial, operational, and regulatory changes. As a Member of the firm, Bart Scott has long been a trusted advisor to clients across West Virginia, particularly those in the construction sector. His CCIFP certification reflects not only technical excellence but also a continued commitment to professional development and industry leadership. Suttle & Stalnaker, PLLC congratulates Bart on this outstanding accomplishment of joining the exclusive group of CCIFP professionals. We are excited about the continued value he brings to the firm and to the construction industry. *Our articles are generally prepared internally, but could contain AI assistance. All articles are reviewed by Suttle & Stalnaker, PLLC professionals for accuracy and completeness and reflect the knowledge of our team. ### If you’re married, should you file jointly or separately? URL: https://www.suttlecpas.com/insights/if-you-re-married-should-you-file-jointly-or-separately Published: 2026-02-20 Married couples have a choice when filing their 2025 federal income tax returns. They can file jointly or separately. What you choose will affect your standard deduction, eligibility for certain tax breaks, tax bracket and, ultimately, your tax liability. Which filing status is better for you depends on your specific situation. Minimizing tax In general, you should choose the filing status that results in the lowest tax. Typically, filing jointly will save tax compared to filing separately. This is especially true when the spouses have different income levels. Combining two incomes can bring some of the higher-earning spouse’s income into a lower tax bracket. Also, some tax breaks aren’t available to separate filers. The child and dependent care credit, adoption expense credit, American Opportunity credit and Lifetime Learning credit are available to married couples only on joint returns. And some of the new tax deductions under 2025’s One Big Beautiful Bill Act (OBBBA) aren’t available to separate filers. These include the qualified tips deduction, the qualified overtime deduction and the senior deduction. You also may not be able to deduct IRA contributions if you or your spouse were covered by an employer-sponsored retirement plan such as a 401(k) and you file separate returns. And you can’t exclude adoption assistance payments or interest income from Series EE or Series I savings bonds used for higher education expenses if you file separately. However, there are cases when married couples may save taxes by filing separately. An example is when one spouse has significant medical expenses. Medical expenses are deductible only to the extent they exceed 7.5% of adjusted gross income (AGI). If a medical expense deduction is claimed on a spouse’s separate return, that spouse’s lower separate AGI, as compared to the higher joint AGI, can result in a larger total deduction. Couples who got married in 2025 If you got married anytime in 2025, for federal tax purposes you’re considered to have been married for all of 2025 and must file either jointly or separately. And married filing separately status isn’t the same as single filing status. So you can’t assume that filing separately for 2025 will produce similar tax results to what you and your spouse each experienced for 2024 filing as singles, even if nothing has changed besides your marital status — especially if you have high incomes. The income ranges for the lower and middle tax brackets and the standard deductions are the same for single and separate filers. But the top tax rate of 37% kicks in at a much lower income level for separate filers than for single filers. So do the 20% top long-term capital gains rate, the 3.8% net investment income tax and the 0.9% additional Medicare tax. Alternative minimum tax (AMT) risk can also be much higher for separate filers than for singles. Liability considerations If you and your spouse file a joint return, each of you is “jointly and severally” liable for the tax on your combined income. And you’re both equally liable for any additional tax the IRS assesses, plus interest and most penalties. That means the IRS can come after either of you to collect the full amount. Although there are “innocent spouse” provisions in the law that may offer relief, they have limitations. Therefore, even if a joint return results in less tax, some people may still choose to file separately if they want to be responsible only for their own tax. This might occur when a couple is separated. Many factors These are only some of the factors to consider when deciding whether to file jointly or separately. Suttle & Stalnaker, PLLC is ready to help you. If you would like more information on how this applies to you, contact our office at 304.343.4126. © 2026 ### Quadrupled SALT deduction limit means more taxpayers will benefit from itemizing on their 2025 returns URL: https://www.suttlecpas.com/insights/quadrupled-salt-deduction-limit-means-more-taxpayers-will-benefit-from-itemizing-on-their-2025-returns Published: 2026-02-18 An important decision to make when filing your individual income tax return is whether to claim the standard deduction or itemize deductions. A change under the One Big Beautiful Bill Act (OBBBA) will make it beneficial for more taxpayers to itemize deductions on their 2025 returns. Specifically, if you paid more than $10,000 in state and local taxes (SALT) last year, you might save tax by itemizing on your 2025 return even if claiming the standard deduction has saved you more tax in recent years. Claiming the standard deduction vs. itemizing Taxpayers can choose to itemize certain deductions on Schedule A or take the standard deduction based on their filing status instead. Itemizing deductions when the total will be larger than the standard deduction saves tax, but it makes filing more complicated. The OBBBA made permanent and, for 2025, slightly increased the Tax Cuts and Jobs Act’s (TCJA’s) nearly doubled standard deduction for each filing status: $15,750 for single and separate filers, $23,625 for heads of household, and $31,500 for married couples filing jointly. (The new amounts have been adjusted for inflation for 2026 and will continue to be adjusted annually going forward.) Because of the higher standard deduction and the TCJA’s reduction or elimination of many itemized deductions (mostly made permanent by the OBBBA), many taxpayers who once benefited from itemizing have been better off taking the standard deduction for the last several years. If you’re among those taxpayers and you have significant SALT expenses, OBBBA changes could increase your SALT itemized deduction for 2025 enough that your total itemized deductions may exceed your standard deduction, causing itemizing to make sense once again for you. Increased limit on the SALT deduction Deductible SALT expenses include property taxes (for homes, vehicles and boats) and either income tax or sales tax, but not both. Historically, eligible SALT expenses were generally 100% deductible on federal income tax returns if an individual itemized deductions. This provided substantial tax savings to many taxpayers in locations with higher income or property tax rates (or higher home values), as well as those who owned both a primary residence and one or more vacation homes. For 2018 through 2025, the TCJA limited the deduction to $10,000 ($5,000 for married couples filing separately). This SALT cap was scheduled to expire after 2025. Rather than letting the $10,000 cap expire or immediately making it permanent, the OBBBA temporarily quadrupled the limit. Beginning in 2025, taxpayers can deduct up to $40,000 ($20,000 for married couples filing separately), with 1% increases each subsequent year. The $10,000 cap is scheduled to return in 2030. The increased SALT cap could lead to major tax savings compared with the $10,000 cap. For example, a married couple filing jointly in the 32% tax bracket with $40,000 in SALT expenses and MAGI below the threshold for the income-based reduction (see below) could save an additional $9,600 in taxes [32% × ($40,000 − $10,000)]. Reduced limit for higher-income taxpayers While the higher SALT limit is in place, the allowable deduction drops by 30% of the amount by which modified adjusted gross income (MAGI) exceeds a threshold amount. For 2025, the threshold is $500,000; when MAGI reaches $600,000, the previous $10,000 cap applies. (These amounts are halved for separate filers.) The MAGI threshold will also increase 1% each year through 2029. Here’s how the earlier example would be different if the taxpayer’s MAGI exceeded the threshold by $20,000: The cap would be reduced by $6,000 (30% × $20,000), leaving a maximum SALT deduction of $34,000 ($40,000 − $6,000). Even reduced, that’s more than three times what would be permitted under the $10,000 cap. The reduced deduction would still save an additional $7,680 in taxes compared to when the $10,000 cap applied [32% × ($34,000 − $10,000)]. Factoring in other itemized deductions Depending on your 2025 SALT expenses, MAGI and filing status, your SALT deduction alone might be enough for your itemized deductions to exceed your standard deduction. If it isn’t, you’ll need to review your other potential itemized deductions and see if all of them, in aggregate, will exceed your standard deduction. Other possible itemized deductions include: Medical expenses. This deduction is limited to the amount of eligible medical expenses that, in aggregate, exceeds 7.5% of adjusted gross income (AGI). Home mortgage interest. This deduction is available for acquisition debt of up to $750,000. (A $1 million limit still applies to indebtedness incurred on or before December 15, 2017.) Charitable donations. For 2025, cash donations to qualified charities are generally deductible up to 60% of AGI. (Beginning in 2026, the deduction will also be limited to the amount of eligible donations that, in aggregate, exceeds 0.5% of AGI.) Noncash donations may also be deductible, but additional requirements and limits apply. Casualty and theft losses. For 2025, these losses are generally deductible only if they’re due to a disaster declared by the President. (Beginning in 2026, losses due to certain state-declared disasters also will be deductible.) The deduction is limited to the amount of eligible losses that, in aggregate, exceeds 10% of AGI. Keep in mind that additional rules and limits apply to these deductions. A return to itemizing? If you have high SALT expenses but have been claiming the standard deduction in recent years, it’s time to revisit itemizing. A return to itemizing on your 2025 return might save you tax. If you’ve already been itemizing, a larger SALT deduction could also increase your tax savings, perhaps significantly, depending on your SALT expenses, MAGI, filing status and tax bracket. We can assess the impact of the SALT limit increase — and other OBBBA changes — on your tax situation and help ensure you claim all the tax breaks you’re entitled to on your 2025 return. Suttle & Stalnaker, PLLC is ready to help. If you would like more information on how this applies to you, contact our office at 304.343.4126. © 2026 ### What Meals Can I Deduct? URL: https://www.suttlecpas.com/insights/what-meals-can-i-deduct Published: 2026-02-17 The One Big Beautiful Bill Act (OBBBA) contained many changes to the tax code, today we will discuss one of those areas, business meals. This article will summarize the main rules that are in effect beginning on January 1, 2026 Meals with Customers To qualify for any deduction, meal expenses must: Be ordinary and necessary expenses paid or incurred in carrying on a trade or business. Not be lavish or extravagant under the circumstances. Involve the taxpayer or an employee being present when the food or beverages are provided. Be properly substantiated (amount, date, place, business purpose, and business relationship of attendees. Meals that meet the parameters listed above fall into the 50% deduction limitation under the tax code. That means, if you take a customer out to dinner for legitimate business reasons, 50% of the cost of the meal would qualify as a tax deduction. Thus, if you spent $100 on the meal, then you would receive a $50 tax deduction. What if there is entertainment involved with the meal (sporting event ticket)?Under the tax code, entertainment remains non-deductible, regardless of business purpose. This includes: Sporting events Concert tickets Golf, hunting, theater, and similar outings Membership dues for clubs organized for business, pleasure, recreation, or other social purposes (country clubs, hunting clubs, etc) Meals provided in conjunction with entertainment may still be deductible (50%) if the food and beverage charges are separately stated from the entertainment charges and the meals otherwise meet the business requirements listed above. Food/Drink Available to the Public Food and beverages made available primarily to the general public, such as complimentary coffee and snacks in a showroom or customer waiting area, remain fully deductible, provided they are not primarily for employees. Meals for Employees Meals provided to your employees as part of a social or recreational event (company picnic, holiday party) are still 100% deductible. However, the OBBBA brought a big change to meals, snacks or drinks provided by an employer for the employer’s convenience. After January 1, 2026, these costs are now non-deductible. The following are examples of what qualifies as meals offered for the employer’s convenience: Meals furnished to employees on or near the employer’s premises (on-site cafeteria, meals ordered so employees can be on call, meals ordered for employees working overtime, etc.) On premises de minimis food or beverages (snacks, coffee, soft drinks) offered to your employees for free or a reduced cost If an employer opts to include these benefits in an employee’s taxable wages, then the costs would be fully deductible to the employer. Travel meals Meals consumed while traveling away from home overnight for business remain 50% deductible, assuming they meet the general substantiation and business‑purpose requirements outlined earlier. This applies whether costs are tracked by actual expenses (receipts) or via per diem, subject to applicable per‑diem rules. Accounting Tips To ensure your compliance with the many types of potential meal expense categories, we recommend the following: Categorize meal expenses in your chart of accounts (for example, travel meals, client meals, employee events, on‑premises food, taxable meals) to assist with correct limitation calculations. Make sure your employees are providing contemporaneous documentation to support the attendees and business purpose for each business meal. Request separate line‑item charges for food and beverages when hosting at venues that also provide entertainment. Reevaluate the cost and design of employer‑provided meal programs and break‑room offerings considering the post‑2025 non-deductibility rules. Because state income tax rules may not follow federal treatment in every respect, separate state‑tax analysis is advisable for multi‑state businesses. Suttle & Stalnaker, PLLC is ready to help you. If you would like more information on how this applies to you, please contact Wallace “Wally” F. Suttle II, CPA at wsuttle@suttlecpas.com or contact our office at 304.343.4126. ### Before claiming a charitable deduction for 2025, make sure you can substantiate it URL: https://www.suttlecpas.com/insights/before-claiming-a-charitable-deduction-for-2025-make-sure-you-can-substantiate-it Published: 2026-02-13 If you itemize deductions on your 2025 individual income tax return, you potentially can deduct donations to qualified charities you made last year. But your gifts must be substantiated in accordance with IRS requirements. Exactly what’s required depends on various factors. In some cases, you must have a written acknowledgment from the charity. Substantiating cash donations If you made a cash gift of under $250, documentation such as a canceled check, bank statement or credit card statement is adequate. However, if you received something in return for the donation, you generally must reduce your deduction by its value — and you must have received a “contemporaneous written acknowledgment” from the charity. Likewise, for a donation of $250 or more, you must obtain such an acknowledgment. In it, the charitable organization must state the amount of the donation, whether you received any goods or services in consideration for the donation and, if you did, the value of those goods or services. The “contemporaneous” requirement can sometimes trip up taxpayers. It means the earlier of: The date you file your tax return, or The due date of your return, including extensions. Therefore, if you made a donation last year that requires a contemporaneous written acknowledgment but you haven’t yet received it from the charity, it’s not too late — as long as you haven’t filed your 2025 return. Contact the charity now and request a written acknowledgment. Substantiating property donations Gifts of property worth $250 or more also generally require a contemporaneous written acknowledgement from the charity. Rather than listing a dollar value for the donation, it must simply include a description of the property. But as with cash donations of $250 or more, it must state whether you received any goods or services in consideration for the donation and, if you did, the value of those goods or services. Some types of donations require additional substantiation. For example, if you donate property valued at more than $500, you must attach a completed Form 8283, “Noncash Charitable Contributions,” to your return. And for donated property with a value of more than $5,000, you generally must obtain a qualified appraisal and attach an appraisal summary to your tax return. But donations of publicly traded securities don’t require an appraisal. Tax-smart charitable giving Many other rules and limits can affect your charitable deductions. We can help you determine what you can claim on your 2025 return and plan a tax-smart charitable giving strategy for 2026. Suttle & Stalnaker, PLLC is ready to help. If you would like more information on how this applies to you, contact our office at 304.343.4126. © 2026 ### To maximize — or not to maximize — depreciation deductions on your 2025 tax return URL: https://www.suttlecpas.com/insights/to-maximize-or-not-to-maximize-depreciation-deductions-on-your-2025-tax-return Published: 2026-02-11 The deadlines for filing 2025 tax returns (or extensions) are fast approaching. Although most tax planning moves must be completed by December 31 of the tax year, there are some decisions you can make when filing your return that can save taxes now or in the future. One such decision is whether to claim accelerated depreciation breaks. Depreciation basics For assets with a useful life of more than one year, the cost generally must be depreciated over a period of years (unless accelerated depreciation breaks are available). In other words, taxpayers can deduct only a portion of the asset’s cost each year over the depreciation period. The depreciation period depends on the type of asset, ranging from three years (such as for software and small tools) to 39 years (for commercial real estate). The Modified Accelerated Cost Recovery System (MACRS) provides larger deductions in the early years of an asset’s life than the straight-line method. In many cases, assets can be depreciated much more quickly under special tax breaks. Some of these breaks were enhanced by last year’s One Big Beautiful Bill Act (OBBBA). First-year bonus depreciation Under the OBBBA, 100% first-year bonus depreciation can be claimed on 2025 tax returns for qualified assets that were acquired after January 19, 2025, and placed in service in 2025. Eligible assets include: Depreciable personal property, such as equipment, computer hardware and peripherals, Transportation equipment, including certain passenger vehicles, and Commercially available software. First-year bonus depreciation can also be claimed for real estate qualified improvement property (QIP). QIP is defined as an improvement to an interior portion of a nonresidential building placed in service after the date the building was placed in service. However, expenditures attributable to the enlargement of a building, elevators or escalators, or the internal structural framework of a building don’t count as QIP and usually must be depreciated over 39 years. The first-year bonus depreciation percentage is 40% for qualified assets acquired on or before January 19, 2025, and placed in service in 2025. Bonus depreciation is automatically applied to eligible assets unless you elect out of it. However, you can elect out of it only on an asset class basis. For example, you can elect out of it for all three-year property, but you can’t elect out of it for just one specific three-year asset. Section 179 expensing election Sec. 179 expensing allows small businesses to write off the full cost of 2025 eligible assets. For tax years beginning in 2025, the maximum Sec. 179 deduction is $2.5 million (double the pre-OBBBA limit). Eligible assets include: Depreciable personal property, such as equipment, computer hardware and peripherals, Transportation equipment, including certain passenger vehicles, Commercially available software, and Real estate QIP. For nonresidential real property, Sec. 179 deductions are also allowed for qualified expenditures for: Roofs, HVAC equipment, Fire protection and alarm systems, and Security systems. Finally, eligible assets include depreciable personal property used predominantly to furnish lodging, such as furniture and appliances in a property rented to transients. In addition to the annual expense limit, Sec. 179 expensing is subject to a couple of other limits that don’t apply to bonus depreciation. First, the deduction is phased-out dollar for dollar if you put more than $4 million of qualifying assets into service last year. Second, Sec. 179 deductions can’t cause an overall business tax loss. The Sec. 179 deduction limits can be tricky if you own an interest in a pass-through business entity. That said, claiming Sec. 179 expensing can be beneficial for assets not eligible for 100% bonus depreciation or if you want to immediately deduct the cost of some, but not all, assets in a particular asset class that is also eligible for bonus depreciation. Depreciation deduction strategies Claiming the maximum depreciation deductions you can on your 2025 income tax return will generally provide the greatest 2025 tax savings. Among other benefits, this can boost cash flow and provide more funds for further investment in the business. But there are circumstances where it may be better to depreciate assets over a period of years. For example, the Section 199A qualified business income (QBI) deduction for pass-through businesses can be up to 20% of an owner’s QBI. Because of the income limitations on this deduction, claiming big first-year depreciation deductions can reduce QBI and lower or even eliminate your allowable QBI deduction. Depreciating assets over a period of years can also be beneficial if you expect to be subject to higher tax rates in the future, such as if you may be in a higher tax bracket or lawmakers increase rates. When you claim 100% bonus depreciation or Sec. 179 expensing today, you’re eliminating your depreciation deductions for those assets in the future. And deductions save more tax when tax rates are higher. Time to get started We can identify which depreciation breaks you’re eligible for, review your overall tax situation and help determine whether it will be beneficial for you to maximize depreciation-related breaks on your 2025 tax return. We can also strategize with you on tax planning for 2026 asset investments. Suttle & Stalnaker, PLLC is ready to help. If you would like more information on how this applies to you, contact our office at 304.343.4126. © 2026 ### Can some small businesses can still benefit from the health care coverage credit? URL: https://www.suttlecpas.com/insights/some-small-businesses-can-still-benefit-from-the-health-care-coverage-credit Published: 2026-02-09 Key Points: The health care coverage credit can provide valuable tax savings for eligible small businesses. Eligibility is limited based on company size and wages. The credit is temporary but still accessible for some businesses. Tax credits reduce tax liability dollar-for-dollar. As a result, they can be more valuable than deductions, which reduce only the amount of income subject to tax. One tax credit that hasn’t been getting much attention lately but that can still be valuable for some small businesses is the credit for providing health insurance to employees. Who’s eligible? Under the Affordable Care Act (ACA), certain small employers that provide employees with health care coverage are eligible for this tax credit. Although it’s been available for more than a decade and generally can be claimed for only two years, some small businesses may still be eligible. These may include newer businesses as well as older ones that only recently have begun offering health insurance. The maximum credit is 50% of group health coverage premiums paid by the employer, if it contributes at least 50% of the total premium or of a benchmark premium. For 2025, the full credit is available for employers with 10 or fewer full-time equivalent employees (FTEs) and average annual wages of $33,300 or less per employee. Partial credits are available on a sliding scale to businesses with fewer than 25 FTEs and average annual wages of less than $66,600. (These amounts are annually adjusted for inflation and increase to $34,100 and $68,200, respectively, for 2026.) As noted, the credit can be claimed for only two years. Also, those years must be consecutive. (Credits claimed before 2014 don’t count, however.) If you started offering employee health insurance in 2025, you may be eligible for the credit on your 2025 return (and again on your 2026 return next year). If you’re offering coverage beginning in 2026, you may be able to claim the credit when you file your 2026 return next year (and then again on your 2027 return the following year). Keep in mind that additional rules apply to the health care coverage credit. But premiums that aren’t eligible for the credit generally can be deducted, subject to the rules that apply to deductions for ordinary business expenses. Can your business claim the credit? If you’re not sure whether your business is eligible for a full (or partial) credit for health care coverage, contact us. We can help assess your eligibility. We can also advise on whether you may be eligible for other tax credits on your 2025 return and if you can take any steps this year so you can potentially claim credits on your 2026 return next year. Suttle & Stalnaker, PLLC is ready to help. If you would like more information on how this applies to you, contact our office at 304.343.4126. © 2026 ### Why Does Updating Project Budgets Matters Under GAAP and Why Should Project Managers Care? URL: https://www.suttlecpas.com/insights/why-updating-project-budgets-matters-under-gaap-and-why-project-managers-should-care Published: 2026-02-06 Key Points: Accurate budgets are critical to GAAP- compliant financial reporting. Outdated budgets can lead to distorted project performance and financial surprises. Timely budget updates improve decision making, compliance, and credibility. In construction, project budgets are more than planning tools—they are the foundation for how revenue and profit are reported under Generally Accepted Accounting Principles (GAAP). When budgets are not kept current, financial statements can be wrong, even if the work in the field is being managed well. Keeping budgets current is also important for avoiding surprises in project margins. Under GAAP, most long-term construction projects recognize revenue based on progress toward completion. In simple terms, the company reports revenue and profit based on how much of the job is complete. That completion percentage is usually driven by costs incurred compared to total expected costs. If the total budget is outdated, the reported progress is wrong, and the impact could be significant For project managers, this means that old budgets can make a job look better or worse than it really is. If expected costs increase but the budget isn’t updated, the job may show too much profit early on. These errors eventually have to be corrected, often all at once, because profits were previously overstated, causing unpleasant surprises later in the project. Updating budgets also ensures losses are recognized when they become known, not when the job is finished. If project estimates indicate a project is expected to lose money, that loss must be recorded. Timely budget updates help identify these situations early, which can give management time to respond while maintaining compliance with external (or internal requirements). Up-to-date budgets also improve credibility with lenders and bonding companies. Accurate budgets are also essential for forecasting remaining costs. From an accounting standpoint, “cost to complete” drives revenue recognition and profit fade/gain. From a project management standpoint, it reflects how realistic the plan is to finish the job. When budgets reflect current conditions, such as change orders, productivity trends, and material pricing, the financial statements align with what is actually happening in the field. Finally, financial statements that consistently reflect real performance reduce questions during audits and reviews. Updated budgets improve job-to-date and cost-to-complete accuracy, which supports reliable work-in-progress (WIP) reporting. WIP schedules are closely reviewed by auditors and third parties, so accurate budgets help make WIP reports understandable, defensible, and realistic. For project managers, this means fewer accounting fire drills and less time explaining numbers that don’t match job reality. As an example, a project has a $2,000,000 contract with an original $1,400,000 cost budget. $700,000 of costs have been incurred. Later, the project team determines that due to design changes, labor overruns, and material increases, the total expected cost is actually $1,900,000, but the budget is not updated. Until it is, the financials don’t reflect the true scope or cost of the work. Under GAAP, revenue must be based on the current contract value and current cost expectations. In this example revenue is overstated by $260,000 and must be corrected. Updating the budget when change orders are approved or cost expectations fluctuate keeps reporting accurate while ensuring the financial results tell the same story as the job site and helps to avoid sudden swings in revenue or profit later in the project. When budgets stay current, accounting and project management stay aligned. Suttle & Stalnaker, PLLC is ready to help you. If you would like more information on how this applies to you, contact our Chris Lambert, CPA, CGMA, CCIFP cslambert@suttlecpas.com or at 304.343.4126. ### How can you get inventory under control? URL: https://www.suttlecpas.com/insights/how-to-get-inventory-under-control Published: 2026-02-05 Key Points: Excess inventory is costly, making effective management essential. Data-driven analysis is key to optimizing work levels. Smart inventory reductions can improve profitability without harming service. Uncertainty regarding inflation, demand and foreign tariffs has made inventory management even harder for businesses than it was previously. Although there are many unknowns right now, one thing is generally certain: Carrying excess inventory is expensive. If you’d like to trim your buffer stock and maximize profitability, there are effective ways to do it without risking customer service. Count and compare Inventory management starts with a physical inventory count. Accuracy is essential for knowing your cost of goods sold and for identifying and resolving discrepancies between your physical count and perpetual inventory records. An external accountant can bring objectivity to the counting process and help minimize errors. The next step is to compare your inventory costs to those of your peers. Trade associations often publish benchmarks for gross margin [(revenue - cost of sales) / revenue], net profit margin (net income / revenue) and days in inventory (average inventory / annual cost of goods sold × 365 days). Your company should strive to meet — or beat — industry standards. For a retailer or wholesaler, inventory is simply purchased from the manufacturer. But the inventory account is more complicated for manufacturers and construction firms where it’s a function of raw materials, labor and overhead costs. Guide to cutting The composition of your company’s cost of goods will guide you on where to cut. You may be able to reduce inventory expenses by renegotiating prices with your suppliers or seeking new vendors. And don’t forget the carrying costs of inventory, such as storage, insurance, obsolescence and pilferage. Brainstorm ways to mitigate such threats and improve margins. For example, you might negotiate a net lease for your warehouse, install antitheft devices or opt for less expensive insurance coverage. To lower your days-in-inventory ratio, compute product-by-product margins. You might stock more products with high margins and high demand — and less of everything else. Whenever possible, return excess supplies of slow-moving materials or products to your suppliers. To help prevent lost sales due to lean inventory, make sure your product mix is sufficiently broad and in tune with consumer needs. Before cutting back on inventory, negotiate speedier delivery from suppliers or consider giving suppliers access to your perpetual inventory system. Reality check Right now, many businesses are sitting on strategic stockpiles they purchased to combat marketplace uncertainty. If this is true of your business and you haven’t been able to move goods fast enough, you may want to consider new inventory management methods. We can advise you on such challenges as using software to accurately forecast inventory needs, pricing goods to increase profitability without alienating customers, and modeling the cost impacts of tariffs and other economic variables. Suttle & Stalnaker, PLLC is ready to help. If you would like more information on how this applies to you, contact our office at 304.343.4126. © 2026 ### How Do the Trump Accounts for Children Work? URL: https://www.suttlecpas.com/insights/how-the-trump-accounts-for-children-will-work Published: 2026-02-02 Key Points: Trump accounts provide a new tax-advantaged savings opportunity for children. Contributions to Trump Accounts can come from multiple sources with flexible limits and benefits. Trump Accounts transition into a traditional IRA at age 18. A new tax-advantaged way to help children build up savings for the future was created by the One Big Beautiful Bill Act (OBBBA): Trump Accounts (TAs). Under a pilot program, you can make an election to set up a TA for your U.S. citizen child born in 2025 through 2028 and the federal government will fund the account with $1,000 of free money. But older children also are eligible for TAs as long as they have a Social Security number and are under 18 at the end of the tax year; they just aren’t eligible for the $1,000 government contribution. How do I set up a Trump Account? One way to set up a TA is to file Form 4547, “Trump Account Election(s),” along with your 2025 federal income tax return. But the form doesn’t have to be filed with a tax return; it can be filed anytime through an online portal that is expected to be available this summer. After July 3, 2026, you and any other individual, such as a grandparent, can begin making annual TA contributions of up to a combined limit of $5,000 (adjusted for inflation starting in 2028) until the year your child turns 18. The $1,000 government contribution doesn’t count against the annual limit. So, if your child is born this year, up to $5,000 could be contributed to his or her TA in 2026 on top of the $1,000 from the government. Other contributions Employers can set up a TA contribution program. After July 3, 2026, employers can contribute and deduct up to $2,500 annually (adjusted for inflation starting in 2028) to a TA for an eligible under-age-18 employee or an employee’s eligible under-age-18 dependent. (Employers can’t contribute more than $2,500 per employee, even if an employee has multiple eligible dependents.) These contributions count against the $5,000 annual contribution limit. Employer contributions are excluded from the employee’s taxable income. State, local or tribal governments and tax-exempt 501(c)(3) organizations can also make tax-free contributions to TAs under rules to be established by the IRS. These qualified general contributions aren’t subject to the $5,000 annual contribution limit and must be provided to all children within a qualified group, as defined. What is the tax treatment and other requirements for a Trump Account? Contributions aren’t deductible for individual contributors, but the account earnings can grow tax-deferred as long as they’re in the account. Generally, no distributions can be taken from the TA before the year your child turns 18. Until the year your child turns 18, the account can invest only in certain eligible investments. These are mutual funds or exchange traded funds that 1) track a qualified index, 2) don’t use leverage, 3) don’t charge fees of more than 0.1% of the invested balance, and 4) meet other criteria that may be set by the IRS. What happens to my Trump Account after age 18? In the year your child turns 18, the TA will transition into a traditional IRA. It will become subject to the familiar federal income tax rules governing traditional IRA contributions and distributions. So, your child will have to have earned income to make any further contributions to the account. But those contributions will be deductible if he or she is eligible, and the higher IRA annual contribution limit will apply. Also starting with the year your child turns 18, distributions can be taken. But the distributions will generally be at least partially taxable, and IRA early withdrawal penalties could also apply. So it’s best to leave the account untouched so that it can continue to grow tax-deferred. Weighing your options If your child is eligible for the $1,000 government contribution, you’ll want to set up a TA to at least get this free money and take advantage of the tax-deferred growth on it. And it can be an even more powerful savings tool if you also make contributions. Say you put $5,000 a year into your child’s TA for the first 17 years of his or her life after collecting the $1,000 of free money from the government in Year 1. If the account earns 5% annually, it will be worth about $138,000 by the time your child turns 18. Say your child leaves the money invested in what’s now a traditional IRA until age 65. If the account continues to earn 5%, it will grow to almost $1.44 million. Once your child starts having earned income, he or she can make additional contributions to what is now a traditional IRA and have an even bigger account balance at retirement. However, before making TA contributions, consider whether other tax-advantaged savings options might better achieve your goals. For example, if you want to build up funds for your child’s education, contributing to a Section 529 savings plan may be a better fit. Distributions used to pay qualified education expenses will be tax-free, and some or all of any remaining balance after your child graduates can eventually be converted to a Roth IRA, with tax-free distributions. Learn more TAs are worth considering, especially if you can afford to make significant annual contributions. If you have questions about TAs or want more information about other tax-advantaged savings options to benefit your children — or grandchildren — we are here to help. Contact our office at 304.343.4126. © 2026 ### Could you qualify for a casualty loss tax deduction if you experienced a disaster? URL: https://www.suttlecpas.com/insights/if-you-suffered-a-disaster-you-may-be-eligible-for-a-casualty-loss-tax-deduction Published: 2026-01-29 Key Points: Casualty loss deductions are limited primarily to declared disasters. Strict thresholds and reductions limit the deductible amount. You must itemize to benefit - and many taxpayers will not. Every year, severe storms, flooding, wildfires and other disasters affect millions of taxpayers. Many experience casualty losses from damage to their homes or personal property. The One Big Beautiful Bill Act (OBBBA), signed into law last year, generally made permanent the Tax Cuts and Jobs Act (TCJA) limitation on the personal casualty loss tax deduction. But it also expanded the deduction in one way. What is considered deductible? For losses incurred from 2018 through 2025, the TCJA generally restricted deductions for personal casualty losses to those due to federally declared disasters. This is the rule that applies to your 2025 income tax return due April 15, 2026. (Before the TCJA, personal casualty losses were also potentially deductible if due to various other types of incidents, such as theft, vandalism and accidents as well as to fires, floods, etc., not attributable to a federally declared disaster.) The OBBBA generally has made the disaster requirement permanent. But, effective January 1, 2026, it expands eligible disasters to include certain state-declared disasters. This applies to the tax return you’ll file next year for 2026. There’s an exception to the general rule, however: If you have personal casualty gains because your insurance proceeds exceed the tax basis of the damaged or destroyed property, you can deduct personal casualty losses that aren’t due to a declared disaster up to the amount of your personal casualty gains. What are the additional limits? Even when the cause of a personal casualty loss qualifies you for the deduction, additional limits apply. First, your deduction for the loss from the declared disaster is reduced by any insurance proceeds received. If insurance covered your entire loss, you can’t claim a casualty loss deduction for that loss. If insurance didn’t cover your entire loss, then $100 (per casualty event) must be subtracted from the uncovered amount. Finally, a 10% of adjusted gross income (AGI) floor applies. So you can deduct only the uncovered loss (reduced by $100 per casualty event) that exceeds 10% of your AGI for the year you claim the loss deduction. If, say, your 2025 AGI is $100,000 and your casualty loss (after subtracting insurance proceeds and $100 per event) is $11,000, you can deduct only $1,000 on your 2025 return. Also keep in mind that you must itemize deductions to claim the casualty loss deduction. Since 2018, fewer people have itemized because the TCJA significantly increased the standard deduction amounts — and the OBBBA has increased them further. For 2025, they’re $15,750 for single filers, $23,625 for heads of households, and $31,500 for married couples filing jointly. For 2026, they’re $16,100, $24,150 and $32,200, respectively. So even if you qualify for a casualty deduction under the rules and limits, you might not get any tax benefit because you don’t have enough total itemized deductions to exceed your standard deduction. Have questions? The rules for the personal casualty loss deduction are complex, so contact us for more information. We can help you determine whether you qualify for — and will benefit from — this deduction on your 2025 income tax return. Suttle & Stalnaker, PLLC is ready to help. If you would like more information on how this applies to you, contact our office at 304.343.4126. © 2026 ### When are medical expenses tax deductible? URL: https://www.suttlecpas.com/insights/when-medical-expenses-are-and-aren-t-tax-deductible Published: 2026-01-27 Key Points: The medical expense deduction has strict eligibility thresholds. A wide range of medical expenses may quality. Tax law changes may make itemizing more beneficial for some taxpayers. If you had significant medical expenses last year, you may be wondering what you can deduct on your 2025 income tax return. Income-based thresholds and other rules can make it hard to claim the medical expense deduction. At the same time, more types of expenses may be eligible than you might expect. What are the limits on the deduction? Medical expenses are deductible only if they weren’t reimbursable by insurance or paid via tax-advantaged accounts (such as Flexible Spending Accounts or Health Savings Accounts). In addition, they’re deductible only to the extent that, in aggregate, they exceed 7.5% of your adjusted gross income (AGI). For example, if your 2025 AGI was $100,000, your eligible medical expenses during the year would have to total more than $7,500 for you to claim the deduction — and only the amount in excess of that floor would be deductible. If you had $10,000 in eligible expenses, your potential deduction would be $2,500. In addition, medical expenses are deductible only if you itemize deductions. For itemizing to be beneficial, your itemized deductions must exceed your standard deduction. Due to changes under the Tax Cuts and Jobs Act that were made permanent by last year’s One Big Beautiful Bill Act (OBBBA), many taxpayers no longer itemize. However, some taxpayers who hadn’t been itemizing recently may benefit from itemizing for 2025 because of the OBBBA’s quadrupling of the state and local tax deduction limit. If you fall into that category, you should also revisit whether you can benefit from the medical expense deduction on your 2025 income tax return. What expenses are eligible? If you do expect to itemize deductions on your 2025 income tax return, now is a good time to review your medical expenses for the year and see if you had enough to exceed the 7.5% of AGI floor. Eligible expenses include many costs besides hospital and doctor bills. Here are some other types of expenses you may have had in 2025 that could be deductible: Transportation. The cost of getting to and from medical treatment is an eligible expense. This includes taxi fares, public transportation or using your own vehicle. Your vehicle costs can be calculated at 21 cents per mile for medical miles driven in 2025, plus tolls and parking. Alternatively, you can deduct certain actual vehicle-related costs, including gas and oil, but not general costs such as insurance, depreciation and maintenance. Insurance premiums. The cost of health insurance is a medical expense that can total thousands of dollars a year. Even if your employer provides you with coverage, you can deduct the portion of the premiums you paid — as long as it wasn’t paid pretax out of your paychecks. Long-term care insurance premiums also qualify, subject to dollar limits based on age. Here are the 2025 limits: 40 and under: $480 41 to 50: $900 51 to 60: $1,800 61 to 70: $4,810 Over 70: $6,020 Therapists and nurses. Services provided by individuals other than physicians can qualify if they relate to a medical condition and aren’t for general health. For example, the cost of physical therapy after knee surgery qualifies, but the cost of a personal trainer to help you get in shape doesn’t. Also qualifying are amounts paid for acupuncture and those paid to a psychologist for medical care. In addition, certain long-term care services required by chronically ill individuals are eligible. Eyeglasses, hearing aids, dental work and prescriptions. Deductible expenses include the cost of glasses, contacts, hearing aids, dentures and most dental work. Purely cosmetic expenses (such as teeth whitening) don’t qualify, but certain medically necessary cosmetic surgery is deductible. Prescription drugs qualify, but nonprescription drugs such as aspirin don’t, even if a physician recommends them. Smoking-cessation programs. Amounts paid to participate in a smoking-cessation program and for prescribed drugs designed to alleviate nicotine withdrawal are deductible expenses. However, nonprescription gum and certain nicotine patches aren’t. Weight-loss programs. A weight-loss program is a deductible expense if undertaken as treatment for a disease diagnosed by a physician. This could be obesity or another disease, such as hypertension, for which a doctor directs you to lose weight. It’s a good idea to get a written diagnosis. In these cases, deductible expenses include fees paid to join a weight-loss program and attend meetings. However, foods for a weight-loss program generally aren’t deductible. Dependents and others. You can deduct the medical expenses you pay for dependents, such as your children. Additionally, you may be able to deduct medical expenses you pay for an individual, such as a parent or grandparent, who would qualify as your dependent except that he or she has too much gross income or files jointly. In most cases, the medical expenses of a child of divorced parents can be claimed by the parent who pays them. Determining if you can benefit After reviewing this list of eligible expenses, do you think you had enough in 2025 to exceed the 7.5% of AGI floor? Or do you have questions about whether specific expenses qualify? Contact us. We can determine if you can benefit from the medical expense deduction — and other tax breaks — on your 2025 income tax return. © 2026 ### New Overtime Reporting Under the OBBBA URL: https://www.suttlecpas.com/insights/new-overtime-reporting-under-the-obbba Published: 2026-01-19 We hope the new year is off to a good start for each of you but wanted to take this opportunity to make you aware of a payroll reporting change that was a result of the One Big Beautiful Bill Act (OBBBA). As you may remember OBBBA included a provision that allowed taxpayers a deduction of their overtime and was made effective retroactive to January 1, 2025. The deduction applies to the premium portion (the extra 50%) of the overtime required under the Fair Labor Standards Act for hours worked over 40 in a work week. Please note that the premium portion is limited to 50%. Below are two examples of overtime that qualifies: Example 1: Assume time-and-a-half pay is $1,500. $1,000 is regular pay + $500 is the OT premium portion. The $500 is what is eligible for this new deduction. Dividing the time-and-a-half pay by 3. Example 2: Assume double-time pay is $2,000. $1,000 is regular pay + $1,000 is the OT premium portion. Only $500 is eligible for this new deduction. Dividing the double-time pay by 4. Now that you understand how to calculate the qualifying overtime, how do you report it to your employees? 2025 W-2 Reporting Requirements: For the 2025 tax year, there are no changes to the way overtime pay is reported on Form W-2. Overtime pay is not reported separately; instead, it is included in the total wage amounts reported in the following boxes: Box 1: Wages, tips, other compensation (taxable wages for federal income tax) Box 3: Social Security wages (up to the annual wage base) Box 5: Medicare wages and tips (no wage base limit) Employers are not required to separately report qualified overtime compensation on the 2025 Form W-2, and there will be no penalties for not doing so, provided the rest of the return is complete and correct. Employers may, if they wish, voluntarily provide the amount of qualified overtime compensation to employees using Box 14 of the W-2 or a separate written statement, but this is not required for 2025. 2026 W-2 Reporting Requirements: Beginning with the 2026 tax year, the IRS will require separate reporting of qualified overtime compensation. A new code (TT) will be added to Box 12 of Form W-2 specifically for this purpose. Employers will need to track and report qualified overtime compensation separately from regular wages starting with the 2026 Form W-2 filing. We encourage you to make sure your payroll software has the capability to track this separately to smooth your reporting in January 2027. Suttle & Stalnaker, PLLC is ready to help you. If you would like more information on how this applies to you, please contact, Wally Suttle, CPA at wsuttle@suttlecpas.com. You may also contact Bart Scott, CPA, CVA, MBA at bscott@suttlecpas.com. ### Important 2026 tax figures for businesses URL: https://www.suttlecpas.com/insights/important-2026-tax-figures-for-businesses Published: 2026-01-15 A new year brings many new tax-related figures for businesses. Here’s an overview of key figures for 2026. Be aware that exceptions or additional rules or limits may apply. Depreciation-related tax breaks Bonus depreciation: 100% Section 179 expensing limit: $2.56 million Section 179 phaseout threshold: $4.09 million Qualified retirement plan limits 401(k), 403(b) and 457 plan deferrals: $24,500 401(k), 403(b) and 457 plan catch-up contributions for those age 50 or older: $8,000 401(k), 403(b) and 457 plan additional catch-up contributions for those age 60, 61, 62 or 63: $3,250 SIMPLE deferrals: $17,000 SIMPLE catch-up contributions for those age 50 or older: $4,000 SIMPLE additional catch-up contributions for those age 60, 61, 62 or 63: $1,250 Contributions to defined contribution plans: $72,000 Annual benefit limit for defined benefit plans: $290,000 Compensation defining highly compensated employee: $160,000 Compensation defining key employee (officer) in a top-heavy plan: $235,000 Compensation triggering Simplified Employee Pension contribution requirement: $800 Other benefits limits Health Savings Account (HSA) contributions: $4,400 for individuals, $8,750 for family coverage Health Flexible Spending Account (FSA) contributions: $3,400 Health FSA rollover: $680 Child and dependent care FSA contributions: $7,500 Employer contributions to Trump account: $2,500 Monthly commuter highway vehicle and transit pass: $340 Monthly qualified parking: $340 Miscellaneous business-related limits Income range over which the Section 199A qualified business income deduction limitations phase in: $201,750 – $276,750 (double those amounts for married couples filing jointly) Threshold for the excess business loss limitation: $256,000 (double that amount for joint filers) — note that this is a reduction from 2025 Limitation on the use of the cash method of accounting: $32 million (also affects other tax items, such as the exemption from the 30% interest expense deduction limit) Planning for 2026 Suttle & Stalnaker, PLLC is ready to help you. If you would like more information on how this applies to you, contact our office at 304.343.4126. We can help you factor these changes and others into your 2026 tax planning. © 2025 ### What significant changes to information reporting will take effect for the 2026 tax year? URL: https://www.suttlecpas.com/insights/significant-changes-to-information-reporting-go-into-effect-for-the-2026-tax-year Published: 2026-01-14 If your business has employees or uses independent contractors, you have associated annual information reporting obligations. The One Big Beautiful Bill Act (OBBBA) makes changes impacting these rules, but not for the 2025 tax year. Tips and overtime income For 2025 through 2028, the OBBBA creates new deductions for employees who receive qualified tips income or qualified overtime income. Importantly, these breaks aren’t income exclusions. Therefore, federal payroll taxes and federal income tax withholding rules still apply to this income. Also, qualified tips and qualified overtime may still be fully taxable for state and local income tax purposes where applicable. The issue for employers and payroll management firms is reporting qualified tips and qualified overtime amounts so eligible workers can claim their rightful federal income tax deductions. In August, the IRS announced that, for tax year 2025, there will be no OBBBA-related changes to federal information returns for individuals, federal payroll tax returns or federal income tax withholding tables. So, the 2025 versions of Form W-2, Forms 1099, Form 941 and other payroll-related forms and returns aren’t being changed. In November, the IRS issued guidance on how taxpayers who’ve received tips or overtime in 2025 can determine their eligibility and calculate their deductions, considering that employers and others aren’t required to provide information reporting specific to qualified tips income or qualified overtime income for the 2025 tax year. Employers and payroll management firms may voluntarily report 2025 qualified tips in Box 14 (“Other”) of Form W-2 or a separate statement. Those that pay overtime, at minimum, should be prepared to answer employee questions about whether they’re considered to be Fair Labor Standards Act employees and thus potentially eligible for the qualified overtime deduction for 2025. Eligible occupations for the tips deduction In September 2025, the IRS released proposed regulations that include a list of dozens of occupations that are eligible for the OBBBA deduction for qualified tips income. Eligible occupations have been given a three-digit code to be used by employers for information return purposes. Eligible occupations are grouped into eight categories: beverage and food service, entertainment and events, hospitality and guest services, home services, personal services, personal appearance and wellness, recreation and instruction, and transportation and delivery. Draft 2026 Form W-2 In September 2025, the IRS also released a draft of the 2026 Form W-2. The draft form incorporates changes to support the new employer reporting requirements for employee deductions for qualified tips income and qualified overtime income, as well as employer contributions to Trump accounts (which will become available in 2026 to provide a tax-advantaged savings opportunity for children). For Box 12 of the draft form, new codes are provided for the following: “TA” to report employer contributions to Trump accounts, “TP” to report the total amount of an employee’s qualified tips income, and “TT” to report the total amount of an employee’s qualified overtime income. Box 14b has been added for employers to report the occupation of an employee who receives qualified tips income. Eased information return rules While the deductions for qualified tips and overtime will add to the information reporting requirements for businesses, the OBBBA also provides some reporting relief. This relief also starts with the 2026 tax year. Businesses generally must report on annual information returns, such as Form 1099-MISC, payments made during the year that equal or exceed the threshold for rents, royalties, premiums, annuities, remuneration, emoluments, or other fixed or determinable gains, profits, and income. In addition, businesses that receive business services generally must report on annual information returns, such as Form 1099-NEC, payments made during the year for services rendered that equal or exceed the statutory threshold. For many years, the threshold for Forms 1099-MISC and 1099-NEC has been $600. Effective for payments made after 2025, the OBBBA increases the reporting threshold to $2,000, with inflation adjustments for payments made after 2026. This change will impact information returns that should be filed in early 2027 to report affected 2026 payments. Stay up to date Additional guidance on reporting requirements for qualified tips income and qualified overtime income is expected, and eventually final 2026 information reporting forms will be released. Contact us to keep up to date on developments and what you need to do to ensure your business is compliant with evolving reporting requirements. Suttle & Stalnaker, PLLC is ready to help you. If you would like more information on how this applies to you, contact our office at 304.343.4126. © 2025 ### Do all business expenses qualify as tax deductions? URL: https://www.suttlecpas.com/insights/not-all-business-expenses-are-tax-deductible Published: 2026-01-13 Key points: The cost of capital is a critical driver in business valuation. Capital structure and financing choices directly affect the cost of capital. Determining the appropriate cost of capital is complex and situation specific. Valuation professionals often use discounted cash flow (DCF) techniques to determine the value of a business or estimate economic losses. A critical input in a DCF model is the cost of capital — the rate that’s used to discount future earnings to today’s dollars. Modest changes in this rate can have a major impact on the expert’s conclusion, so it’s important to get it right. Financing options The cost of capital represents the expected rate of return that the market requires to attract funds to a particular investment. It’s based on the perceived risk of the investment. All else equal, as risk increases, the discount rate rises, and the value of the business or investment falls (and vice versa). The cost of capital depends in part on whether the business is financed with 100% equity or a combination of equity and debt. In most cases, debt financing costs less than equity capital. Why? Debt holders receive regular economic benefits (principal and interest payments). But equity investors receive dividends only at management’s discretion, and they must wait until a sale to receive any capital appreciation, making their returns inherently less certain and thus the cost of equity higher. Estimating the cost of equity Several market-based components can be used to estimate the cost of equity. These typically include: A risk-free rate, based on U.S. Treasury securities, A market risk premium, based on historical returns for a stock index over the risk-free rate, and A company-specific risk premium, based on the subject company’s financial performance, industry and other attributes. The cost of equity is used as the cost of capital when the subject company is financed entirely with equity or when the valuation expert discounts earnings available only to equity investors. Calculating the WACC When discounting the earnings available to both equity investors and creditors, valuators typically use a weighted average cost of capital (WACC). This rate incorporates the costs of both equity and debt financing, based on an assumed capital structure. The cost of debt is generally derived from market-based borrowing rates available to the subject company, taking into account credit risk, collateral and prevailing lending conditions. As leverage increases, creditors typically demand higher interest rates to compensate for incremental risk. Interest expense is generally tax-deductible, which reduces the effective cost of debt. But valuators must consider current limitations on interest deductibility, particularly for larger companies subject to earnings-based caps under current tax law. How do you select the appropriate capital structure? When using WACC as the discount rate, a valuator can choose various capital structures. What’s appropriate depends on the characteristics of the company and the applicable valuation standard. For example, an expert might apply the subject company’s historical or expected percentages of debt and equity capital when valuing a business interest that lacks control over financing decisions. Alternatively, an expert might choose an industry average capital structure when calculating lost profits or valuing a controlling interest in the business. What’s appropriate for your situation? The cost of capital is a critical input in DCF models. The appropriate rate is determined on a case-by-case basis, depending on the facts and circumstances. Suttle & Stalnaker, PLLC is ready to help you. If you would like more information on how this applies to you. Contact our office for more information on developing and supporting cost of capital assumptions in today’s uncertain marketplace. © 2026 ### How Is the Rise of ESOPs Changing Ownership in the Construction Industry? URL: https://www.suttlecpas.com/insights/from-hard-hats-to-shareholders-the-rise-of-esops-in-construction Published: 2026-01-13 Key Points: ESOPs create a culture of ownership that drives engagement and performance. ESOPs are a powerful tool for attracting and retaining talent. ESOPs provide significant financial and tax benefits. In the landscape of modern business, employee ownership is gaining traction as a viable strategy for enhancing company performance and employee engagement. One of the most prominent methods of facilitating this ownership is through Employee Stock Ownership Plans. An Employee Stock Ownership Plan (ESOP) is a program that allows employees to acquire an ownership interest in their company. Essentially, it is a retirement plan that enables employees to hold shares of the company’s stock, creating a culture of shared ownership and mutual benefit. ESOPs represent a powerful tool for fostering employee engagement, enhancing company performance, and providing financial benefits to employees and employers. By creating a culture of ownership, companies can motivate their workforce, improve retention, and ensure a smoother transition during ownership changes. As businesses continue to evolve, ESOPs offer a unique approach to building a resilient and committed team, paving the way for long-term success. Here’s a closer look at how ESOPs can transform the construction sector. How do ESOPs enhance employee attraction and maintain talent retention? In a competitive job market, offering an ESOP can set a construction company apart from its competitors. Potential employees are often drawn to companies that provide ownership opportunities, seeing them as more stable and forward-thinking. This advantage can be crucial in attracting skilled professionals in a field where expertise is essential. Additionally, high turnover rates can be particularly damaging in the construction industry, where skilled labor is in high demand. ESOPs create a compelling reason for employees to stay with a company as they build equity over time. This not only reduces recruitment and training costs but also fosters a more experienced and cohesive workforce. Enhanced Employee Motivation and Engagement One of the most significant advantages of ESOPs is their ability to boost employee motivation. When employees have a stake in the company’s success, they tend to be more engaged in their work and are more likely to contribute innovative ideas and solutions. ESOPs can create a strong sense of community among employees, as they work together toward a common goal: the success of their company. This loyalty can lead to enhanced teamwork and collaboration, which are vital in the construction industry, where projects often require coordinated efforts from various stakeholders. What are the retirement benefits of an ESOP? Employees accumulate shares of the company over time, which can grow in value as the company succeeds, which can lead to a significant retirement nest egg, especially if the company performs well. Employees do not pay taxes on the shares held in the ESOP until they sell them, usually at retirement or upon leaving the company. This tax deferral allows the value of the investment to grow without the drag of annual taxes. If the company grows and becomes more valuable, the stock held in the ESOP can appreciate significantly, which can result in substantial returns for employees when they sell their shares during retirement. Upon retirement or separation from the company, employees can sell their shares back to the ESOP or on the open market, providing liquidity. This helps employees access their retirement funds when needed as well as can provide a meaningful source of income during retirement, supplementing other retirement plans like 401(k)s or pensions. What are the tax Advantages of an ESOP? C Corporations can make tax-deductible contributions to the ESOP up to 25% of covered payroll, whether cash or stock. This reduces the company’s taxable income, leading to lower overall tax liability. If a company borrows money to fund the ESOP, the interest on that loan is also tax-deductible. This can significantly enhance cash flow and reduce the effective cost of borrowing. For owners of C-corporations, if they sell their stock to an ESOP and meet specific requirements contained in IRC Sec. 1042, they can defer capital gains taxes on the sale if they reinvest the proceeds in qualified replacement property. In S-corporations, the portion of the income that belongs to the ESOP is not subject to federal income tax. The deferred income would be taxed when the S-Corporation distributes cash to the participants at retirement, death, disability or another form of employment termination. Partnerships and sole-proprietorships do not qualify for ESOP ownership. Employee Stock Ownership Plans (ESOPs) represent a powerful tool for fostering employee engagement, enhancing company performance, and providing financial benefits to both employees and employers. By creating a culture of ownership, companies can motivate their workforce, improve retention, and ensure a smoother transition during ownership changes. As the construction industry continues to evolve, companies that embrace employee ownership will likely find themselves not only more competitive but also better equipped to foster a loyal, engaged, and productive workforce. For those considering this path, consulting with financial and legal experts is crucial to ensure the ESOP aligns with their strategic goals and operational needs. Suttle & Stalnaker, PLLC is ready to help. If you would like more information on how this applies to you, contact Chris Lambert, CPA, CGMA, CCIFP at 304.343.4126 ### More individuals with disabilities will be eligible for tax-advantaged ABLE accounts in 2026 URL: https://www.suttlecpas.com/insights/more-individuals-with-disabilities-will-be-eligible-for-tax-advantaged-able-accounts-in-2026 Published: 2026-01-08 Did you know there’s a tax-advantaged way to save for the expenses of a person with a disability that’s similar to saving for college expenses with a Section 529 plan? Achieving a Better Life Experience (ABLE) accounts can help fund qualified disability expenses for an eligible beneficiary. The SECURE 2.0 Act, signed into law in 2022, made changes that will allow more people to be eligible for ABLE accounts beginning in 2026. The One Big Beautiful Bill Act (OBBBA), signed into law July 4, 2025, has made certain enhancements to them permanent. The benefits ABLE accounts can be created by eligible individuals to support themselves, by family members to support their dependents, or by guardians for the benefit of the individuals for whom they’re responsible. Anyone can contribute to an ABLE account. The OBBBA made permanent the ability of the designated beneficiary to claim the saver’s credit for contributions he or she makes to his or her ABLE account. The maximum saver’s credit for an individual for 2025 and 2026 is $1,000. While contributions aren’t tax-deductible, the funds in the account are invested and grow tax-deferred. Distributions used to pay eligible expenses are tax-free. (If distributions are used for nonqualified expenses, the portion of the distribution that represents earnings on the account is subject to income tax — plus a 10% penalty.) Having an ABLE account generally won’t affect the beneficiary’s eligibility for the government benefits to which he or she is entitled. ABLE accounts have no impact on Social Security Disability Insurance (SSDI) payments or Medicaid eligibility. However, ABLE account balances in excess of $100,000 are counted toward the Supplemental Security Income (SSI) program’s $2,000 individual resource limit. Therefore, an individual’s SSI benefits are suspended, but not terminated, when his or her ABLE account balance exceeds $102,000 (assuming the individual has no other assets). In addition, distributions from an ABLE account to pay housing expenses count toward the SSI income limit. Expanded eligibility Eligible individuals must be blind or disabled. For 2025 and prior years, the individual must have become so before turning age 26. But under SECURE 2.0, this age increases to 46 beginning on January 1, 2026. To be eligible, individuals generally must be entitled to benefits under the SSI or SSDI programs. Alternatively, individuals can become eligible if a disability certificate is filed with the IRS. Qualified expenses Distributions from an ABLE account are tax-free if used to pay for expenses that maintain or improve the beneficiary’s health, independence or quality of life. These expenses include: Education, Housing, Transportation, Health and wellness, Assistive technology, and Personal support services. Employment support expenses also qualify. Setting up an account Like 529 plans, ABLE accounts are established under state programs, and there are many choices. An account may be opened under the program of a state other than the one where the individual resides (as long as the state allows out-of-state participants). The funds in an account can be invested in a variety of options, and the account’s investment directions can be changed up to twice a year. Be aware that an eligible individual can have only one ABLE account. Also, there’s an annual contribution limit of $19,000 for 2025 and $20,000 for 2026. The OBBBA made permanent the ability to roll over 529 plan funds to an ABLE account without penalty, as long as the ABLE account is owned by the beneficiary of the 529 plan or a member of the beneficiary’s family. Such rolled-over amounts count toward the annual contribution limit. However, if the beneficiary works, he or she can also contribute part, or all, of his or her income to the account. (This additional contribution is limited to the poverty-line amount for a one-person household.) A new opportunity If you or someone in your family became disabled or blind after turning 26 but before age 46, the expansion of ABLE account eligibility in 2026 provides a new opportunity for tax-advantaged savings. To learn more about the tax benefits and other financial considerations, contact us. © 2025 ### Changes to charitable donation deductions are on the horizon URL: https://www.suttlecpas.com/insights/changes-to-charitable-donation-deductions-are-on-the-horizon Published: 2026-01-06 Beginning in 2026, individuals who itemize deductions and donate to charity will face a new limit on their charitable deductions. And in some cases, they’ll face two new limits. But there’s some good news for nonitemizing individuals who make charitable donations. New charitable deduction floor Under the One Big Beautiful Bill Act (OBBBA), starting in 2026, if you itemize deductions, your otherwise allowable charitable deduction will be reduced by 0.5% of your adjusted gross income (AGI). Put another way, your 2026 charitable deduction will be limited to the amount that exceeds 0.5% of your 2026 AGI. AGI includes all taxable income items and is reduced by above-the-line deductions like the write-offs for traditional IRA contributions, self-employed retirement plan contributions, self-employed health insurance premiums, 50% of self-employment tax, qualified education loan interest expense and Health Savings Account contributions. Let’s look at an example: You and your spouse file jointly in 2026. Your AGI is $400,000 and you make charitable donations of $10,000. Your allowable itemized charitable deduction for 2026 is limited to $8,000 [$10,000 − (0.5% × $400,000)]. New itemized deduction limitation Also under the OBBBA, beginning in 2026, itemized deductions — including charitable deductions — for individuals in the top federal income tax bracket of 37% will be reduced by the lesser of: 1) 2/37 times the amount of otherwise allowable itemized deductions, or 2) 2/37 times the amount of taxable income (before considering those deductions) in excess of the applicable threshold for the 37% tax bracket. That sounds complicated, but generally the limitation will mean that the tax benefit of itemized deductions for taxpayers in the 37% bracket will be as if they were in the 35% bracket. When a taxpayer has charitable deductions, the charitable deduction floor rule will be applied before the itemized deduction limitation. However, only high-income individuals will be affected by the itemized deduction limitation. Planning tips for 2025 and beyond If you’ll itemize this year and next, consider advancing some charitable donations that you normally would make in 2026 into this year to avoid the impact of the new 0.5%-of-AGI charitable deduction floor that will take effect next year. In future years, consider taking steps to reduce your AGI to minimize the impact of the charitable deduction floor. For instance, you can recognize capital losses from securities held in taxable brokerage accounts and make bigger deductible or pretax retirement plan contributions. Another option is to bunch your charitable giving into alternating years. For example, instead of donating $10,000 to charity every year, donate $20,000 every other year. Because the charitable deduction reduction is based on AGI, not the amount of the deduction, you can increase your tax benefit with this strategy (assuming your AGI is steady from year to year). In the previous example, if you make $10,000 in donations in 2026 and another $10,000 in 2027 and your AGI remains at $400,000 for both years, each year your deduction will be reduced by $2,000, for a total deduction over two years of $16,000. But if you bunch your donations into 2027, your 2027 $20,000 deduction will be reduced by that same $2,000. You won’t have an itemized charitable deduction for 2026, but your total deduction for the two-year period will be $18,000. It’s important to review your overall tax picture before implementing a bunching strategy. For example, if not being able to claim an itemized charitable deduction on your 2026 income tax return would push you into a higher income tax bracket, then bunching may not be beneficial. New charitable deduction for nonitemizers If you don’t have enough total itemized deductions — including charitable donations — to exceed your standard deduction, you’ll save more tax by claiming the standard deduction. In recent years, including 2025, nonitemizers haven’t been allowed to deduct any charitable contributions. But starting in 2026, the OBBBA reinstates the COVID-era deduction for cash donations by nonitemizers, subject to an increased annual limit of $1,000, or $2,000 for joint filers. (The limits were $300 and $600, respectively, for 2021 when this nonitemizer deduction was last available.) The definition of “cash contribution” may be broader than you think. It includes gifts made by debit or credit card, check, ACH, online payment platform, and payroll deduction. But be aware that this deduction doesn’t reduce your AGI. This year and next Limits to charitable deductions are nothing new. Limits beyond the ones discussed here have long applied. For example, only donations to qualified charities are eligible, proper substantiation is required, and other AGI-based limits apply in certain situations. Contact us to discuss what you can deduct on your 2025 return, last-minute 2025 planning opportunities and your 2026 donation strategy. © 2025 ### A new year means new tax figures for individuals URL: https://www.suttlecpas.com/insights/a-new-year-means-new-tax-figures-for-individuals Published: 2026-01-02 Many tax figures are annually adjusted for inflation and typically increase each year (or at least every few years). For 2026, some additional changes are going into effect under the One Big Beautiful Bill Act, signed into law July 4, 2025. Here’s an overview of some important limits and other tax figures for 2026. Keep in mind that exceptions or additional rules or limits may apply. Standard deduction Single and married filing separately: $16,100 Head of household: $24,150 Married couples filing jointly: $32,200 Additional standard deduction for those age 65 or older and/or blind: $2,050 ($1,650 per spouse if married). For taxpayers both 65 or older and blind, the additional deduction is doubled. Itemized deduction limits Casualty loss deduction: only for eligible losses from federally or (new for 2026) state-declared disasters Charitable deduction floor (new for 2026): 0.5% of adjusted gross income (AGI) Mortgage interest deduction: interest on qualified debt up to $750,000 Medical expense deduction floor: 7.5% of AGI State and local tax deduction: $40,400 Overall limit for higher-income taxpayers (new for 2026): Generally, the tax benefit from itemized deductions for taxpayers in the 37% bracket will be as if they were in the 35% bracket Retirement plan limits Traditional and Roth IRA contributions: $7,500 Traditional and Roth IRA catch-up contributions for those age 50 or older: $1,100 401(k), 403(b) and 457 plan deferrals: $24,500 401(k), 403(b) and 457 plan catch-up contributions for those age 50 or older: $8,000 401(k), 403(b) and 457 plan additional catch-up contributions for those age 60, 61, 62 or 63: $3,250 SIMPLE deferrals: $17,000 SIMPLE catch-up contributions for those age 50 or older: $4,000 SIMPLE additional catch-up contributions for those age 60, 61, 62 or 63: $1,250 Contributions to defined contribution plans: $72,000 Annual benefit limit for defined benefit plans: $290,000 Other tax-advantaged savings limits Health Savings Account (HSA) contributions: $4,400 for individuals, $8,750 for family coverage Health Flexible Spending Account (FSA) contributions: $3,400 Child and dependent care FSA contributions: $7,500 Trump account contributions: $5,000 Estate planning Gift and estate tax exemption: $15 million Generation-skipping transfer tax exemption: $15 million Annual gift tax exclusion: $19,000 (unchanged from 2025) 2026 tax planning These are only some of the figures and limits that could affect your 2026 taxes. To learn more and begin planning for the new year, contact us. © 2025 ### Nail Your Numbers: Essential Financial Analysis and Ratios for Your Construction Business URL: https://www.suttlecpas.com/insights/nail-your-numbers-essential-financial-analysis-and-ratios-for-your-construction-business Published: 2025-12-30 Preparing or analyzing financial statements can be a daunting task for owners or management with only an operational background or “on the job” accounting or financial experience. Financial statements or similar reports are useful tools for operating and managing a business, or planning for the business’s future. Knowing what goes where under generally accepted accounting principles, or what a user of your financial statements may be looking for can be difficult. Revenue Recognition: Revenue for construction contracts is typically recognized using the percentage completion method, using the total costs incurred to date as a percentage of the total estimated costs on a given project. Cost of Revenues: These are generally costs related to materials, subcontractors, and direct labor. To analyze, look for consistency and reasonableness in these expenses. Gross Profit Margin: Use gross profit margin to assess how efficiently the contractor manages direct costs relative to revenue. Overhead Expenses: These include general and administrative expenses, such salaries, office rent, utilities, or other overhead costs. Costs should be reasonable and in line with the scale of operations. Work in Progress (WIP): Understand how WIP is calculated and whether it’s valued properly. This is crucial for assessing the financial health of ongoing projects and may provide information for future revenue expectation of those projects. Cash Flow: Analyze the statement of cash flows to understand how cash is generated and used by the contractor. Pay attention to operating cash flows and capital expenditures. Ratios: Financial statement ratios fall into a few categories: but there are a handful that are important for contractors. What are some ratio types? Liquidity Measures a company’s ability to pay off short-term debt using short-term assets, or how effectively the company can meet its immediate financial obligations without raising additional capital or selling long term assets. Examples: Quick Ratio, Current Ratio, and Cash Ratio Leverage Measures a company’s financial risk and ability to meet obligations by comparing debt levels relative to other items, such as assets, equity, or earnings. Examples: Debt to Assets, Debt to Equity, Debt to EBITDA, Debt Service Coverage, and Interest Coverage Efficiency Measures how effectively a company uses its resources to generate revenue or profit. They show how quickly conversion to cash or sales occurs. Examples: AR Turnover, Inventory Turnover, Asset Turnover, and Working Capital Ratio Profitability Measures a company’s ability to generate profit, manage costs, and create value. These ratios are used to evaluate financial performance over time. Examples: Gross Profit Margin, EBITDA Margin, Net Profit Margin, Return on Assets (ROA), Return on Equity (ROE), Cashflow Margin It is critical to remember that none of these ratios can explain everything about your performance and are simply a tool to help monitor financial health. By focusing on these areas, you can gain a more thorough understanding of construction contractor's financial health, performance, and potential risks faced. If you're not familiar with financial statement analysis or what to look for on your financial statements, consulting with our team experienced in the construction industry could be beneficial. Suttle & Stalnaker, PLLC is ready to help. If you would like more information on how this applies to you, contact Chris Lambert, CPA, CGMA, CCIFP, at 304.343.4126. ### 2025 Year-End Reminders & Planning Tips URL: https://www.suttlecpas.com/insights/2025-year-end-reminders-and-planning-tips Published: 2025-12-17 As the end of the year quickly approaches, we want to remind you of things to consider before December 31 and to provide you with some important reminders as you prepare for the tax filing season. Protect Your Personal Information – Identity Theft continues to be an issue for the IRS and state tax authorities. The IRS and state do not initiate contact by email or phone unless they have previously contacted you by mail regarding a matter. No legitimate organization will ever ask for sensitive information through emails or other unsecured methods. Here are some steps you can follow to protect your information: Please forward all notices to us so we can review and respond expeditiously to the IRS or State Tax Do not open attachments in suspicious Read your credit card, banking, and health insurance statements carefully and often – watch for even the smallest charge that appears Shred any documents with personal and financial Beware of phishing scams requesting you update or verify your Obtain an Identity Protection PIN from the IRS at the following website: https://www.irs.gov/identity-theft-fraud-scams/get-an-identity-protection-pin Secure emails from our office – We use a secure portal system called Share File to send and receive sensitive information electronically. If you wish to send us information securely using Share File, please contact us to send you the link. Unexpected refund checks – If you receive an unexpected tax refund, DO NOT deposit or cash the check until you discuss it with us. If the overpayment should have been applied to your estimated taxes, the refund may cause you to be subject to underpayment penalties. The check can be returned to avoid incurring any penalties. Tax Law Updates – We continue to provide up-to-date information on our website and our News You Can Use e-blasts, including the 2025 Year-End Tax Planning Guide, other articles, and planning tips for individuals and businesses, financial tools, and any late-breaking tax news. Please visit our website www.SuttleCPAs.com (if you do not have access to our website and want us to send a copy of the 2025 Year-End Tax Planning report, please let us know). If you are not receiving our email e-blasts please subscribe to our newsletter on our website or contact us and we will make sure you are on the contact list. The information below is general in nature. You should consult with us before acting upon the information to be sure of the tax ramifications based on your specific situation. 2025 Tax Projections – If you have had any changes to your income, deductions, or withholding that could significantly alter your 2025 estimated taxes, please contact our office as soon as possible. It is important that you review your projected tax and projected tax withholding from all sources for the current year. “No Tax on Overtime” (Overtime Deduction) – Individuals earning overtime pay can deduct up to $12,500 ($25,000 for joint filers) of overtime pay. This applies only to the “premium” portion of the overtime rate (the extra half-time pay above the regular hourly rate). This deduction begins to phase out once your modified adjusted gross income exceeds $150,000 ($300,000 for joint filers). While this deduction reduces federal taxable income, overtime pay remains subject to Social Security and Medicare payroll taxes. Overtime pay will not be separately stated on your Form W-2 for 2025. Please submit your year-end pay stub with your Form W-2 if you received overtime pay during the year. “No Tax on Tips” (Tip Income Deduction) – Individuals in certain tipped occupations can deduct up to $25,000 of tip income in 2025. If you are married and only one spouse has tip income, you can still only deduct up to $25,000. If both spouses have tip income, then up to $50,000 of income can be deducted. This deduction begins to phase out by $100 for every $1,000 of Modified Adjusted Gross Income above $150,000 ($300,000 for joint filers). Importantly, while this deduction reduces federal taxable income, tips remain subject to Social Security and Medicare payroll taxes and must be reported as wages for payroll tax purposes. Interest Deduction for Passenger Vehicle Loans – Eligible taxpayers who itemize or do not, may deduct up to $10,000 of non-business interest expense on the purchase of a new, qualified personal use passenger vehicle. The deduction is not available for used vehicles, leases, or vehicles purchased for business or commercial purposes. The vehicle must have final assembly in the US and be under 14,000 pounds. Lenders may provide a breakdown of interest paid on this loan. If not, you may have to request it from the financial institution. This deduction also requires you to list the vehicle’s VIN on your return. The deduction begins to phase out when a taxpayer has a modified adjusted gross income over $100,000 ($200,000 for joint filers). The deduction is available even if the taxpayer does not itemize. Senior Deduction – Starting in 2025, taxpayers who are 65 or older at the end of the year qualify for a $6,000 deduction ($12,000 for joint filers). This deduction begins to phase out once modified adjusted gross income exceeds $75,000 ($150,000 for joint filers). The deduction is available even if the taxpayer does not itemize. Bonus depreciation phase-out ends – Qualified assets placed into service after January 19, 2025, are eligible for the 100% bonus depreciation deduction. Assets placed into service before January 19, 2025, are still subject to the 40% bonus depreciation deduction. The reinstated 100% bonus depreciation is now permanent and will not be reduced in future years. Required minimum distribution rules changed: The SECURE 2.0 Act, passed in 2022, raised the starting age for RMDs from 72 to 73 as of January 1, 2023. Just a reminder, if you are 70½, you can take advantage of the exclusion for direct charitable donations of IRA funds (up to $108,000). This exclusion counts toward your required minimum distribution if you are age 73. Roth IRA conversions – If you expect your 2025 income to be lower than usual or if you expect your income in 2026 to push you into a higher tax bracket, a Roth IRA conversion may be an advantageous way to convert traditional-IRA money invested in any beaten-down stocks (or mutual funds) into a Roth IRA in 2025 if eligible to do so. Keep in mind that the conversion will increase your 2025 income, which may reduce tax breaks subject to phase-out at higher adjusted gross income levels. This may be desirable, however, for those potentially subject to higher tax rates under pending legislation. Year-end investment moves – Tax considerations should not drive your investment decisions. However, it is worth considering the tax implications of any year-end investment decisions you make. If you have capital gains from sales of investments, you may want to consider selling securities in loss positions to reduce your tax. If you plan to make substantial donations by selling stock, consider donating appreciated stock or digital assets. You will receive a deduction for the stock’s fair market value and will not have a reportable capital gain. Deduction timing – When paying deductible items, you should pay them in the year (2025 vs. 2026) you expect to be in a higher tax bracket. Keep the following in mind: An expense is only deductible in the year it is paid for cash basis taxpayers. Expenses paid in 2025 by credit card are deductible when posted, even though you pay your credit card bill in 2026. Retirement Plans – There are several types of retirement plans available for self-employed individuals and small businesses. Some of the plans must be established by December 31. If you plan to set up a 2025 plan, please give us a call to discuss which plan would be best for your business. State and Local Taxes – If itemizing, the deduction for state and local taxes paid increased to $40,000 for single and joint filers. The $40,000 cap begins to phase out once income exceeds $500k for single and joint filers. This deduction is a combination of property taxes and both state and local income taxes or sales taxes paid during the tax year. Therefore, it is not tax-advantageous to prepay your fourth-quarter state estimate if you are already over the $40,000 limit. WV Motor Vehicle Property Tax Adjustment Credit – West Virginia has implemented a tax credit for motor vehicle taxes paid on time to be credited to your WV tax liability. You will receive a tax credit certificate in January 2026 from the WV Tax Division or online (tax.wv.gov). Please provide this form to us to claim this credit. Charitable Contributions – For the 2025 tax year, there are no changes to the rules surrounding charitable deductions. We continue to remind you to ensure you are receiving the required documentation for any gift of $250 or more (the letter should state that no goods or services were received). There has been some information provided that indicates the IRS may be conducting more audits related to charitable contributions, especially for non-cash contributions. Making sure you keep all your documentation remains important. Starting in 2026, non-itemizers can deduct up to $1,000 for single filers ($2,000 for joint filers) for cash donations during the year. Donor Advised Funds are excluded from this. Additionally, there will be a 0.5% Adjusted Gross Income Floor that will reduce the total charitable contribution deduction that you will receive. For taxpayers in the top 37% federal income tax bracket, the value of all itemized deductions, including charitable, will be capped at 35% of the total amount of deductions. You may consider making your 2026 donations in 2025, when there isn’t a limitation on them. We can help you assess that opportunity. Digital assets – If you have bought, sold, received, sent, transferred, or otherwise transacted with digital assets please let us know. There will be additional work required to capture and report this data within your tax return. Note that digital assets are treated as property by the IRS and therefore digital asset transactions may result in short-term or long-term capital gains. You may receive a new form this year detailing activity from digital assets, Form 1099-DA. Make year-end friends and family gifts before December 31 – A person can make gifts to any other person (related and non-related) totaling up to $19,000 for 2025 and 2026 without requiring a gift tax return or starting to use the lifetime exemption. The 2025 annual exclusion amount increases to $38,000 per donee if the donor and spouse make gifts to the donee, including gift splitting. The unused exclusion does not carry over to the next year. Direct payment to the provider for education and medical expenses does not count against the annual exclusion. The 2025 lifetime estate and gift tax exemption is $13.99 million ($27.98 if married). The 2026 lifetime estate and gift tax exemption will be $15 million per individual. Special rules allow a donor to contribute more than $19,000 in the current year to a §529 College Savings Plan and have the annual exclusion for up to four subsequent years apply without incurring any gift tax. The contribution to a 529 Plan may also entitle you to a state income tax deduction if you contribute to a plan sponsored by your state of residence. Keep in mind, 529 contribution maximums vary by state. Carryover tax basis – For gifted property, the donee has the same income tax basis and holding period as the donor. There are special rules if the fair market value of the asset at the time of the gift is lower than the adjusted basis. Generally, the tax basis of inherited property is the fair market value on the date of death. These rules may be changed with any new tax laws. Review All Planning Documents – Each year as you gather and organize your tax information, it is the perfect time to review all of your estate planning documents – wills, trusts, powers of attorney, medical directives, etc. – to account for births, deaths, divorces, and other changes that occurred. It is also important to review your beneficiary designations included in your life insurance policies, annuities, IRAs, and other retirement plans. Filing Forms 1099 – If you have paid over $600 in your trade or business to an individual or other entity (excluding corporations) you may have Form 1099 filing requirements. Form 1099s are due January 31 to the recipient and IRS. If you need our assistance with your filing requirements, please let us know. You will be asked on your tax return if all required Forms 1099 were filed. The IRS will impose a perform penalty if you do not file a Form 1099 when required. As you prepare your business for year-end, please review your vendors to determine if this rule applies to you. TAX SEASON REMINDERS Individual Tax Organizers – Your 2025 Tax Organizer, customized from your prior year return information, will be mailed to you in the coming weeks. Additional information regarding your tax data and documents will be included. Remember, you do not need to transcribe information already contained on the tax documents. Use the Organizer as a guide to be sure you have everything, or to note new items and those that did not recur this year. We will pick up the details from the tax documents. If you have some information in another form (Excel schedules, QuickBooks reports, etc.), you can provide those schedules in lieu of entering the details in the related section of the Organizer. Please provide the original copies of all tax documents. We use a scanning technology that does not work as well with copies. This includes Forms W-2’s, 1099’s, 1098’s, K-1’s, and complete year-end brokerage statements. We will return all original documents to you. The Organizer and your tax data must be returned to our office by March 9, 2026. All tax documents, with the exception of Schedule K-1s and certain brokerage statements, should be received by then. Please hold your information until complete, with those limited exceptions. Tax information received after the deadline may require an extension of time to file the returns. Safe Send – We are encouraging our clients to use a program called Safe Send Returns to electronically deliver and sign their tax returns. If you choose this method of delivery, you will not receive a bound, paper copy of your return (unless you request it). We will have additional information on this in your year-end tax Organizer packet. Tax Season Office Hours – Monday through Friday from 8:30 a.m. to 5:00 p.m. We are available by appointment outside of regular office hours. Satisfaction and Referrals – Our goal is to provide the highest level of professional service. If this is not happening, please let us know so we can correct any problems. Thank you for your referrals. If you know of others who will benefit from the service we provide, please let them know. We appreciate your confidence. To continue receiving this year-end newsletter, please be sure we have your current email address by subscribing to our newsletter on the home page of our website www.SuttleCPAs.com. ### Year-End Tax Planning: Leverage Bonus Depreciation to Minimize Tax Liability URL: https://www.suttlecpas.com/insights/year-end-tax-planning-leverage-bonus-depreciation-to-minimize-tax-liability Published: 2025-12-17 As the year draws to a close and your income projections become clearer, now is the ideal time to begin implementing year-end tax planning strategies to help minimize your potential tax liability. One of the most effective strategies available is bonus depreciation. Under the Tax Cuts and Jobs Act of 2017, businesses were allowed to take 100% bonus depreciation on qualifying assets purchased between 2017 and 2022. Beginning in 2023, this benefit was gradually reduced by 20% each year, eventually phasing out entirely by 2026. During this phase-down period, many businesses turned to Section 179 expensing as an alternative. However, Section 179 has limitations on the types of assets eligible and caps on the deduction amount. For 2025, the maximum Section 179 deduction is $2.5 million, and it begins to phase out once a business places more than $6.5 million of qualifying property in service. In contrast, bonus depreciation has no such limits or phase-outs, making it a powerful tool for larger capital investments. New Legislation Reinstates 100% Bonus Depreciation With the signing of the One Big Beautiful Bill Act (OBBA) on July 4, 2025, 100% bonus depreciation was reinstated for qualifying assets purchased after January 19, 2025. This change allows businesses to fully write off the cost of qualifying assets in the year of acquisition—providing a major opportunity for year-end planning. What Assets Qualify for Bonus Depreciation? Not all assets qualify for bonus depreciation. Eligible property includes: Machinery and Equipment Furniture and Fixtures Vehicles (subject to specific limitations) Tools Land Improvements Qualified Improvement Property (QIP) Be Aware of State Conformity Rules While 100% bonus depreciation is available at the federal level, it’s important to review how the states in which you file conform (or do not conform) to these rules. Some states disallow bonus depreciation entirely or require modifications. This can significantly impact your overall tax liability and should be factored into your planning. Let’s Plan Ahead Together Year-end tax planning can be complex, but you don’t have to navigate it alone. We’re here to help you evaluate your options and implement the strategies that best align with your financial goals. Suttle & Stalnaker, PLLC is ready to help. If you would like more information on how this applies to you, contact our office at 304.343.4126. ### ACA Reporting Requirements for Plan Year 2025: Key Points and Deadlines URL: https://www.suttlecpas.com/insights/aca-reporting-requirements-for-plan-year-2025-key-points-and-deadlines Published: 2025-12-16 The Affordable Care Act (ACA) mandates specific reporting requirements for applicable large employers (ALEs), generally those with 50 or more full-time equivalent (FTE) employees, as well as self-insured employers of any size. For plan year 2025, the reporting process for employer-provided health coverage is largely unchanged and deadlines remain crucial. The Paperwork Burden Reduction Act expands employer’s options for delivering ACA forms to employees. Below is a brief summary of the 2025 ACA reporting requirements and deadlines: Who is Required to File Under Section 6056 of the Internal Revenue Code, an Applicable Large Employer (ALE) must report information on Form 1095-C that discloses if an employer is subject to an assessment of a Shared Responsibility Payment. Generally, an ALE is an employer with fifty (50) or more full-time equivalent (FTE) employees during the previous calendar year. This may include employers that are part of an aggregated ALE group due to significant common ownership or control stemming from related employer entities. If you are unsure whether your organization is an ALE, contact us to discuss. The ACA requires Applicable Large Employers (ALEs) to report whether they offered minimum essential coverage (MEC) that was affordable and provided minimum value to full-time employees. Employers of any size with self-insured plans (including level-funded) also report months of coverage for all individuals. ACA reporting for fully insured ALEs is handled via IRS Forms 1094-C and 1095-C. Self-insured employers, regardless of size, must complete and submit Forms 1095-B and 1094-B for reporting minimum essential coverage (MEC). Plan Year 2025 ACA Reporting Deadlines The IRS has updated reporting deadlines as follows: Employee Form Distribution: Forms 1095-B and 1095-C must be distributed to employees by March 2, 2026. IRS Filing: Employers filing 10 or more returns (this number includes 1095 forms, W-2, and 1099 forms) must file electronically by March 31, 2026. New Options – Beginning with 2025 coverage (forms furnished in early 2026): ALEs may use the alternative furnishing method for Form 1095-C. This means: ALEs are no longer required to automatically mail Form 1095-C to every full-time employee. Instead, the employer may: Post a clear and prominent notice on its website stating that Form 1095-C is available upon request. (We can provide you with sample language) Provide instructions for how individuals may request their form (email, phone, or mailing address). Keep the notice posted through at least October 15, 2026. Furnish the Form 1095-C within 30 days of receiving any request. This option applies to all ALEs, regardless of whether their health plan is fully insured or self-insured. Penalties for Reporting Non-Compliance Employers that fail to file electronically when required, miss reporting deadlines, or submit inaccurate information may incur penalties. Meeting the ACA’s reporting requirements is critical for ALEs and self-insured employers. If Suttle & Stalnaker prepared your plan year 2024 1095-C forms, we will be sending you the 2025 engagement letter and data template in the coming week. Our HR Consulting team has the knowledge and expertise to help you, and your business navigate the Affordable Care Act (ACA) reporting complexities. Please contact our office if you need assistance with reporting or if you have other ACA related questions or concerns. ### Understanding the most common IRS notices URL: https://www.suttlecpas.com/insights/understanding-the-most-common-irs-notices Published: 2025-09-23 For many taxpayers, receiving a letter from the IRS can feel intimidating. The envelope arrives with the IRS seal, and immediately, worry sets in: Did I make a mistake? Am I in trouble? The truth is, IRS notices aren’t uncommon, and most of them can be resolved fairly easily once you understand what they mean. This article walks through the most common types of IRS notices, explains why taxpayers receive them, and provides guidance on how to respond. Why the IRS sends notices? The IRS communicates primarily by mail — not phone or email. Notices are typically sent for reasons such as: Clarifying information on a tax return, Notifying you of a balance due, Confirming changes made to your return, Requesting additional documentation, and Alerting you to a possible error. Each notice is numbered in the upper right-hand corner (for example, CP2000 or Notice CP12). That code is your key to understanding the purpose of the letter. In all cases, contact us if you have questions about how to proceed. 5 common notices and what they mean 1. CP2000, proposed changes to your tax return. This notice is issued when the IRS finds a mismatch between the information you reported and what third parties (like employers or banks) reported. For example, if your W-2 shows more wages than what you entered, the IRS will propose a correction. How to respond: Review the notice carefully. If the IRS is correct, you can agree and pay any additional tax owed. If you disagree, you have the right to dispute it by providing supporting documentation. 2. CP12, refund adjustment. If the IRS corrects a math error or other mistake on your return, you may receive this notice. Sometimes, it will result in a smaller or larger refund than you expected. How to respond: If you agree with the correction, no action is needed. If not, you can request a reversal by contacting the IRS within 60 days of the date of the notice. 3. CP14, balance due. This is the most common notice. It informs a taxpayer that he or she owes additional tax. It will list the amount due, including penalties and interest. How to respond: Don’t ignore it. Pay the balance in full, set up a payment plan or contact the IRS if you believe the notice is incorrect. 4. Letter 4883C, identity verification. When the IRS suspects identity theft, it sends this letter asking you to verify your identity before processing your return. How to respond: Follow the instructions immediately — usually by calling the IRS or verifying online. Delaying could stall your refund. 5. CP49, refund applied to a debt. A taxpayer will receive this notice if he or she was expecting a refund, but instead had it applied to past-due federal taxes or other debts (like child support or student loans). How to respond: The notice will explain how the refund was applied. If you disagree, you may need to contact the agency that received the payment, not the IRS. Steps to take In addition to the response steps listed above, here are six more tips: Don’t panic. Notices are often routine and resolvable. Read carefully. The notice will explain the issue, next steps and deadlines. Check the notice number. This will help you look up details online or discuss the matter with us. Verify accuracy. Compare the notice to your tax return and records. Respond promptly. Many notices have deadlines for disputing or appealing. Avoid scams. The IRS will never email, text or call demanding payment. Legitimate notices always come by mail. Ways we can help Interpreting an IRS notice may be tricky, especially if it involves complex calculations or disputed information. We can review the notice for accuracy and explain what it means in plain language. In addition, we can communicate with the IRS on your behalf, help you gather documentation, file corrections and guide you through payment plans or appeals if needed. With professional guidance, most IRS issues can be resolved without stress or confusion. Suttle & Stalnaker, PLLC is ready to help. If you would like more information on how this applies to you, contact our office at 304.343.4126. ### The power of catch-up retirement account contributions after 50 URL: https://www.suttlecpas.com/insights/the-power-of-catch-up-retirement-account-contributions-after-50 Published: 2025-09-21 Are you age 50 or older? You’ve earned the right to supercharge your retirement savings with extra “catch-up” contributions to your tax-favored retirement account(s). And these contributions are more valuable than you may think. What are the IRA contribution amounts? For 2025, eligible taxpayers can make contributions to a traditional or Roth IRA of up to the lesser of $7,000 or 100% of earned income. They can also make extra catch-up contributions of up to $1,000 annually to a traditional or Roth IRA. If you’ll be 50 or older as of December 31, 2025, you can make a catch-up contribution for the 2025 tax year by April 15, 2026. Extra deductible contributions to a traditional IRA create tax savings, but your deduction may be limited if you (or your spouse) are covered by a retirement plan at work and your income exceeds a certain amount. Extra contributions to Roth IRAs don’t generate any upfront tax savings, but you can take federal-income-tax-free qualified withdrawals after age 59½. There are also income limits on Roth contributions. Higher-income individuals can make extra nondeductible traditional IRA contributions and benefit from the tax-deferred earnings advantage. What are the employer plan contribution amounts? For 2025, you can contribute up to $23,500 to an employer 401(k), 403(b) or 457 retirement plan. If you’re 50 or older and your plan allows it, you can contribute up to an additional $7,500 in 2025. Check with your human resources department to see how to sign up for extra contributions. Contributions are subtracted from your taxable wages, so you effectively get a federal income tax deduction. You can use the tax savings to help pay for part of your extra catch-up contribution, or you can set the tax savings aside in a taxable retirement savings account to further increase your retirement wealth. Examples of how catch-up contributions grow How much can you accumulate? To see how powerful catch-up contributions can be, let’s run a few scenarios. Example 1: Let’s say you’re age 50 and you contribute an extra $1,000 catch-up contribution to your IRA this year and then do the same for the following 15 years. Here’s how much extra you could have in your IRA by age 65 (rounded to the nearest $1,000): 4% annual return: $22,000 8% annual return: $30,000 Keep in mind that making larger deductible contributions to a traditional IRA can also lower your tax bill. Making additional contributions to a Roth IRA won’t, but they’ll allow you to take more tax-free withdrawals later in life. Example 2: Assume you’ll turn age 50 next year. You contribute an extra $7,500 to your company plan in 2026. Then, you do the same for the next 15 years. Here’s how much more you could have in your 401(k), 403(b), or 457 plan account (rounded to the nearest $1,000): 4% annual return: $164,000 8% annual return: $227,000 Again, making larger contributions can also lower your tax bill. Example 3: Finally, let’s say you’ll turn age 50 next year and you’re eligible to contribute an extra $1,000 to your IRA for 2026, plus you make an extra $7,500 contribution to your company plan. Then, you do the same for the next 15 years. Here’s how much extra you could have in the two accounts combined (rounded to the nearest $1,000): 4% annual return: $186,000 8% annual return: $258,000 The amounts add up quickly As you can see, catch-up contributions are one of the simplest ways to boost your retirement wealth. If your spouse is eligible too, the impact can be even greater. Suttle & Stalnaker, PLLC is ready to help you. If you would like more information on how this applies to you, contact our office at 304.343.4126. ### Teachers and others can deduct eligible educator expenses this year — and more next year and beyond URL: https://www.suttlecpas.com/insights/teachers-and-others-can-deduct-eligible-educator-expenses-this-year-and-more-next-year-and-beyond Published: 2025-09-19 At back-to-school time, much of the focus is on the students returning to the classroom — and on their parents buying them school supplies, backpacks, clothes, etc., for the new school year; but teachers are also buying school supplies for their classrooms, and in many cases, they don’t receive reimbursement. Fortunately, they may be able to deduct some of these expenses on their tax returns. And, beginning next year, eligible educators will have an additional deduction opportunity under the One Big Beautiful Bill Act (OBBBA). What is the current above-the-line deduction? Eligible educators can deduct some of their unreimbursed out-of-pocket classroom costs under the educator expense deduction. This is an “above-the-line” deduction, which means you don’t have to itemize and it reduces your adjusted gross income (AGI), which has an added benefit: Because AGI-based limits affect a variety of tax breaks, lowering your AGI might help you maximize your tax breaks overall. To be eligible, taxpayers must be kindergarten through grade 12 teachers, instructors, counselors, principals or aides. Also, they must work at least 900 hours a school year in a school that provides elementary or secondary education as determined under state law. For 2025, up to $300 of qualified expenses paid during the year that weren’t reimbursed can be deducted. (The deduction limit is $600 if both taxpayers are eligible educators who file a joint tax return, but these taxpayers can’t deduct more than $300 each.) The limit is annually indexed for inflation, but typically doesn’t go up every year. Examples of qualified expenses include books, classroom supplies, computer equipment (including software), other materials used in the classroom, and professional development courses. For courses in health and physical education, the costs for supplies are qualified expenses only if related to athletics. A new miscellaneous itemized deduction The OBBBA makes permanent the Tax Cut and Jobs Act’s (TCJA’s) suspension of miscellaneous itemized deductions subject to the 2% of AGI floor. This had included unreimbursed employee business expenses such as teachers’ out-of-pocket classroom expenses. The suspension had been in place since 2018. But the OBBBA creates a new miscellaneous itemized deduction for educator expenses. This is in addition to the $300 above-the-line deduction. And this deduction isn’t subject to the 2% of AGI floor or a specific dollar limit. The new deduction is available for eligible expenses incurred after Dec. 31, 2025. Both who’s eligible and what expenses qualify are a little broader for the itemized deduction than for the above-the-line deduction. For example, interscholastic sports administrators and coaches are also eligible. And, for courses in health and physical education, the supplies don’t have to be related to athletics. Keep in mind that you’ll have to itemize deductions to claim this new deduction next year. Taxpayers can choose to itemize this and certain other deductions or to take the standard deduction based on their filing status. Itemizing deductions saves tax only when the total is greater than the standard deduction. The OBBBA has made permanent the nearly doubled standard deductions under the TCJA, so fewer taxpayers are benefiting from itemizing. Carefully track expenses If you’re a teacher or other educator, keep receipts when you pay for eligible expenses and note the date, amount and purpose of each purchase. Suttle & Stalnaker, PLLC is ready to help you. If you would like more information or have questions about educator deductions or other tax-saving strategies, contact our office at 304.343.4126. ### Lower your self-employment tax bill by switching to an S corporation URL: https://www.suttlecpas.com/insights/lower-your-self-employment-tax-bill-by-switching-to-an-s-corporation Published: 2025-09-05 If you own an unincorporated small business, you may be frustrated with high self-employment (SE) tax bills. One way to lower your SE tax liability is to convert your business to an S corporation. SE tax basics Sole proprietorship income, as well as partnership income that flows through to partners (except certain limited partners), is subject to SE tax. These rules also apply to single-member LLCs that are treated as sole proprietorships for federal tax purposes and multi-member LLCs that are treated as partnerships for federal tax purposes. In 2025, the maximum federal SE tax rate of 15.3% hits the first $176,100 of net SE income. That includes 12.4% for the Social Security tax and 2.9% for the Medicare tax. Together, we’ll refer to them as federal employment taxes. The rate drops after SE income hits $176,100 because the Social Security component goes away above the Social Security tax ceiling of $176,100 for 2025. But the Medicare tax continues to accrue at a 2.9% rate, and then increases to 3.8% at higher income levels because of the 0.9% additional Medicare tax. This 0.9% tax applies when wages and SE income exceed $200,000 for singles and heads of households, $250,000 for married couples filing jointly and $125,000 for married couples filing separately. Tax reduction strategy To lower your SE tax bill, consider converting your unincorporated small business into an S corp and then paying yourself (and any other shareholder-employees) a modest salary. Distribute most (or all) of the remaining corporate cash flow to the shareholder-employee(s) as federal-employment-tax-free distributions. S corp taxable income passed through to a shareholder-employee and S corp cash distributions paid to a shareholder-employee aren’t subject to federal employment taxes. Only wages paid to shareholder-employees are subject to them. This favorable tax treatment places S corps in a potentially more favorable position than businesses conducted as sole proprietorships, partnerships or LLCs. The caveats However, this strategy isn’t right for every business. Here are some considerations: 1. Operating as an S corp and paying yourself a modest salary saves SE tax, but the salary must be reasonable. Otherwise, you run the risk of the IRS auditing your business and imposing back employment taxes, interest and penalties. You can minimize that risk if you gather objective market evidence to demonstrate that outsiders could be hired to perform the same work for salaries equal to what you’re paying. 2. A potentially unfavorable side effect of paying modest salaries to an S corp shareholder-employee is that it can reduce your ability to make deductible contributions to tax-favored retirement accounts. If the S corp maintains a SEP or traditional profit-sharing plan, the maximum annual deductible contribution for each shareholder-employee is limited to 25% of his or her salary. So, the lower the salary, the lower the maximum contribution. However, if the S corp sets up a 401(k) plan, paying modest salaries won’t preclude generous contributions. 3. Operating as an S corp requires extra administrative hassle. For example, you must file a separate federal return (and possibly a state return). In addition, you must scrutinize transactions between S corps and shareholders for potential tax consequences, including any transfers of assets from an existing sole proprietorship or partnership to the new S corp. State-law corporation requirements, such as conducting board meetings and keeping minutes, must be respected. Mechanics of converting To convert an existing sole proprietorship or partnership to an S corp, a corporation must be formed under applicable state law, and business assets must be contributed to the new corporation. Then, an S election must be made for the new corporation by a separate form with the IRS by no later than March 15 of the calendar year, if you want the business to be treated as an S corp for that year. Suppose you currently operate your business as a domestic LLC. In that case, it generally isn’t necessary to go through the legal step of incorporation to convert the LLC into an entity that will be treated as an S corp for federal tax purposes. The reason is because the IRS allows a single-member LLC or multi-member LLC that otherwise meets the S corp qualification rules to simply elect S corporation status by filing a form with the IRS. However, if you want your LLC to be treated as an S corp for the calendar year, you also must complete this paperwork by no later than March 15 of the year. Weighing the upsides and downsides Converting an existing unincorporated business into an S corp to reduce federal employment taxes can be a wise tax move under the right circumstances. That said, consult with us so we can examine all implications before making the switch. Suttle & Stalnaker, PLLC is ready to help you. If you would like more information on how this applies to you, contact our office at (304) 343-4126. ### The next estimated tax payment deadline is coming up soon URL: https://www.suttlecpas.com/insights/the-next-estimated-tax-payment-deadline-is-coming-up-soon Published: 2025-08-30 If you make quarterly estimated tax payments, the amount you owe may be affected by the One Big Beautiful Bill Act (OBBBA). The law, which was enacted on July 4, 2025, introduces new deductions, credits and tax provisions that could shift your income tax liability this year. Tax basics Federal estimated tax payments are designed to ensure that certain individuals pay their fair share of taxes throughout the year. If you don’t have enough federal tax withheld from your paychecks and other payments, you may have to make estimated tax payments. This is the case if you receive interest, dividends, self-employment income, capital gains, a pension or other income that’s not covered by withholding. Individuals generally must pay 25% of a “required annual payment” by April 15, June 15, September 15, and January 15 of the following year, to avoid an underpayment penalty. If one of those dates falls on a weekend or holiday, the payment is due on the next business day. The third installment for 2025 is due on Monday, September 15. Payments are made using Form 1040-ES. Amount to be paid The required annual payment for most individuals is the lower of 90% of the tax shown on the current year’s return or 100% of the tax shown on the return for the previous year. However, if the adjusted gross income on your previous year’s return was more than $150,000 ($75,000 if you’re married filing separately), you must pay the lower of 90% of the tax shown on the current year’s return or 110% of the tax shown on the return for the previous year. Most people who receive the bulk of their income in the form of wages satisfy these payment requirements through the tax withheld from their paychecks by their employers. Those who make estimated tax payments generally do so in four installments. After determining the required annual payment, divide that number by four and make four equal payments by the due dates. But you may be able to use the annualized income method to make smaller payments. This method is useful to people whose income flow isn’t uniform over the year, perhaps because of a seasonal business. For example, if your income comes exclusively from a business operated in a resort area during June, July and August, no estimated payment is required before September 15. The underpayment penalty If you don’t make the required payments, you may be subject to an underpayment penalty. The penalty equals the product of the interest rate charged by the IRS on deficiencies times the amount of the underpayment for the period of the underpayment. However, the underpayment penalty doesn’t apply to you if: The total tax shown on your return is less than $1,000 after subtracting withholding tax paid; You had no tax liability for the preceding year, you were a U.S. citizen or resident for that entire year, and that period was 12 months; For the fourth (January 15) installment, you file your return by that January 31 and pay your tax in full; or You’re a farmer or fisherman and pay your entire estimated tax by January 15 or pay your entire tax and file your tax return by March 2, 2026. In addition, the IRS may waive the penalty if the failure was due to casualty, disaster or other unusual circumstances, and it would be inequitable to impose the penalty. The penalty can also be waived for reasonable cause during the first two years after you retire (and reach age 62) or become disabled. OBBBA highlights Several provisions of the OBBBA could directly affect quarterly estimated tax payments because they change how much tax some individuals will ultimately owe for the year. For example, the law introduces a temporary (2025 through 2028) additional $6,000 deduction for seniors, which can lower taxable income. It creates new deductions for overtime pay, tips and auto loan interest — available even if you don’t itemize — which can meaningfully reduce estimated liabilities. The bill also increases the state and local tax deduction cap for certain taxpayers and temporarily enhances the Child Tax Credit. Because these deductions and credits apply during the tax year rather than after, they can reduce your quarterly payment obligations mid-year, making it important to recalculate estimates to avoid overpayment or underpayment penalties. Seek guidance now Suttle & Stalnaker, PLLC is ready to help you. If you would like more information on how this applies to you contact us at (304) 343-4126. ### A tax guide to choosing the right business entity URL: https://www.suttlecpas.com/insights/a-tax-guide-to-choosing-the-right-business-entity Published: 2025-08-15 One of the most critical decisions entrepreneurs make when starting or restructuring a business is choosing the right entity type. This choice directly impacts how the business is taxed, the level of administrative complexity and regulatory compliance obligations. While legal liability considerations also matter, we will focus on tax implications. For liability advice, consult a legal professional. Whether launching a new venture or reassessing your current structure, understanding how each entity is taxed can help you make strategic and compliant decisions. Here’s a brief overview of five entities. 1. Sole proprietorship: Simple with full responsibility A sole proprietorship is the easiest structure to set up. It’s owned and operated by one person and requires minimal administrative effort. Here are the main features: Taxation. Income and losses are reported on the owner’s personal tax return on Schedule C of Form 1040. Income is subject to 15.3% federal self-employment tax, and the business itself isn’t taxed separately. The owner may also qualify for a Qualified Business Income (QBI) deduction, potentially reducing the effective tax rate. Compliance. Aside from obtaining necessary licenses or a business name registration, there’s little required paperwork. However, the owner is personally liable for all business debts and legal obligations. 2. S Corporation: Pass-through entity with payroll considerations An S corp is a tax designation offering pass-through taxation benefits while imposing stricter rules. Here are the highlights: Taxation. S corps don’t pay income tax at the entity level. Instead, profits or losses are passed through to shareholders via Schedule K-1 and reported on individual returns. A key tax benefit is that shareholders who are employees receive a salary (subject to payroll tax), while additional profit distributions aren’t subject to self-employment tax. However, the salary must be reasonable. The business is eligible for QBI deductions. Compliance. To qualify, S corps must have 100 or fewer shareholders, all U.S. citizens or residents, and only one class of stock. They must file Form 2553, issue annual Schedule K-1s and follow corporate formalities like shareholder meetings and recordkeeping. An informational return (Form 1120-S) is also required. 3. Partnership: Collaborative ownership with pass-through taxation A partnership involves two or more individuals jointly operating a business. Common types include general partnerships, limited partnerships, and limited liability partnerships (LLPs). Here’s what makes it unique: Taxation. Partnerships are pass-through entities. The business files Form 1065 (an informational return), and income or loss is distributed to partners on Schedule K-1. Partners report this on their personal returns. General partners must pay self-employment tax, while limited partners usually don’t. The business is eligible for QBI deductions. Compliance. Partnerships require a detailed partnership agreement, coordinated recordkeeping and clear profit-sharing arrangements. While more complex than a sole proprietorship, partnerships offer flexibility for growing businesses. 4. Limited liability company: Flexible and customizable An LLC merges elements of corporations and partnerships, offering owners — called members — both operational flexibility and liability protection. Taxation. By default, a single-member LLC is taxed like a sole proprietorship, and a multimember LLC like a partnership. However, LLCs may elect to be taxed as a C or S corp by filing Form 8832 or Form 2553. This gives owners control over their tax strategies. LLCs that don’t elect C corp status are eligible for QBI deductions. Compliance. LLCs require articles of organization and often must have an operating agreement. Though not as complex as corporations, they still generally face state-specific compliance requirements and annual filings. 5. C Corporation: Double taxation with scalability A C corp is a distinct legal entity offering the most liability protection and growth potential through stock issuance. Here are its features: Taxation. C corps face double taxation — the business pays taxes on earnings (currently at a 21% federal rate), and shareholders pay taxes again on dividends. However, C corps can offer deductible benefits (for example, health insurance, retirement plans) and retain earnings without immediately distributing profits. C corps aren’t eligible for QBI deductions. Compliance: These entities require the most administrative upkeep, including bylaws, annual meetings, board minutes, and extensive state and federal reporting. C corps are ideal for companies seeking venture capital or IPOs. After hiring employees Regardless of entity type, adding employees increases compliance requirements. Businesses must obtain an Employer Identification Number (EIN) and withhold federal and state payroll taxes. Employers also take on added responsibilities related to benefits, tax deposits, and employment law compliance. What’s right for you? There’s no universal answer to which entity is best. The right choice depends on your growth goals, ownership structure and financial needs. Tax optimization is a critical factor. For example, an LLC electing S corp status may help minimize self-employment taxes if set up properly. Contact us. We can coordinate with your attorney to ensure your structure supports both your tax strategies and business goals. Suttle & Stalnaker, PLLC, is ready to help you. If you would like more information on how this applies to you, contact our office at (304) 343-4126. ### Handle with care: Upgrading your company’s accounting software URL: https://www.suttlecpas.com/insights/handle-with-care-upgrading-your-company-s-accounting-software Published: 2025-07-14 What’s the most important type of software for your business? Your first thought may be whatever system you rely on most to produce or sell your company’s products or services. And that may well be true. However, more than likely, your accounting software comes in a close second. After all, this technological tool tracks every financial transaction related to your business. It needs to be secure, up to date, and appropriate for your company’s size and needs. To keep all those factors in line, you’ve got to handle accounting software upgrades with care. Let’s review some fundamental best practices. Plan upgrades strategically Among the most important aspects of managing an upgrade is knowing when to do it. You don’t want to unnecessarily disrupt operations and spend money, but you shouldn’t risk the downsides of outdated functionality by waiting too long. There’s no one-size-fits-all answer. Your financial statements are a potentially helpful source of information. A general rule of thumb says that, when annual revenues hit certain benchmarks — perhaps $1 million, $5 million, $10 million and so forth — a business may want to consider an upgrade seriously. However, the right tipping point depends on various factors. Look for an industry-specific solution Some companies rush into upgrades without considering all their options. Others resist change entirely, sticking with the same accounting software for years. Either way, you could miss out on something important: a product designed for your industry. For instance, construction companies can choose from many applications with built-in features tailored to how contract-based businesses work. Manufacturers also have industry-specific accounting software. If you’re ready to upgrade, check out whether there’s now a solution on the market that was developed for your industry’s accounting practices and standards. Mind all the details When upgrading, be sure to mind all the details. For instance, don’t overlook the importance of integration and mobile access. Older accounting software may still function only as a standalone application, meaning data from across the company has to be manually entered into the system. This creates all sorts of risks. Optimally, you should be able to integrate your accounting software with other critical applications to share data seamlessly and securely, reducing errors and redundancy. Also, if you haven’t already, add mobile access to your accounting system. Many solutions now include apps for smartphones or tablets. Set your budget carefully It’s easy to overspend on an accounting system upgrade. Those bells and whistles can be enticing. Then again, many frugal-minded business owners underspend — settling for a cheaper, less robust upgrade that may leave their employees dealing with headaches. The ideal approach generally lies somewhere in the middle. Perform a thorough review of your accounting needs, transaction volume and required reports. Also factor in the proficiency of everyone who’ll use the software and the availability of tech support. Then set a reasonable budget for an upgrade that checks all the right boxes. Ask for help It’s easy to grow accustomed to a certain kind of business accounting software. The trouble is, over time, that software can slow down your operations and deprive you of helpful functions and insights. If you’re unsure whether you’ve reached the point where an upgrade is imperative, we’re here to help. We can assess your current system and assist you in deciding whether now’s the time to act. If it is, we’ll partner with you and your leadership team to set a budget, choose the right solution and implement it properly. ### Is college financial aid taxable? A crash course for families URL: https://www.suttlecpas.com/insights/is-college-financial-aid-taxable-a-crash-course-for-families Published: 2025-07-11 College can be expensive. According to the College Board, the average sticker price for tuition and fees at private colleges was $43,350 for the 2024–2025 school year. The average cost for tuition and fees for out-of-state students at public colleges was $30,780. For in-state students, the cost was $11,610. Of course, there are additional costs for housing, food, books, supplies, transportation and incidentals that can add thousands to the total. Fortunately, a surprisingly high percentage of students at many schools receive at least some financial aid, and your child’s chances may be better than you think. So, if your child cashes in on some financial aid, what are the tax implications? Here’s what you need to know. The basics The economic characteristics of what’s described as financial aid determine how it’s treated for federal income tax purposes. Gift aid, which is money the student doesn’t have to work for, is often tax-free. Gift aid may be called a scholarship, fellowship, grant, tuition discount or tuition reduction. Most gift aid is tax-free Free-money scholarships, fellowships and grants are generally awarded based on either financial need or academic merit. Such gift aid is nontaxable as long as: The recipient is a degree candidate, including a graduate degree candidate. The funds are designated for tuition and related expenses (including books and supplies) or they’re unrestricted and aren’t specifically designated for some other purpose — like room and board. The recipient can show that tuition and related expenses equaled or exceeded the payments. To pass this test, the student must incur enough of those expenses within the time frame for which the aid is awarded. If gift aid exceeds tuition and related expenses, the excess is taxable income to the student. Tuition discounts are also tax-free Gift aid that comes directly from the university is often called a tuition discount, tuition reduction or university grant. These free-money awards fall under the same tax rules that apply to other free-money scholarships, fellowships and grants. Payments for work-study programs generally are taxable Arrangements that require the student to work in exchange for money are sometimes called scholarships or fellowships, but those are misnomers. Whatever payments for work are called, they’re considered compensation from employment and must be reported as income on the student’s federal tax return. As explained below, however, this doesn’t necessarily mean the student will actually owe any tax. Under such arrangements, the student is required to teach, do research, work in the cafeteria or perform other jobs. The college or financial aid payer should determine the taxable payments and report them to the student on Form W-2 (if the student is treated as an employee) or Form 1099-MISC (if the student is treated as an independent contractor). Taxable income doesn’t necessarily trigger taxes Receiving taxable financial aid doesn’t necessarily mean owing much or anything to the federal government. Here’s why: A student who isn’t a dependent can offset taxable income with the standard deduction, which is $15,000 for 2025 for an unmarried individual. If the student is a dependent, the standard deduction is the greater of 1) $1,350 or 2) earned income + $450, not to exceed $15,000. The student may have earned income from work at school or work during summer vacation and school breaks. Taxable financial aid in excess of what can be offset by the student’s standard deduction will probably be taxed at a federal rate of only 10% or 12%. Finally, if you don’t claim your child as a dependent on your federal income tax return, he or she can probably reduce or eliminate any federal income tax bill by claiming the American Opportunity Tax Credit (worth up to $2,500 per year for the first four years of undergraduate study) or the Lifetime Learning Credit (worth up to $2,000 per year for years when the American Opportunity credit is unavailable). Avoid surprises at tax time As you can see, most financial aid is tax-free, though it’s possible it could be taxable. Suttle & Stalnaker, PLLC is ready to help you. If you would like more information on how this applies to you, contact our office at 304.343.4126. ### Tax Provisions in the One Big Beautiful Bill Act URL: https://www.suttlecpas.com/insights/tax-provisions-in-the-one-big-beautiful-bill-act Published: 2025-07-10 On July 4, 2025, President Donald Trump signed into law the “One Big Beautiful Bill Act”, a sweeping package that extends and reshapes many provisions of the 2017 Tax Cuts and Jobs Act (TCJA). The bill’s passing brings changes ahead for individuals and businesses. Below is a list comparing key tax provisions under current law with those contained in the One Big Beautiful Bill Act. The list was created to assist our clients in understanding the bill’s implications for their planning and operations. Individual Tax Provisions Tax Rates and Brackets Current Law: Currently, the highest tax rate of 37% was set to increase to 39.6% after 2025. New Law: Makes current rates permanent with inflation indexing for income thresholds (highest rate will stay at 37%) Timeframe: Permanent State and Local Taxes (SALT) Deduction Cap Current Law: $10k cap New Law: Cap raised to $40k with 1% increases through 2029; Cap amount phases down once modified adjusted gross income exceeds $500k for all filers; phase down does not fall below $10k Timeframe: Temporary (2025-2029) Tips Income Deduction Current Law: Taxable New Law: Deductible up to $25k of reported tip income; deduction available even if the taxpayer does not itemize, phases out once MAGI exceeds $150k for single and $300k MFJ; excludes highly compensated Timeframe: Temporary (2025-2028) Overtime Income Deduction Current Law: Taxable New Law: Deductible up to $12,500 for single and $25,000 for joint filer; deduction available even if the taxpayer does not itemize; phases out once MAGI exceeds $150k for single and $300k MFJ Timeframe: Temporary (2025-2028) Standard Deduction Current Law: $15k (single); $30k (MFJ) New Law: Increased to $15,750 (single) , $23,625 (HOH) $31,500 (MFJ) with inflation adjustments Timeframe: Permanent, beginning 2025 Senior Deduction Current Law: Additional standard deduction for 65+ New Law: Adds $6k deduction for individuals aged 65+; phases out once MAGI exceeds $75k for single and $150k for MFJ; deduction available even if the taxpayer does not itemize Timeframe: Temporary (2025-2028) Itemized Deduction Limit Current Law: No limitation New Law: Limits itemized deductions to 2/37 of the lesser of: (i) itemized deduction amount; or (ii) amount of taxable income exceeding §1(j) threshold for 37% tax bracket. Revised limitation does not apply to §199A qualified business income deduction. Timeframe: Permanent, beginning 2026 Child Tax Credit Current Law: $2k per child New Law: Increased to $2,200 per child; indexed for inflation Timeframe: Permanent, beginning 2025 Estate & Gift Tax Exemption Current Law: $13.99M per person New Law: Raised to $15M with annual inflation adjustments Timeframe: Permanent, beginning 2026 Trump Accounts Current Law: N/A New Law: $1k account contribution from federal government for babies born in 2025 through 2028 Auto Loan Interest Deduction Current Law: N/A New Law: $10k deduction for new car loan interest on vehicles assembled in the U.S.; phases out once MAGI exceeds $100k for single and $200k MFJ; deduction available even if the taxpayer does not itemize Timeframe: Temporary (2025-2028) Charitable Deduction for Non-Itemizers Current Law: Not available after 2021 New Law: Non-itemizers can still deduct qualified charitable contributions of $1k for single and $2k for MFJ Timeframe: Permanent, beginning in 2026 Charitable Deduction for Individuals who Itemize Current Law: Taxpayers who itemize can deduct a portion of their charitable contributions, subject to a specified limitation based on the type of contribution New Law: Limits the charitable deduction for taxpayers who itemize by providing a deduction only for charitable contributions to the extent that they exceed 0.5% of the taxpayer’s contribution base Timeframe: Permanent, beginning in 2026 Gambling Losses Current Law: Itemized Deduction up to 100% of winnings New Law: Itemized Deduction limited to 90% of winnings Timeframe: Permanent, beginning 2026 Business Tax Provisions Pass Through Deduction (199A) Current Law: 20% deduction for pass-through income; deduction subject to phaseout for specified service trades or businesses (SSTBs); deduction limitations based on taxable income, wages paid, and the presence of SSTBs. New Law: Deduction remains at 20%; phase out amounts are increased (expands the deduction limit phase-in range by increasing the $100k (MFJ) and $50k (single filers) amounts to $150k and $75k respectively), and a new minimum $400 deduction is added for taxpayers with at least $1k of QBI Timeframe: Permanent, beginning 2026 Bonus Depreciation Current Law: 40% in 2025 New Law: Allowance increased to 100% of property acquired and placed in service on or after January 19, 2025 Timeframe: Permanent, beginning January 19, 2025 Qualified Production Property “Manufacturing Property” Current Law: Generally depreciated over 39 years New Law: Bonus depreciation allowed on manufacturing property where construction begins after January 19, 2025, and before January 1, 2029, and must be placed in service after July 4, 2025, and prior to 2031. Section 179 Expensing Current Law: Allows businesses to expense up to $1,160,000 of qualifying property, with a phase-out threshold beginning at $2,890,000 both indexed for inflation New Law: Increases the maximum amount a taxpayer may expense under Sec. 179 to $2,500,000 and increases the phaseout threshold amount to $4,000,000 Timeframe: Beginning 2025 R&D Deduction Current Law: 5 year amortization New Law: Allows full expenses for domestic R&D from January 1, 2025. In addition, the bill provides small businesses with the option to apply this change retroactively back to 2022 through the amended returns. It would also allow taxpayers to accelerate any remaining Sec. 174 deductions Timeframe: Permanent, beginning 2025 SALT Cap Workarounds for Pass-Throughs Current Law: Individual SALT deduction capped at $10k, which caused 36 states and 1 locality to implement an entity-level PTET SALT deduction New Law: No changes Excess Business Loss Limitation Carry Current Law: Limits pass-through business losses through 2028. Disallowed losses become NOLs and can be used in subsequent years, subject only to NOL rules. New Law: No change. Expanded to estates and trusts Timeframe: Permanent Section 1202 Current Law: Provides for the partial exclusion of gain on the sale of qualified small business stock (QSBS) held for more than five years. For stock acquired after September 27, 2010, the exclusion is 100%; for stock acquired in earlier periods, the exclusion is 50% or 75%, depending on the acquisition date New Law: Modifies the QSBS exclusion to provide a tiered exclusion determined on the years the taxpayer holds the QSBS: 50% exclusion if held for three years; 75% exclusion if held for four years; and 100% exclusion if held for five or more years. The bill also increases eligibility limit on the corporation’s aggregate gross assets at the time of issuance from a $50 million limit to a $75 million limit. Employee Retention Credit (ERC) Current Law: Employers had until April 15, 2024 to file ERC claims for the 2020-year, and until April 15, 2025, to file the ERC claims for the 2021 year. The IRS has a 3 – year statute of limitations for 2020 and early 2021 claims, and a 5-year statute of limitations for the Q3, Q4, 2021 claims. New Law: No claims for third and fourth quarter 2021 submitted after January 31, 2024, will be processed. The statute of limitation period for ERC claims for third and fourth quarters 2021 is extended to 6 years, beginning with the date the claim was originally filed. Form 1099 Reporting Current Law: The general Form 1099 reporting threshold remains at $600 and applies to payments made in the course of a trade or business. New Law: Increases the information reporting threshold for certain payments to persons engaged in a trade or business and payments of remuneration for services to $2,000 in a calendar year (from $600) with the threshold amount to be indexed annually for inflation in calendar years after 2026 Timeframe: Beginning in 2026 Economic Outlook and Legislative Path The bill is projected to reduce federal tax revenue by $5 trillion over 10 years on a conventional basis. Supporters cite potential boosts in GDP, job creation, and capital investment. Opponents warn of rising deficits and reduced health care and social program funding. What This Means for You The “One Big Beautiful Bill” has broad implications across income levels and sectors. Whether you’re an individual planning for retirement or a business investing in growth, proactive planning will be key as the legislation takes shape. These are just a few of the many potential changes we expect over the coming months. We’re closely monitoring developments and will continue to provide updates with clarity, context, and a focus on what matters most to you. Suttle & Stalnaker, PLLC is ready to help you. If you have questions about how this legislation could impact your strategy or next steps, we encourage you to connect with your advisor. ### Milestone moments: How age affects certain tax provisions URL: https://www.suttlecpas.com/insights/milestone-moments-how-age-affects-certain-tax-provisions Published: 2025-07-09 They say age is just a number — but in the world of tax law, it’s much more than that. As you move through your life, the IRS treats you differently because key tax rules kick in at specific ages. Here are some important age-related tax milestones for you and loved ones to keep in mind as the years fly by. Ages 0–23: The kiddie tax The kiddie tax can potentially apply to your child, grandchild or other loved one until age 24. Specifically, a child or young adult’s unearned income (typically from investments) in excess of the annual threshold is taxed at the parent’s higher marginal federal income tax rates instead of the more favorable rates that would otherwise apply to the young person in question. For 2025, the unearned income threshold is $2,700. Age 30: Coverdell accounts If you set up a tax-favored Coverdell Education Savings Account (CESA) for a child or grandchild, the account must be liquidated within 30 days after the individual turns 30 years old. To the extent earnings included in a distribution aren’t used for qualified education expenses, the earnings are subject to tax plus a 10% penalty tax. To avoid that, you can roll over the CESA balance into another CESA set up for a younger loved one. Age 50: Catch-up contributions If you’re age 50 or older at end of 2025, you can make an additional catch-up contribution of up to $7,500 to your 401(k) plan, 403(b) plan or 457 plan for a total contribution of up to $31,000 ($23,500 regular contribution plus $7,500 catch-up contribution). This assumes that your plan allows catch-up contributions. If you’re 50 or older at the end of 2025, you can make an additional catch-up contribution of up to $3,500 to your SIMPLE IRA for a total contribution of up to $20,000 ($16,500 regular contribution plus $3,500 catch-up contribution). If your company has 25 or fewer employees, the 2025 maximum catch-up contribution is $3,850. If you’re 50 or older at the end of 2025, you can make an additional catch-up contribution of up to $1,000 to your traditional IRA or Roth IRA, for a total contribution of up to $8,000 ($7,000 regular contribution plus $1,000 catch-up contribution). Age 55: Early withdrawal penalty from employer plan If you permanently leave your job for any reason after reaching age 55, you may be able to receive distributions from your former employer’s tax-favored 401(k) plan or 403(b) plan without being socked with the 10% early distribution penalty tax that generally applies to the taxable portion of distributions received before age 59½. This rule doesn’t apply to IRAs. Age 59½: Early withdrawal penalty from retirement plans After age 59½, you can receive distributions from all types of tax-favored retirement plans and accounts (IRAs, 401(k) accounts and pensions) without being hit with the 10% early distribution penalty tax. The penalty generally applies to the taxable portion of distributions received before age 59½. Ages 60–63: Larger catch-up contributions to some employer plans If you’re age 60–63 at the end of 2025, you can make a larger catch-up contribution of up to $11,250 to your 401(k) plan, 403(b) plan, or 457 plan. This assumes your plan allows catch-up contributions. If you’re age 60–63 at the end of 2025, you can make a larger catch-up contribution of up to $5,250 to your SIMPLE IRA. Age 73: Required minimum withdrawals After reaching age 73, you generally must begin taking annual required minimum distributions (RMDs) from tax-favored retirement accounts (traditional IRAs, SEP accounts and 401(k)s) and pay the resulting extra income tax. If you fail to withdraw at least the RMD amount for the year, you can be assessed a penalty tax of up to 25% of the shortfall. However, if you’re still working after reaching age 73 and you don’t own over 5% of your employer’s business, you can postpone taking RMDs from the employer’s plan(s) until after you retire. Watch the calendar Keep these important tax milestones in mind for yourself and your loved ones. Knowing these rules can mean the difference between a smart tax strategy and a costly oversight. Suttle & Stalnaker, PLLC is ready to help you. If you would like more information on how this applies to you, please contact our office at 304.343.4126. ### DOs and DON’Ts to help protect your business expense deductions URL: https://www.suttlecpas.com/insights/dos-and-don-ts-to-help-protect-your-business-expense-deductions Published: 2025-07-07 If you’re claiming deductions for business meals or vehicle expenses, expect the IRS to closely review them. In some cases, taxpayers have incomplete documentation or try to create records months (or years) later. In doing so, they fail to meet the strict substantiation requirements set forth under tax law. Tax auditors are adept at rooting out inconsistencies, omissions and errors in taxpayers’ records, as illustrated by one recent U.S. Tax Court case. (T.C. Memo. 2024-82) Facts of the case The taxpayer operated a software installation, training and consulting business. She claimed substantial deductions for several tax years. The IRS disallowed many of the deductions and the U.S. Tax Court agreed. Here’s a rundown of some of the disallowed expenses and the reasons why they couldn’t be deducted: Meals and entertainment. The business owner deducted nearly $9,000 for meal expenses in one tax year and testified the amount was for “working lunches” with the “person she worked for and the developer.” As documentation, she submitted bank statements. The court noted that “bank statements alone do not substantiate the ‘business purpose of the expense’ or the ‘business relationship’ between petitioner and the individuals with whom she dined.” It added: “The cost of eating lunch during the workday is not — without more — a deductible business expense.” Supplies. The taxpayer deducted more than $17,000 for supplies purchased during two tax years. She testified that these included “desks, monitors, office equipment, paper, printers, [and] anything that was pertinent to the business itself.” To substantiate her reported expenses, the taxpayer submitted receipts from office supply stores. However, the receipts were dated later than the tax years in question, and they covered (among other things) purchases of soda dispensers and gift cards. The court noted that “some of these purchases appear personal” and all were made after she terminated her consulting business. Home office expenses. Over two years, the taxpayer deducted $21,393 for the business use of a home office. But the court ruled that she “failed to prove that the ‘focal point’ of her software consulting business was her home.” At trial, she testified that she was required to be on site at a client’s office much of the time. In addition, she didn’t supply evidence to establish how much time she worked from home or what (if any) portion of her residence was used exclusively for business purposes. Other expenses the court disallowed included attorney’s fees, utilities, hotel stays and vehicle expenses. In all cases, the taxpayer didn’t substantiate with adequate records or sufficient evidence that the expenses were related to her business. Best practices This case exemplifies why it’s critical to maintain meticulous records to support business expense deductions. Here’s a list of DOs and DON’Ts to help meet the strict IRS and tax law substantiation requirements for these items: DO keep detailed, accurate records. For example, for each business meal, record the amount, date, place, business purpose, and the business relationship of any person you dine with. If you have employees whom you reimburse for meals, travel and vehicle expenses, make sure they’re complying with all the rules. DON’T reconstruct expense logs at year end or wait until you receive a notice from the IRS. Take a moment to record the details in a log or diary or on a receipt at the time of an event or soon after. Require employees to submit weekly or monthly expense reports. DO respect the fine line between personal and business expenses. Be careful about combining business and pleasure. Your business checking account and credit cards shouldn’t be used for personal expenses. DON’T be surprised if the IRS asks you to prove your deductions. Vehicle, travel, meal and home office expenses are attention magnets. Be prepared for a challenge. Stand up to scrutiny With organization and our guidance, your tax records can stand up to IRS inspection. There may be other ways to substantiate your deductions. In addition, there may be a way to estimate certain deductions (called “the Cohan rule”), if your records are lost due to a fire, theft, flood or other disaster. Suttle & Stalnaker, PLLC is ready to help you. If you would like more information on how this applies to you, contact our office at 304.343.4126. ### Startup costs and taxes: What you need to know before filing URL: https://www.suttlecpas.com/insights/startup-costs-and-taxes-what-you-need-to-know-before-filing Published: 2025-07-03 The U.S. Census Bureau reports there were nearly 447,000 new business applications in May of 2025. The bureau measures this by tracking the number of businesses applying for an Employer Identification Number. If you’re one of the entrepreneurs, you may not know that many of the expenses incurred by start-ups can’t currently be deducted on your tax return. You should be aware that the way you handle some of your initial expenses can make a large difference in your federal tax bill. How to treat expenses for tax purposes If you’re starting or planning to launch a new business, here are three rules to keep in mind: Start-up costs include those incurred or paid while creating an active trade or business or investigating the creation or acquisition of one. Under the tax code, taxpayers can elect to deduct up to $5,000 of business start-up costs and $5,000 of organizational costs in the year the business begins. As you know, $5,000 doesn’t go very far these days! And the $5,000 deduction is reduced dollar-for-dollar by the amount your total start-up or organizational costs exceed $50,000. Any remaining costs must be amortized over 180 months on a straight-line basis. No deductions, including amortization deductions, are allowed until the year when “active conduct” of your new business begins. Generally, this means the year when the business has all the necessary components in place to start generating revenue. To determine if a taxpayer meets this test, the IRS and courts generally ask questions such as: Did the taxpayer undertake the activity with the intention of earning a profit? Was the taxpayer regularly and actively involved? And did the activity actually begin? Expenses that qualify In general, start-up expenses are those you incur to: Investigate the creation or acquisition of a business, Create a business, or Engage in a for-profit activity in anticipation of that activity becoming an active business. To qualify for the limited deduction, an expense must also be one that would be deductible if incurred after the business began. One example is money you spend analyzing potential markets for a new product or service. To be eligible as an “organization expense,” an expense must be related to establishing a corporation or partnership. Some examples of these expenses are legal and accounting fees for services related to organizing a new business, and filing fees paid to the state of incorporation. Plan now If you have start-up expenses you’d like to deduct this year, you need to decide whether to take the election described above. Record keeping is critical. Contact us about your start-up plans. We can help with the tax and other aspects of your new business. Suttle & Stalnaker, PLLC is ready to help you. If you would like more information on how this applies to you, please contact our office at 304.343.4126. ### 5 tax breaks on the table: What business owners should know about the latest proposals URL: https://www.suttlecpas.com/insights/5-tax-breaks-on-the-table-what-business-owners-should-know-about-the-latest-proposals Published: 2025-06-25 A bill in Congress — dubbed The One, Big, Beautiful Bill — could significantly reshape several federal business tax breaks. While the proposed legislation is still under debate, it’s already sparking attention across business communities. Here’s a look at the current rules and proposed changes for five key tax provisions and what they could mean for your business. 1. Bonus depreciation Current rules: Businesses can deduct 40% of the cost of eligible new and used equipment in the year it’s placed in service. (In 2026, this will drop to 20%, eventually phasing out entirely by 2027.) Proposed change: The bill would restore 100% bonus depreciation retroactively for property acquired after January 19, 2025, and extend it through 2029. This would be a major win for businesses looking to invest in equipment, machinery and certain software. Why it matters: A full deduction in the year of purchase would allow for faster depreciation, freeing up cash flow. This could be especially beneficial for capital-intensive industries. 2. Section 179 expensing Current rules: Businesses can “expense” up to $1.25 million of qualified asset purchases in 2025, with a phaseout beginning at $3.13 million. Under Section 179, businesses can deduct the cost of qualifying equipment or software in the year it’s placed in service, rather than depreciating it over several years. Proposed change: The bill would increase the expensing limit to $2.5 million and the phaseout threshold to $4 million for property placed into service after 2024. The amounts would be adjusted annually for inflation. Why it matters: This provision could help smaller businesses deduct more of the cost (or the entire cost) of qualifying purchases without dealing with depreciation schedules. Larger thresholds would mean more flexibility for expanding operations. 3. Qualified business income (QBI) deduction Current rules: Created by the Tax Cuts and Jobs Act (TCJA), the QBI deduction is currently available through 2025 to owners of pass-through entities. These include S corporations, partnerships, limited liability companies, sole proprietors and most self-employed individuals. QBI is defined as the net amount of qualified items of income, gain, deduction and loss that are effectively connected with the conduct of a U.S. business. The deduction generally equals 20% of QBI, not to exceed 20% of taxable income minus net capital gain. But it’s subject to additional limits that can reduce or eliminate the tax benefit. Proposed change: Under the bill, the QBI tax break would be made permanent. Additionally, the deduction amount would increase to 23% for tax years beginning after 2025. Why it matters: The increased deduction rate and permanent extension would lead to substantial tax savings for eligible pass-through entities. If the deduction is made permanent and adjusted for inflation, businesses could engage in more effective long-term tax planning. 4. Research and experimental (R&E) expensing Current rules: Under the TCJA, businesses must capitalize and amortize domestic R&E costs over five years (15 years for foreign research). Proposed change: The bill would reinstate a deduction available to businesses that conduct R&E. Specifically, the deduction would apply to R&E costs incurred after 2024 and before 2030. Providing added flexibility, the bill would allow taxpayers to elect whether to deduct or amortize the expenditures. (The requirement under current law to amortize such expenses would be suspended while the deduction is available.) Why it matters: Many businesses — especially startups and tech firms — depend heavily on research investments. Restoring current expensing could ease tax burdens and encourage innovation. 5. Increase in information reporting amounts Current rules: The annual reporting threshold for payments made by a business for services performed by an independent contractor is generally $600. That means businesses must send a Form 1099-NEC to contractors they pay more than $600 by January 31 of the following year. Proposed change: The bill would generally increase the threshold to $2,000 in payments during the year and adjust it for inflation. This provision would apply to payments made after December 31, 2024. (The bill would also make changes to the rules for Form 1099-K issued by third-party settlement organizations.) Why it matters: This proposal would reduce the administrative burdens on businesses. Fewer 1099-NECs would need to be prepared and filed, especially for small engagements. If the provision is enacted, contractors would receive fewer 1099-NECs. Income below $2,000 annually would still have to be reported to the IRS, so contractors may have to be more diligent in tracking income. More to consider These are just five of the significant changes being proposed. The One, Big, Beautiful Bill also proposes changes to the business interest expense deduction and some employee benefits. It would eliminate federal income tax on eligible tips and overtime — and make many more changes. If enacted, the bill could deliver immediate and long-term tax relief to certain business owners. It narrowly passed in the U.S. House of Representatives and is currently being considered in the Senate. Changes are likely to be made there, at which point the new version would have to be passed again by the House before being sent to President Trump to be signed into law. The current uncertainty means business owners shouldn’t act prematurely. While these changes may sound beneficial, their complexity — and the possibility of retroactive provisions — make professional guidance essential. Suttle & Stalnaker, PLLC is ready to help you. If you would like more information on how this applies to you contact our office at 304.343.4126. ### How working in the gig economy affects your taxes URL: https://www.suttlecpas.com/insights/how-working-in-the-gig-economy-affects-your-taxes Published: 2025-06-23 The gig economy offers flexibility, autonomy and a way to earn income, but it also comes with tax obligations that can catch many workers off guard. Whether you’re driving for a rideshare service, delivering food, selling products online or offering local services like pet walking, it’s crucial to understand the tax implications of gig work to stay compliant and avoid costly surprises. Understanding your tax status One of the biggest differences between traditional employment and gig work is your classification. Most gig workers are considered independent contractors, not employees. This means that companies you work with typically don’t withhold income taxes, Social Security, or Medicare taxes from your pay. Instead, you’re responsible for tracking and paying these taxes yourself. As an independent contractor, your earnings are considered self-employment income. This status has specific tax consequences and responsibilities, including the need to file Schedule C (Profit or Loss from Business) with your tax return and pay self-employment tax using Schedule SE. Self-employment tax explained Self-employment tax covers Social Security and Medicare taxes for those who work for themselves. In 2025, the self-employment tax rate is 15.3% — 12.4% for Social Security and 2.9% for Medicare. If your net earnings exceed $400 for the year, you’re required to pay this tax, regardless of your age or whether you receive Social Security benefits. It’s important to note that while this may seem steep, self-employed individuals can deduct half (the employer-equivalent portion) of the self-employment tax from their taxable income, which helps offset the burden. Quarterly estimated tax payments Because taxes aren’t automatically withheld from your gig income, you may need to make estimated tax payments to the IRS. These payments are due April 15, June 15, September 15 and January 15 of the following year. (If a due date falls on a Saturday, Sunday or holiday, the due date becomes the next business day.) Failing to pay enough throughout the year could result in penalties and interest, even if you end up getting a refund at tax time. To avoid this, we can help you calculate your estimated tax payments based on your expected income, deductions and credits. Recordkeeping and deductions Maintaining accurate records is essential for gig workers. Keep track of all your income, whether you receive Form 1099-NEC from your customers or not. Many platforms only issue 1099s if you earn $600 or more from them, but all income must be reported, regardless of whether you get a form. On the plus side, gig workers can deduct many business-related expenses to reduce their taxable income. Common deductions include eligible: Vehicle mileage and maintenance expenses, Home office expenses, Advertising and marketing expenses, and Professional services expenses, such as for tax or legal advice. Make sure you keep receipts and records to substantiate these deductions in case of an IRS audit. State and local taxes Don’t forget about state and local taxes. Depending on where you live, you may owe income taxes to your state or city. Some states also have specific requirements for self-employed individuals, such as business licenses or local tax filings. Tips for staying compliant To stay on top of your tax responsibilities, here are four tips to consider: Set aside 25%–30% of your income for taxes. Use accounting software or spreadsheets to track income and expenses. File taxes on time, and don’t ignore IRS correspondence. Consult with us to help you navigate complex deductions and ensure accuracy. Plan ahead for the best results While the gig economy offers many benefits, it also comes with tax responsibilities that workers need to manage proactively. By understanding your obligations, tracking your earnings and expenses and making timely payments, you can avoid penalties and keep more of what you earn. Planning ahead will help ensure your gig work is both profitable and compliant. Suttle & Stalnaker, PLLC is ready to help you. If you would like more information on how this applies to you, contact our office at 304.343.4126. ### Digital assets and taxes: What you need to know URL: https://www.suttlecpas.com/insights/digital-assets-and-taxes-what-you-need-to-know Published: 2025-06-18 As the use of digital assets like cryptocurrencies continues to grow, so does the IRS’s scrutiny of how taxpayers report these transactions on their federal income tax returns. The IRS has flagged this area as a key focus. To help you stay compliant and avoid tax-related complications, here are the basics of digital asset reporting. The definition of digital assets Digital assets are defined by the IRS as any digital representation of value that’s recorded on a cryptographically secured distributed ledger (also known as blockchain) or any similar technology. Common examples include: Cryptocurrencies, such as Bitcoin and Ethereum, Stablecoins, which are digital currencies tied to the value of a fiat currency like the U.S. dollar, and Non-fungible tokens (NFTs), which represent ownership of unique digital or physical items. If an asset meets any of these criteria, the IRS classifies it as a digital asset. Related question on your tax return Near the top of your federal income tax return, there’s a question asking whether you received or disposed of any digital assets during the year. You must answer either “yes” or “no.” When we prepare your return, we’ll check “yes” if, during the year, you: Received digital assets as compensation, rewards or awards, Acquired new digital assets through mining, staking or a blockchain fork, Sold or exchanged digital assets for other digital assets, property or services, or Disposed of digital assets in any way, including converting them to U.S. dollars. We’ll answer “no” if you: Held digital assets in a wallet or exchange, Transferred digital assets between wallets or accounts you own, or Purchased digital assets with U.S. dollars. Reporting the tax consequences of digital asset transactions To determine the tax impact of your digital asset activity, you need to calculate the fair market value (FMV) of the asset in U.S. dollars at the time of each transaction. For example, if you purchased one Bitcoin at $93,429 on May 21, 2025, your cost basis for that Bitcoin would be $93,429. Any transaction involving the sale or exchange of a digital asset may result in a taxable gain or loss. A gain occurs when the asset’s FMV at the time of sale exceeds your cost basis. A loss occurs when the FMV is lower than your basis. Gains are classified as either short-term or long-term, depending on whether you held the asset for more than a year. Example: If you accepted one Bitcoin worth $80,000 plus $10,000 in cash for a car with a basis of $55,000, you’d report a taxable gain of $35,000. The holding period of the car determines whether this gain is short-term or long-term. How businesses handle crypto payments Digital asset transactions have their own tax rules for businesses. If you’re an employee and are paid in crypto, the FMV at the time of payment is treated as wages and subject to standard payroll taxes. These wages must be reported on Form W-2. If you’re an independent contractor compensated with crypto, the FMV is reported as nonemployee compensation on Form 1099-NEC if payments exceed $600 for the year. Crypto losses and the wash sale rule Currently, the IRS treats digital assets as property, not securities. This distinction means the wash sale rule doesn’t apply to cryptocurrencies. If you sell a digital asset at a loss and buy it back soon after, you can still claim the loss on your taxes. However, this rule does apply to crypto-related securities, such as stocks of cryptocurrency exchanges, which fall under the wash sale provisions. Form 1099 for crypto transactions Depending on how you interact with a digital asset, you may receive a: Form 1099-MISC, Form 1099-K, Form 1099-B, or Form 1099-DA. These forms are also sent to the IRS, so it’s crucial that your reported figures match those on the form. Evolving landscape Digital asset tax rules can be complex and are evolving quickly. If you engage in digital asset transactions, maintain all related records — transaction dates, FMV data and cost basis. Contact us with questions. This will help ensure accurate and compliant reporting, minimizing your risk of IRS penalties. Suttle & Stalnaker, PLLC is ready to help you. If you would like more information on how this applies to you, please contact our office at 304.343.4126. ### Tax breaks in 2025 and how The One, Big Beautiful Bill could change them URL: https://www.suttlecpas.com/insights/tax-breaks-in-2025-and-how-the-one-big-beautiful-bill-could-change-them Published: 2025-06-16 The U.S. House of Representatives passed The One, Big, Beautiful Bill Act on May 22, 2025, introducing possible significant changes to individual tax provisions. While the bill is now being considered by the Senate, it’s important to understand how the proposals could alter key tax breaks. Curious about how the bill might affect you? Here are seven current tax provisions and how they could change under the bill. 1. Standard deduction The Tax Cuts and Jobs Act nearly doubled the standard deduction. For the 2025 tax year, the standard deduction has been adjusted for inflation as follows: $15,000 for single filers, $30,000 for married couples filing jointly, and $22,500 for heads of household. Under current law, the increased standard deduction is set to expire after 2025. The One, Big, Beautiful Bill would make it permanent. Additionally, for tax years 2025 through 2028, it proposes an increase of $1,000 for single filers, $2,000 for married couples filing jointly and $1,500 for heads of households. 2. Child Tax Credit (CTC) Currently, the CTC stands at $2,000 per qualifying child but it’s scheduled to drop to $1,000 after 2025. The bill increases the CTC to $2,500 for 2025 through 2028, after which it would revert to $2,000. In addition, the bill indexes the credit amount for inflation beginning in 2027 and requires the child and the taxpayer claiming the child to have Social Security numbers. 3. State and local tax (SALT) deduction cap Under current law, the SALT deduction cap is set at $10,000 but the cap is scheduled to expire after 2025. The bill would raise this cap to $40,000 for taxpayers earning less than $500,000, starting in 2025. This change would be particularly beneficial for taxpayers in high-tax states, allowing them to deduct a larger portion of their state and local taxes. 4. Tax treatment of tips and overtime pay Currently, tips and overtime pay are considered taxable income. The proposed legislation seeks to exempt all tip income from federal income tax through 2029, provided the income is from occupations that traditionally receive tips. Additionally, it proposes to exempt overtime pay from federal income tax, which could increase take-home pay for hourly workers. These were both campaign promises made by President Trump. He also made a pledge during the campaign to exempt Social Security benefits from taxes. However, that isn’t in the bill. Instead, the bill contains a $4,000 deduction for eligible seniors (age 65 or older) for 2025 through 2028. To qualify, a single taxpayer would have to have modified adjusted gross income (MAGI) under $75,000 ($150,000 for married couples filing jointly). 5. Estate and gift tax exemption As of 2025, the federal estate and gift tax exemption is $13.99 million per individual. The bill proposes to increase this exemption to $15 million per individual ($30 million per married couple) starting in 2026, with adjustments for inflation thereafter. This change would allow individuals to transfer more wealth without incurring federal estate or gift taxes. 6. Auto loan interest Currently, there’s no deduction for auto loan interest. Under the bill, an above-the-line deduction would be created for up to $10,000 of eligible vehicle loan interest paid during the taxable year. The deduction begins to phase out when a single taxpayer’s MAGI exceeds $100,000 ($200,000 for married couples filing jointly). There are a number of rules to meet eligibility, including that the final assembly of the vehicle must occur in the United States. If enacted, the deduction is allowed for tax years 2025 through 2028. 7. Electric vehicles Currently, eligible taxpayers can claim a tax credit of up to $7,500 for a new “clean vehicle.” There’s a separate credit of up to $4,000 for a used clean vehicle. Income and price limits apply as well as requirements for the battery. These credits were scheduled to expire in 2032. The bill would generally end the credits for purchases made after December 31, 2025. Next steps These are only some of the proposals being considered. While The One, Big, Beautiful Bill narrowly passed the House, it faces scrutiny and potential changes in the Senate. Taxpayers should stay informed about these developments, as the proposals could significantly impact individual tax liabilities in the coming years. Suttle & Stalnaker, PLLC is ready to help you. If you would like more information on how this applies to you, please contact our office at 304.343.4126. ### FDIC 2025 Risk Review: Community Banking Summary URL: https://www.suttlecpas.com/insights/fdic-2025-risk-review-community-banking-summary Published: 2025-06-05 The Federal Deposit Insurance Corporation (FDIC) recently released their 2025 Risk Review, offering an overview of economic conditions and banking performance, market risks, and credit risks impacting banks in 2024. Reading the FDIC’s 2025 Risk Review can offer critical strategic value and practical insights to help community banks assess their own risks, adjust strategies, and stay ahead of regulatory expectations. In this article, we will summarize key information as it relates to community banks. Overall Economic Conditions and Banking Performance Community banks held their ground despite various economic concerns over the last several years and have continued to adapt due to constantly changing economic and financial market conditions. The following are highlights of the 2024 economic conditions: Economic growth was solid in 2024 and exceeded expectations for much of the year. Real GDP growth was generally solid and was reported at 2.8 percent for 2024. Inflation continued to decline in 2024, but at a slower pace and remained above the Federal Reserve’s 2 percent target. Interest rates were elevated throughout 2024; however, the Federal Reserve Federal Open Market Committee (FOMC) began lowering the target federals funds 50 basis points in September 2024, 25 basis points in November, and another 25 basis points in December. The yield curve remained inverted for most of 2024 but flattened in medium and longer maturities toward the end of the calendar year and ended with an upward slope. The banking industry’s performance was mixed but was overall resilient. Community bank performance highlights from 2024 include the following: Community bank pre-tax return on assets declined 8 basis points to 1.14 percent from 2023 to 2024. Higher funding costs compressed margins for community banks and community bank net interest margin (NIM) was 3.33 percent, down from 3.39 percent in 2023. Community banks generally performed better than the rest of the industry during the year in domestic deposit growth (4.7 percent) and loan growth (5.1 percent) rates; however, the deposit and loan growth rates were offset by higher non-interest expenses and reduced net interest margins. Overall, community banking net income decreased 2.4 percent when compared to 2023. Similar to the rest of the industry, community banks reported higher past due and nonaccrual rates compared to 2023. Community bank net charge-off rates were also higher in 2024 than in 2023. Market Risks and Margin Pressure Community banks continued to face large challenges navigating the difficult interest rate environment. As a whole, community banking market risks generally followed the same pattern as the rest of the industry. The industry-wide decline in NIM hit community banks especially hard. Funding costs for interest-bearing deposits continued to rise and generally outpaced asset yields and subsequently squeezed profitability and margins. Other highlights from 2024 include the following: Unrealized losses on securities portfolios increased in 2024 due to longer-term interest rates increasing year-over-year. Unrealized losses totaled $482.4 billion in the fourth quarter of 2024 which was up 1.0 percent from the fourth quarter 2023. Banks reduced their reliance on wholesale funds, which declined 3.1 percent during the year. Deposit growth resumed in 2024 after declining for two consecutive years. Total domestic deposits increased 2.3 percent. Noninterest-bearing deposits declined for the third consecutive year and made up just 21.8 percent of total domestic deposits at the end of the year, which is the lowest share reported since 2010. Credit Risk Community banks continued to experience various credit risks during 2024, but the overall sentiment is that community banks continued to carefully manage their credit risk while individual bank risk can vary widely depending on local economic performance and lending portfolio composition. The following are community bank highlights for various lending segments: Commercial real estate (CRE): past due and nonaccrual rates remained low relative to historical levels; however, exposure to CRE loans remained high. At the median, community banks’ CRE loan past due and nonaccrual rate was 0.31 percent, up slightly from year-end 2023. Community banks’ median CRE concentration ratio was 195 percent, up almost a percentage point from year-end 2023. Consumer loans: asset quality deteriorated more at community banks than the rest of the industry in 2024. Median past due and nonaccrual rates remained lower at community banks than the rest of the industry; however, the median past due and nonaccrual rates were higher at community banks in fourth quarter 2024 than a year earlier for all loan categories. Residential mortgage: community bank residential mortgage loan balances were up 3.2 percent from one year earlier and had higher growth than the rest of the industry during the same period. Asset quality remained sound with past due and nonaccrual rates remaining below pre-pandemic levels and was lower than the rest of the industry. Overall Summary The FDIC’s 2025 Risk Review paints a mixed picture for community banks. Overall, community banks continued to show strength in core banking relationships and experienced loan and deposit growth, but experienced decreasing net income due to higher noninterest costs and economic impacts related to interest rate market risks. Additionally, there is continued and increasing complexity in managing interest rate and credit-related risks. As various challenges remain, community banks will need to lean on their deep local knowledge and customer-centric focus to navigate economic uncertainties that persist. Suttle & Stalnaker, PLLC is ready to help. If you would like more information on how this applies to you, please contact Josh Sharp, CPA at (304)343-4126 or jsharp@suttlecpas.com. ### Can you turn business losses into tax relief? URL: https://www.suttlecpas.com/insights/can-you-turn-business-losses-into-tax-relief Published: 2025-05-22 Even well-run companies experience down years. The federal tax code may allow a bright strategy to lighten the impact. Certain losses, within limits, may be used to reduce taxable income in later years. Who qualifies? The net operating loss (NOL) deduction levels the playing field between businesses with steady income and those with income that rises and falls. It lets businesses with fluctuating income to average their income and losses over the years and pay tax accordingly. You may be eligible for the NOL deduction if your deductions for the tax year are greater than your income. The loss generally must be caused by deductions related to your: Business (Schedules C and F losses, or Schedule K-1 losses from partnerships or S corporations), Casualty and theft losses from a federally declared disaster, or Rental property (Schedule E). The following generally aren’t allowed when determining your NOL: Capital losses that exceed capital gains, The exclusion for gains from the sale or exchange of qualified small business stock, Nonbusiness deductions that exceed nonbusiness income, The NOL deduction itself, and The Section 199A qualified business income deduction. Individuals and C corporations are eligible to claim the NOL deduction. Partnerships and S corporations generally aren’t eligible, but partners and shareholders can use their separate shares of the business’s income and deductions to calculate individual NOLs. What are the changes and limits? Before the Tax Cuts and Jobs Act (TCJA), NOLs could be carried back two years, forward 20 years, and offset up to 100% of taxable income. The TCJA changed the landscape: Carrybacks are eliminated (except certain farm losses). Carryforwards are allowed indefinitely. The deduction is capped at 80% of taxable income for the year. If an NOL carryforward exceeds your taxable income of the target year, the unused balance may become an NOL carryover. Multiple NOLs must be applied in the order they were incurred. What’s the excess business loss limitation? The TCJA established an “excess business loss” limitation, which took effect in 2021. For partnerships and S corporations, this limitation is applied at the partner or shareholder level, after the outside basis, at-risk and passive activity loss limitations have been applied. Under the rule, noncorporate taxpayers’ business losses can offset only business-related income or gain, plus an inflation-adjusted threshold. For 2025, that threshold is $313,000 ($626,000 if married filing jointly). Remaining losses are treated as an NOL carryforward to the next tax year. In other words, you can’t fully deduct them because they become subject to the 80% income limitation on NOLs, reducing their tax value. Important: Under the Inflation Reduction Act, the excess business loss limitation applies to tax years through 2028. Under the TCJA, it had been scheduled to expire after December 31, 2026. Plan proactively Navigating NOLs and the related restrictions is complex, especially when coordinating with other deductions and credits. Thoughtful planning can maximize the benefit of past losses. Please consult with us about how to proceed in your situation. ### Still have tax questions? You’re not alone URL: https://www.suttlecpas.com/insights/still-have-tax-questions-you-re-not-alone Published: 2025-05-19 Even after your 2024 federal return is submitted, a few nagging questions often remain. Below are quick answers to five of the most common questions we hear each spring. 1. When will my refund show up? Use the IRS’s “Where’s My Refund?” tracker at IRS.gov. Have these three details ready: Social Security number, Filing status, and Exact refund amount. Enter them, and the tool will tell you whether your refund is received, approved or on the way. 2. Which tax records can I toss? At a minimum, keep tax records related to your return for as long as the IRS can audit your return or assess additional taxes. In general, the statute of limitations is three years after you file your return. So you can generally get rid of most records related to tax returns for 2021 and earlier years. (If you filed an extension for your 2021 return, hold on to your records until at least three years from when you filed the extended return.) However, the statute of limitations extends to six years for taxpayers who understate their gross income by more than 25%. You should hang on to certain tax-related records longer. For example, keep the actual tax returns indefinitely, so you can prove to the IRS that you filed legitimate returns. (There’s no statute of limitations for an audit if you didn’t file a return or you filed a fraudulent one.) When it comes to retirement accounts, keep records associated with them until you’ve depleted the account and reported the last withdrawal on your tax return, plus three (or six) years. And retain records related to real estate or investments for as long as you own the asset, plus at least three years after you sell it and report the sale on your tax return. (You can keep these records for six years to be on the safe side.) 3. I missed a credit or deduction. Can I still get a refund? Yes. You can generally file Form 1040-X (amended return) within: Three years of the original filing date, or Two years of paying the tax — whichever is later. In a few instances, you have more time. For instance, you have up to seven years from the due date of the return to claim a bad debt deduction. 4. What if the IRS contacts me about the tax return? It’s possible the IRS could have a problem with your return. If so, the tax agency will only contact you by mail — not phone, email or text. Be cautious about scams! If the IRS needs additional information or adjusts your return, it will send a letter explaining the issue. Contact us about how to proceed if we prepared your tax return. 5. What if I move after filing? You can notify the IRS of your new address by filling out Form 8822. That way, you won’t miss important correspondence. Year-round support Questions about tax returns don’t stop after April 15 — and neither do we. Reach out anytime for guidance. ### Hiring independent contractors? Make sure you’re doing it right URL: https://www.suttlecpas.com/insights/hiring-independent-contractors-make-sure-you-re-doing-it-right Published: 2025-05-15 Many businesses turn to independent contractors to help manage costs, especially during times of staffing shortages and inflation. If you’re among them, ensuring these workers are properly classified for federal tax purposes is crucial. Misclassifying employees as independent contractors can result in expensive consequences if the IRS steps in and reclassifies them. It could lead to audits, back taxes, penalties and even lawsuits. Understanding worker classification Tax law requirements for businesses differ for employees and independent contractors. And determining whether a worker is an employee or an independent contractor for federal income and employment tax purposes isn’t always straightforward. If a worker is classified as an employee, your business must: Withhold federal income and payroll taxes, Pay the employer’s share of FICA taxes, Pay federal unemployment (FUTA) tax, Potentially offer fringe benefits available to other employees, and Comply with additional state tax requirements. In contrast, if a worker qualifies as an independent contractor, these obligations generally don’t apply. Instead, the business simply issues Form 1099-NEC at year end (for payments of $600 or more). Independent contractors are more likely to have more than one client, use their own tools, invoice customers and receive payment under contract terms, and have an opportunity to earn profits or suffer losses on jobs. Defining an employee What defines an “employee”? Unfortunately, there’s no single standard. Generally, the IRS and courts look at the degree of control an organization has over a worker. If the business has the right to direct and control how the work is done, the individual is more likely to be an employee. Employees generally have tools and equipment provided to them and don’t incur unreimbursed business expenses. Some businesses that misclassify workers may qualify for relief under Section 530 of the tax code, but only if specific conditions are met. The requirements include treating all similar workers consistently and filing all related tax documents accordingly. Keep in mind, this relief doesn’t apply to all types of workers. Why you should proceed cautiously with Form SS-8 Businesses can file Form SS-8 to request an IRS determination on a worker’s status. However, this move can backfire. The IRS often leans toward classifying workers as employees, and submitting this form may draw attention to broader classification issues — potentially triggering an employment tax audit. In many cases, it’s wiser to consult with us to help ensure your contractor relationships are properly structured from the outset, minimizing risk and ensuring compliance. For example, you can use written contracts that clearly define the nature of the relationships. You can maintain documentation that supports the classifications, apply consistent treatment to similar workers and take other steps. When a worker files Form SS-8 Workers themselves can also submit Form SS-8 if they believe they’re misclassified — often in pursuit of employee benefits or to reduce self-employment tax. If this happens, the IRS will contact the business, provide a blank Form SS-8 and request it be completed. The IRS will then evaluate the situation and issue a classification decision. Help avoid costly mistakes Worker classification is a nuanced area of tax law. If you have questions or need guidance, reach out to us. We can help you accurately classify your workforce to avoid costly missteps. ### Small business alert: Watch out for the 100% penalty URL: https://www.suttlecpas.com/insights/small-business-alert-watch-out-for-the-100-penalty Published: 2025-05-06 Some tax sins are much worse than others. An example is failing to pay over federal income and employment taxes that have been withheld from employees’ paychecks. In this situation, the IRS can assess the trust fund recovery penalty, also called the 100% penalty, against any responsible person. It’s called the 100% penalty because the entire unpaid federal income and payroll tax amounts can be assessed personally as a penalty against a responsible person, or several responsible persons. Determining responsible person status Since the 100% penalty can only be assessed against a so-called responsible person, who does that include? It could be a shareholder, director, officer or employee of a corporation; a partner or employee of a partnership; or a member (owner) or employee of an LLC. To be hit with the penalty, the individual must: Be responsible for collecting, accounting for, and paying over withheld federal income and payroll taxes, and Willfully fail to pay over those taxes. Willful means intentional, deliberate, voluntary and knowing. The mere authority to sign checks when directed to do so by a person who is higher-up in a company doesn’t by itself establish responsible person status. There must also be knowledge of and control over the finances of the business. However, responsible person status can’t be deflected simply by assigning signature authority over bank accounts to another person in order to avoid exposure to the 100% penalty. As a practical matter, the IRS will look first and hard at individuals who have check-signing authority. What courts examine The courts have examined several factors beyond check-signing authority to determine responsible person status. These factors include whether the individual: Is an officer or director, Owns shares or possesses an entrepreneurial stake in the company, Is active in the management of day-to-day affairs of the company, Can hire and fire employees, Makes decisions regarding which, when and in what order outstanding debts or taxes will be paid, and Exercises daily control over bank accounts and disbursement records. Real-life cases The individuals who have been targets of the 100% penalty are sometimes surprising. Here are three real-life situations: Case 1: The operators of an inn failed to pay over withheld taxes. The inn was an asset of an estate. The executor of the estate was found to be a responsible person. Case 2: A volunteer member of a charitable organization’s board of trustees had knowledge of the organization’s tax delinquency. The individual also had authority to decide whether to pay the taxes. The IRS determined that the volunteer was a responsible person. Case 3: A corporation’s newly hired CFO became aware that the company was several years behind in paying withheld federal income and payroll taxes. The CFO notified the company’s CEO of the situation. Then, the new CFO and the CEO informed the company’s board of directors of the problem. Although the company apparently had sufficient funds to pay the taxes in question, no payments were made. After the CFO and CEO were both fired, the IRS assessed the 100% penalty against both of them for withheld but unpaid taxes that accrued during their tenures. A federal appeals court upheld an earlier district court ruling that the two officers were responsible persons who acted willfully by paying other expenses instead of the withheld federal taxes. Therefore, they were both personally liable for the 100% penalty. Don’t be tagged If you participate in running a business or any entity that hasn’t paid over federal taxes that were withheld from employee paychecks, you run the risk of the IRS tagging you as a responsible person and assessing the 100% penalty. If this happens, you may ultimately be able to prove that you weren’t a responsible person. But that can be an expensive process. Consult your tax advisor about what records you should be keeping and other steps you should be taking to avoid exposure to the 100% penalty. ### Understanding the “step-up in basis” when inheriting assets URL: https://www.suttlecpas.com/insights/understanding-the-step-up-in-basis-when-inheriting-assets Published: 2025-05-01 If you inherit assets after a loved one passes away, they often arrive with a valuable — but frequently misunderstood — tax benefit called the step-up in basis. Below is an overview of how the rule works and what planning might need to be done. What “basis” means First, let’s look at a couple definitions. Basis is generally what the owner paid for an asset, adjusted for improvements, depreciation, return of capital, etc. Capital gain (or loss) equals the sale price minus the basis. At death, many capital assets (stocks, real estate, business interests, collectibles, crypto, etc.) are stepped up (or down) to their fair market value (FMV) as of the date of death (or, if elected by the executor, the “alternate valuation date” six months later). The heir’s new basis is that FMV, erasing the tax on any unrealized gain or loss that accumulated during the deceased person’s life. For example, your father bought ABC stock many years ago for $50,000. At his death, it’s worth $220,000. Your inherited basis is $220,000. If you sell immediately for $220,000, there’s no capital gains tax. Hold it and sell later for $260,000 and you’ll only recognize the $40,000 gain since the date of death. Some assets don’t receive a stepped-up basis. For example, 401(k)s and IRAs are excluded. Actions for heirs and future estates There are some steps that heirs and individuals planning their estates can take. After a death, heirs should: Document the FMV of assets on the date of death. You can use brokerage statements, appraisals, Zillow printouts, cryptocurrency exchange screenshots, etc. Retitle assets into your name or trust as soon as possible to avoid administrative issues. Keep meticulous records. You may sell years later, or the IRS may question you. Asset owners planning ahead should: Inventory low-basis assets you plan to hold and include in your estate. Harvest losses strategically to offset gains you can’t eliminate through a step-up. Coordinate gifting and lifetime transfers. Remember that gifts use a carry-over basis. This means if you are given a gift (rather than an inheritance), your basis is generally the same as the donor’s was when the gift was made. Good records and proactive planning These are the basic rules. Other rules and limits may apply. For example, in some cases, a deceased person’s executor may be able to make an alternate valuation election. And gifts made just before a person dies (sometimes called “death bed gifts”) may be included in the gross estate for tax purposes. Reach out to us for tax assistance when estate planning or after receiving an inheritance. We’ll help you chart the most tax-efficient path forward. ### What tax documents can you safely shred? And which ones should you keep? URL: https://www.suttlecpas.com/insights/what-tax-documents-can-you-safely-shred-and-which-ones-should-you-keep Published: 2025-04-18 Once your 2024 tax return is in the hands of the IRS, you may be tempted to clear out file cabinets and delete digital folders. But before reaching for the shredder or delete button, remember that some paperwork still has two important purposes: Protecting you if the IRS comes calling for an audit, and Helping you prove the tax basis of assets you’ll sell in the future. Keep the return itself — indefinitely Your filed tax returns are the cornerstone of your records. But what about supporting records such as receipts and canceled checks? In general, except in cases of fraud or substantial understatement of income, the IRS can only assess tax within three years after the return for that year was filed (or three years after the return was due). For example, if you filed your 2022 tax return by its original due date of April 18, 2023, the IRS has until April 18, 2026, to assess a tax deficiency against you. If you file late, the IRS generally has three years from the date you filed. In addition to receipts and canceled checks, you should keep records, including credit card statements, W-2s, 1099s, charitable giving receipts and medical expense documentation, until the three-year window closes. However, the assessment period is extended to six years if more than 25% of gross income is omitted from a return. In addition, if no return is filed, the IRS can assess tax any time. If the IRS claims you never filed a return for a particular year, a copy of the signed return will help prove you did. Property-related and investment records The tax consequences of a transaction that occurs this year may depend on events that happened years or even decades ago. For example, suppose you bought your home in 2009, made capital improvements in 2016 and sold it this year. To determine the tax consequences of the sale, you must know your basis in the home — your original cost, plus later capital improvements. If you’re audited, you may have to produce records related to the purchase in 2009 and the capital improvements in 2016 to prove what your basis is. Therefore, those records should be kept until at least six years after filing your return for the year of sale. Retain all records related to home purchases and improvements even if you expect your gain to be covered by the home-sale exclusion, which can be up to $500,000 for joint return filers. You’ll still need to prove the amount of your basis if the IRS inquires. Plus, there’s no telling what the home will be worth when it’s sold, and there’s no guarantee the home-sale exclusion will still be available in the future. Other considerations apply to property that’s likely to be bought and sold — for example, stock or shares in a mutual fund. Remember that if you reinvest dividends to buy additional shares, each reinvestment is a separate purchase. Duplicate records in a divorce or separation If you separate or divorce, be sure you have access to tax records affecting you that your spouse keeps. Or better yet, make copies of the records since access to them may be difficult. Copies of all joint returns filed and supporting records are important because both spouses are liable for tax on a joint return, and a deficiency may be asserted against either spouse. Other important records to retain include agreements or decrees over custody of children and any agreement about who is entitled to claim them as dependents. Protect your records from loss To safeguard records against theft, fire or another disaster, consider keeping essential papers in a safe deposit box or other safe place outside your home. In addition, consider keeping copies in a single, easily accessible location so that you can grab them if you must leave your home in an emergency. You can also scan or photograph documents and keep encrypted copies in secure cloud storage so you can retrieve them quickly if they’re needed. We’re here to help Contact us if you have any questions about record retention. Thoughtful recordkeeping today can save you time, stress and money tomorrow. ### Discover if you qualify for “head of household” tax filing status URL: https://www.suttlecpas.com/insights/discover-if-you-qualify-for-head-of-household-tax-filing-status Published: 2025-03-31 When we prepare your tax return, we’ll check one of the following filing statuses: single, married filing jointly, married filing separately, head of household or qualifying widow(er). Only some people are eligible to file a return as a head of household. But if you’re one of them, it’s more favorable than filing as a single taxpayer. To illustrate, the 2025 standard deduction for a single taxpayer is $15,000. However, it’s $22,500 for a head of household taxpayer. To be eligible, you must maintain a household that, for more than half the year, is the principal home of a “qualifying child” or other relative of yours whom you can claim as a dependent. Tax law fundamentals Who’s a qualifying child? This is one who: Lives in your home for more than half the year, Is your child, stepchild, adopted child, foster child, sibling, stepsibling (or a descendant of any of these), Is under age 19 (or a student under 24), and Doesn’t provide over half of his or her own support for the year. If the parents are divorced, the child will qualify if he or she meets these tests for the custodial parent — even if that parent released his or her right to a dependency exemption for the child to the noncustodial parent. Can both parents claim head of household status if they live together but aren’t married? According to the IRS, the answer is no. Only one parent can claim head of household status for a qualifying child. A person can’t be a “qualifying child” if he or she is married and can file a joint tax return with a spouse. Special “tie-breaker” rules apply if the individual can be a qualifying child of more than one taxpayer. The IRS considers you to “maintain a household” if you live in the home for the tax year and pay over half the cost of running it. In measuring the cost, include house-related expenses incurred for the mutual benefit of household members, including property taxes, mortgage interest, rent, utilities, insurance on the property, repairs and upkeep, and food consumed in the home. Don’t include medical care, clothing, education, life insurance or transportation. Providing your parent a home Under a special rule, you can qualify as head of household if you maintain a home for your parent even if you don’t live with him or her. To qualify under this rule, you must be able to claim the parent as your dependent. You can’t be married You must be single to claim head of household status. Suppose you’re unmarried because you’re widowed. In that case, you can use the married filing jointly rates as a “surviving spouse” for two years after the year of your spouse’s death if your dependent child, stepchild, adopted child or foster child lives with you and you maintain the household. The joint rates are more favorable than the head of household rates. If you’re married, you must file jointly or separately — not as head of household. However, if you’ve lived apart from your spouse for the last six months of the year and your dependent child, stepchild, adopted child, or foster child lives with you and you “maintain the household,” you’re treated as unmarried. If this is the case, you can qualify as head of household. Suttle & Stalnaker, PLLC is ready to help. If you would like more information on how this applies to you, contact your Suttle & Stalnaker, PLLC representative or our office at 304.343.4126. ### Many business tax limits have increased in 2025 URL: https://www.suttlecpas.com/insights/many-business-tax-limits-have-increased-in-2025 Published: 2025-02-15 A variety of tax-related limits that affect businesses are indexed annually based on inflation. Many have increased for 2025, but with inflation cooling, the increases aren’t as great as they have been in the last few years. Here are some amounts that may affect you and your business. 2025 deductions as compared with 2024 Section 179 expensing: Limit: $1.25 million (up from $1.22 million) Phaseout: $3.13 million (up from $3.05 million) Sec. 179 expensing limit for certain heavy vehicles: $31,300 (up from $30,500) Standard mileage rate for business driving: 70 cents per mile (up from 67 cents) Income-based phaseouts for certain limits on the Sec. 199A qualified business income deduction begin at: Married filing jointly: $394,600 (up from $383,900) Other filers: $197,300 (up from $191,950) Retirement plans in 2025 vs. 2024 Employee contributions to 401(k) plans: $23,500 (up from $23,000) Catch-up contributions to 401(k) plans: $7,500 (unchanged) Catch-up contributions to 401(k) plans for those age 60, 61, 62 or 63: $11,250 (not available in 2024) Employee contributions to SIMPLEs: $16,500 (up from $16,000) Catch-up contributions to SIMPLEs: $3,500 (unchanged) Catch-up contributions to SIMPLE plans for those age 60, 61, 62 or 63: $5,250 (not available in 2024) Combined employer/employee contributions to defined contribution plans (not including catch-ups): $70,000 (up from $69,000) Maximum compensation used to determine contributions: $350,000 (up from $345,000) Annual benefit for defined benefit plans: $280,000 (up from $275,000) Compensation defining a highly compensated employee: $160,000 (up from $155,000) Compensation defining a “key” employee: $230,000 (up from $220,000) Social Security tax Cap on amount of employees’ earnings subject to Social Security tax for 2025: $176,100 (up from $168,600 in 2024). Other employee benefits this year vs. last year Qualified transportation fringe-benefits employee income exclusion: $325 per month (up from $315) Health Savings Account contribution limit: Individual coverage: $4,300 (up from $4,150) Family coverage: $8,550 (up from $8,300) Catch-up contribution: $1,000 (unchanged) Flexible Spending Account contributions: Health care: $3,300 (up from $3,200) Health care FSA rollover limit (if plan permits): $660 (up from $640) Dependent care: $5,000 (unchanged) Potential upcoming tax changes These are only some of the tax limits and deductions that may affect your business, and additional rules may apply. But there’s more to keep in mind. With President Trump back in the White House and the Republicans controlling Congress, several tax policy changes have been proposed and could potentially be enacted in 2025. For example, Trump has proposed lowering the corporate tax rate (currently 21%) and eliminating taxes on overtime pay, tips, and Social Security benefits. These and other potential changes could have wide-ranging impacts on businesses and individuals. It’s important to stay informed. Suttle & Stalnaker, PLLC is ready to help. If you would like more information on how this applies to you, contact your Suttle & Stalnaker, PLLC representative or our office at 304.343.4126. ### Taming the tax tangle if you’re retiring soon URL: https://www.suttlecpas.com/insights/taming-the-tax-tangle-if-you-re-retiring-soon Published: 2025-02-12 Retirement is often viewed as an opportunity to travel, spend time with family or simply enjoy the fruits of a long career. Yet the transition may bring a tangle of tax considerations. Planning carefully can help you minimize tax bills. Below are four steps to take if you’re approaching retirement, along with the tax implications. 1. Consider your post-career lifestyle Begin by assessing what retirement might look like for you. For example, will you relocate to a different state or downsize by selling your home? Will you continue to work part-time? Tax implications: Moving to a state with lower income or property taxes may stretch your retirement savings. If you sell your home and the capital gain exceeds $250,000 ($500,000 for married couples filing jointly), you’ll need to pay tax on the amount over the exclusion limit. And if you work part-time, your earnings could reduce your Social Security benefits (depending on your age) or push you into a higher tax bracket. 2. Assess your income sources Social Security is a major income component for many retirees, and deciding when to start collecting benefits is crucial. The government will permanently reduce your monthly benefit if you begin collecting before your full retirement age. Conversely, if you delay benefits past your full retirement age (up to age 70), you’ll receive larger monthly payments. Tax implications: Depending on your total income (including wages, retirement distributions and taxable investment income), up to 85% of your Social Security benefits could be taxable. Proper planning can help you manage taxable income and potentially reduce or avoid higher taxes on benefits. If you’re fortunate enough to have a pension, find out your payout options. Some pensions offer lump-sum distributions, while others offer monthly annuity payments. Tax implications: Most pension income is taxable at ordinary income tax rates. In addition to retirement accounts, you may have savings and investments in brokerage accounts that can supplement your income. Tax implications: Capital gains and dividends may be taxed differently than ordinary income, potentially at lower rates. Strategic withdrawals from taxable accounts and retirement accounts can help you manage your overall tax liability. 3. Develop a retirement account withdrawal strategy Once you turn 73, you must take required minimum distributions (RMDs) from most tax-deferred retirement accounts such as traditional IRAs and 401(k)s. Failing to do so can result in hefty penalties. Tax implications: RMDs are treated as ordinary income for tax purposes. If you don’t need them for living expenses, you might consider a qualified charitable distribution (QCD) to lower your taxable income. With a QCD, funds go directly from your retirement account to a qualified charity. They can count toward your RMD but aren’t included in your taxable income. Distributions from Roth IRAs and Roth 401(k)s are generally tax-free (if holding-period requirements are met), making them valuable tools for reducing taxes in retirement. If you have traditional and Roth accounts, you might choose to take withdrawals from Roth accounts in years when you want to manage your tax bracket more carefully. Tax implications: Roth accounts don’t require RMDs during the original owner’s lifetime. 4. Plan for health care expenses Medical costs can significantly impact retirees. Medicare premiums, hospital visits, prescriptions and potential long-term care are just some of the expenses that can eat into your retirement savings without careful planning. Tax implications: Health Savings Accounts (HSAs) allow for tax-deductible contributions, tax-free growth and tax-free withdrawals for qualified medical expenses. If you’re retiring soon and have a high-deductible health plan, maximizing HSA contributions can be a smart move. In addition, qualified medical expenses can sometimes be deducted if they exceed a certain percentage of your adjusted gross income (AGI). Final thoughts Retirement can span decades, and tax laws frequently change. By combining various withdrawal strategies and staying proactive about tax changes, you can tame the tax tangle. These are only some of the tax issues and implications. Suttle & Stalnaker, PLLC is ready to help. If you would like more information, please contact your Suttle & Stalnaker, PLLC representative or our main office at 304.343.4126. ### Sales Tax From A Contractor’s Perspective URL: https://www.suttlecpas.com/insights/sales-tax-from-a-contractor-s-perspective Published: 2025-02-10 As a construction contractor, understanding the rules associated with consumer sales tax on real property in West Virginia is crucial for your business. Sales tax in the state can have a significant impact on both the pricing of projects and the overall financial planning for new construction or renovation work. West Virginia imposes a 6% sales tax that contractors are required to collect on both the services and material provided for each job, unless there is a specific exclusion for the work being performed. One such exclusion is if you are engaged in an activity that constitutes as a capital improvement. What is a Capital Improvement? A capital improvement is defined as any addition or alteration to real property that meets all three of the following requirements: It substantially adds to the value of real property or appreciable prolongs the useful life of the real property; It becomes part of the real property or is permanently affixed to the real property so that removal would cause material damage to the property or article itself; and It is intended to become a permanent installation or to remain there for an indefinite period of time. Essentially, capital improvements involve projects for new construction, or that increase the value or function of a property in a long-term and significant way. These services are classified as non-taxable, and as such, no sales tax is required to be collected or remitted on the service labor. If a service fails to meet the definition of a capital improvement, it is classified as repairs and maintenance and you must collect sales tax from the customer on the labor for the job. Sales Tax on Materials Used in Jobs In general, sales tax should only be paid one time on the materials used in construction jobs. Either the contractor should pay sales tax to the supplier, or the contractor will collect the sales tax from the customer. Who pays the tax is dependent on what type of job is being performed. Capital Improvement Jobs Since capital improvement projects are exempt from sales tax, contractors do not collect or charge sales tax on the materials used in the job. Instead, the contractor is required to pay sales tax to the supplier for the job materials. If the customer buys the supplies directly from the supplier, the customer pays the sales tax to the supplier. Repairs and Maintenance Jobs Contractors are required to collect sales tax from the customer for labor and materials used in repairs and maintenance jobs. Since the sales tax is charged to the customer, contractors are able to buy materials used directly in repairs and maintenance jobs tax free. Contractors must obtain an exempt certificate from the state of West Virginia and present it to the supplier to buy the materials tax free. Best Practices Understanding the nuances of sales tax on capital improvements in West Virginia is essential for contractors to remain compliant and avoid unnecessary costs. Some of the best practices contractors can implement to manage sales tax are: Document everything: Keep accurate records of all materials purchased, labor charges, job classifications, and any claims for tax exemptions. Detailed documentation will make it easier to substantiate claims during audits or inquiries from the state. Keep a reference guide: The state of West Virginia has published TSD 310 detailing the capital improvement rules for sales and use tax. The publication contains several useful examples of what qualifies as a capital improvement vs a repair and maintenance. Contractors should keep an accessible copy of the publication to reference for sales tax determinations. Consult a tax professional: Because the rules governing sales and use tax for capital improvements can be complex, contractors should work with a tax professional to ensure they’re taking full advantage of available exemptions and ensuring full compliance with state law. Suttle & Stalnaker, PLLC is ready to help. If you would like more information on how this applies to you, contact Bart Scott, CPA, CVA, MBA at bscott@suttlecpas.com. You may also contact Chad Newell, CPA at cnewell@suttlecpas.com. ### Looking ahead to 2025 tax limits as you prepare to file your 2024 return URL: https://www.suttlecpas.com/insights/looking-ahead-to-2025-tax-limits-as-you-prepare-to-file-your-2024-return Published: 2025-02-04 Chances are, you’re more concerned about your 2024 tax return right now than you are about your 2025 tax situation. That’s understandable because your 2024 individual tax return is due to be filed by April 15 (unless you file for an extension). However, it’s a good time to familiarize yourself with tax amounts that may have changed for 2025 due to inflation. Not all tax figures are adjusted annually for inflation, and some amounts only change when Congress passes new laws. In addition, there may be tax changes due to what’s happening in Washington. With Republicans in control of both the White House and Congress, we expect major tax law changes in the coming months. With that in mind, here are some Q&As about 2025 tax limits. I haven’t been able to itemize deductions on my last few tax returns. Will I qualify for 2025? Beginning in 2018, the Tax Cuts and Jobs Act eliminated the ability to itemize deductions for many people by increasing the standard deduction and reducing or eliminating various deductions. For 2025, the standard deduction amount is $30,000 for married couples filing jointly (up from $29,200 in 2024). For single filers, the amount is $15,000 (up from $14,600 in 2024) and for heads of households, it’s $22,500 (up from $21,900 in 2024). If the total amount of your itemized deductions (including mortgage interest) is less than the applicable standard deduction amount, you won’t itemize for 2025. If I don’t itemize deductions, can I claim charitable deductions on my 2025 return? Generally, taxpayers who claim the standard deduction on their federal tax returns can’t deduct charitable donations. How much can I contribute to an IRA for 2025? If you’re eligible, you can contribute up to $7,000 a year to a traditional or Roth IRA. If you earn less than $7,000 during the year, you can contribute up to 100% of your earned income. (This is unchanged from 2024.) If you’re 50 or older, you can make an additional $1,000 “catch up” contribution (for 2024 and 2025). I have a 401(k) plan with my employer. How much can I contribute to it? In 2025, you can contribute up to $23,500 to a 401(k) or 403(b) plan (up from $23,000 in 2024). You can make an additional $7,500 catch-up contribution if you’re age 50 or older (for 2024 and 2025). However, there’s something new this year for 401(k) and 403(b) participants of certain ages. Beginning in 2025, those who are age 60, 61, 62 or 63 can make catch-up contributions of up to $11,250. I occasionally hire a cleaning person. Am I required to withhold and pay FICA tax on the amounts I pay him or her? In 2025, the threshold for when a domestic employer must withhold and pay FICA for babysitters, house cleaners, etc. who are independent contractors is $2,800 (up from $2,700 in 2024). How much of my earnings are taxed for Social Security in 2025? The Social Security tax “wage base” is $176,100 for this year (up from $168,600 in 2024). That means you don’t owe Social Security tax on amounts earned above that. (You must pay Medicare tax on all amounts you earn.) How much can I give to one person without triggering a gift tax return in 2025? The annual gift tax exclusion for 2025 is $19,000 (up from $18,000 in 2024). How will the changes in Washington affect taxes this year and in the future? We obviously can’t predict the future with certainty. The specifics of any new tax legislation depend on various political and economic factors. However, there are likely to be many changes in the next few years. President Trump and Republicans have signaled that they’d like to extend and possibly make permanent the provisions in the Tax Cuts and Jobs Act that expire after 2025. They’ve also discussed raising or eliminating the cap on the state and local tax deduction. Other proposals include expanding the Child Tax Credit and making certain types of income (tips, overtime and Social Security benefits) tax-free. Some of these tax breaks could become effective for the 2025 tax year. Changes ahead These are only some of the tax amounts and potential changes that may apply to you. Suttle & Stalnaker, PLLC is ready to help. If you would like more information please contact our office at 304.343.4126 or contact your Suttle & Stalnaker, PLLC representative. ### The standard business mileage rate increased in 2025 URL: https://www.suttlecpas.com/insights/the-standard-business-mileage-rate-increased-in-2025 Published: 2025-01-23 The nationwide price of gas is slightly higher than it was a year ago and the 2025 optional standard mileage rate used to calculate the deductible cost of operating an automobile for business has also gone up. The IRS recently announced that the 2025 cents-per-mile rate for the business use of a car, van, pickup or panel truck is 70 cents. In 2024, the business cents-per-mile rate was 67 cents per mile. This rate applies to gasoline and diesel-powered vehicles as well as electric and hybrid-electric vehicles. The process of calculating rates The 3-cent increase from the 2024 rate goes along with the recent price of gas. On January 17, 2025, the national average price of a gallon of regular gas was $3.11, compared with $3.08 a year earlier, according to AAA Fuel Prices. However, the standard mileage rate is calculated based on all the costs involved in driving a vehicle — not just the price of gas. The business cents-per-mile rate is adjusted annually. It’s based on an annual study commissioned by the IRS about the fixed and variable costs of operating a vehicle, including gas, maintenance, repairs and depreciation. Occasionally, if there’s a substantial change in average gas prices, the IRS will change the cents-per-mile rate midyear. Standard rate or real expenses Businesses can generally deduct the actual expenses attributable to business use of a vehicle. These include gas, oil, tires, insurance, repairs, licenses and vehicle registration fees. In addition, you can claim a depreciation allowance for the vehicle. However, in many cases, certain limits apply to depreciation write-offs on vehicles that don’t apply to other types of business assets. The cents-per-mile rate is beneficial if you don’t want to keep track of actual vehicle-related expenses. With this method, you don’t have to account for all your actual expenses. However, you still must record certain information, such as the mileage for each business trip, the date and the destination. Using the cents-per-mile rate is also popular with businesses that reimburse employees for business use of their personal vehicles. These reimbursements can help attract and retain employees who drive their personal vehicles a great deal for business purposes. Why? Under current law, employees can’t deduct unreimbursed employee business expenses, such as business mileage, on their own income tax returns. If you do use the cents-per-mile rate, keep in mind that you must comply with various rules. If you don’t comply, the reimbursements could be considered taxable wages to the employees. When you can’t use the standard rate There are some cases when you can’t use the cents-per-mile rate. It partly depends on how you’ve claimed deductions for the same vehicle in the past. In other situations, it depends on if the vehicle is new to your business this year or whether you want to take advantage of certain first-year depreciation tax breaks on it. As you can see, there are many factors to consider in deciding whether to use the standard mileage rate to deduct vehicle expenses. We can help if you have questions about tracking and claiming such expenses in 2025 — or claiming 2024 expenses on your 2024 income tax return. ### Early bird tips: Answering your tax season questions URL: https://www.suttlecpas.com/insights/early-bird-tips-answering-your-tax-season-questions Published: 2025-01-20 (No content available.) ### What will your marginal income tax rate be? URL: https://www.suttlecpas.com/insights/what-will-your-marginal-income-tax-rate-be Published: 2025-01-15 While the Tax Cuts and Jobs Act (TCJA) generally reduced individual tax rates for 2018 through 2025, some taxpayers could see their taxes go up due to reductions or eliminations of certain tax breaks — and, in some cases, due to their filing status. But some may see additional tax savings due to their filing status. Unmarried vs. married taxpayers In an effort to further eliminate the marriage “penalty,” the TCJA made changes to some of the middle tax brackets. As a result, some single and head of household filers could be pushed into higher tax brackets more quickly than pre-TCJA. For example, the beginning of the 32% bracket for singles for 2018 is $157,501, whereas it was $191,651 for 2017 (though the rate was 33%). For heads of households, the beginning of this bracket has decreased even more significantly, to $157, 501 for 2018 from $212,501 for 2017. Married taxpayers, on the other hand, won’t be pushed into some middle brackets until much higher income levels for 2018 through 2025. For example, the beginning of the 32% bracket for joint filers for 2018 is $315,001, whereas it was $233,351 for 2017 (again, the rate was 33% then). 2018 filing and 2019 brackets Because there are so many variables, it will be hard to tell exactly how specific taxpayers will be affected by TCJA changes, including changes to the brackets, until they file their 2018 tax returns. In the meantime, it’s a good idea to begin to look at 2019. As before the TCJA, the tax brackets are adjusted annually for inflation. Below is a look at the 2019 brackets under the TCJA. Contact us for help assessing what your tax rate likely will be for 2019 — and for help filing your 2018 tax return. Single individuals 10%: $0 – $9,700 12%: $9,701 – $39,475 22%: $39,476 – $84,200 24%: $84,201 – $160,725 32%: $160,726 – $204,100 35%: $204,101 – $510,300 37%: Over $510,300 Heads of households 10%: $0 – $13,850 12%: $13,851 – $52,850 22%: $52,851 – $84,200 24%: $84,201 – $160,700 32%: $160,701 – $204,100 35%: $204,101 – $510,300 37%: Over $510,300 Married individuals filing joint returns and surviving spouses 10%: $0 – $19,400 12%: $19,401 – $78,950 22%: $78,951 – $168,400 24%: $168,401 – $321,450 32%: $321,451 – $408,200 35%: $408,201 – $612,350 37%: Over $612,350 Married individuals filing separate returns 10%: $0 – $9,700 12%: $9,701 – $39,475 22%: $39,476 – $84,200 24%: $84,201 – $160,725 32%: $160,726 – $204,100 35%: $204,101 – $306,175 37%: Over $306,175 ### Small business strategy: A heavy vehicle plus a home office equals tax savings URL: https://www.suttlecpas.com/insights/small-business-strategy-a-heavy-vehicle-plus-a-home-office-equals-tax-savings Published: 2025-01-15 New and used “heavy” SUVs, pickups and vans placed in service in 2025 are potentially eligible for big first-year depreciation write-offs. One requirement is you must use the vehicle more than 50% for business. If your business usage is between 51% and 99%, you may be able to deduct that percentage of the cost in the first year. The write-off will reduce your federal income tax bill and your self-employment tax bill, if applicable. You might get a state tax income deduction too. Setting up a business office in your home for this year can also help you collect tax savings. Here’s what you need to know about the benefits of combining these two tax breaks. First, buy a suitably heavy vehicle The generous first-year depreciation deal is only available for an SUV, pickup, or van with a manufacturer’s gross vehicle weight rating (GVWR) above 6,000 pounds that’s purchased (not leased). First-year depreciation deductions for lighter vehicles are subject to smaller depreciation limits of up to $20,400 in 2024. (The 2025 amount hasn’t come out yet.) It’s not hard to find attractive vehicles with GVWRs above the 6,000-pound threshold. Examples include the Cadillac Escalade, Jeep Grand Cherokee, Chevy Tahoe, Ford Explorer, Lincoln Navigator, and many full-size pickups. You can usually find the GVWR on a label on the inside edge of the driver’s side door. Take advantage of generous depreciation deductions Favorable depreciation rules apply to heavy SUVs, pickups and vans that are used over 50% for business because they’re classified as transportation equipment for federal income tax purposes. Three factors to keep in mind: First-year Section 179 deductions. Many businesses can write off most or all of the business-use portion of a heavy vehicle’s cost in year 1 under the Section 179 deduction privilege. The maximum Sec. 179 deduction for tax years beginning in 2024 is $1.25 million. Limited Sec. 179 deductions for heavy SUVs. There’s a limit on Sec. 179 deductions for heavy SUVs with GVWRs between 6,001 and 14,000 pounds. For tax years beginning in 2025, the limit is $31,300. First-year bonus depreciation. For heavy vehicles placed in service in 2025, the first-year bonus depreciation percentage is currently 40%, but future legislation may allow a bigger write-off. There are several limitations on Sec. 179 deductions but no limits on 40% bonus depreciation. So, bonus depreciation can help offset the impact of Sec. 179 limitations, if applicable. Then, qualify for home office deductions Again, the favorable first-year depreciation rules are only allowed if you use your heavy SUV, pickup, or van over 50% for business. You’re much more likely to pass the over-50% test if you have an office in your home that qualifies as your principal place of business. Then, all the commuting mileage from your home office to temporary work locations, such as client sites, is considered business mileage. The same is true for mileage between your home office and any other regular place of business, such as another office you keep. This is also the case for mileage between your other regular place of business and temporary work locations. Bottom line: When your home office qualifies as a principal place of business, you can easily rack up plenty of business miles. That makes passing the over-50%-business-use test for your heavy vehicle much easier. How do you make your home office your principal place of business? The first way is to conduct most of your income-earning activities there. The second way is to conduct administrative and management chores there. But don’t make substantial use of any other fixed location (like another office) for these chores. Key points: You must use the home office space regularly and exclusively for business throughout the year. Also, if you’re employed by your own corporation (as opposed to being self-employed), you can’t deduct home office expenses under the current federal income tax rules. Double tax break You can potentially claim generous first-year depreciation deductions for heavy business vehicles and also claim home office deductions. The combination can result in major tax savings. Suttle & Stalnaker, PLLC is ready to help. If you would like more information on how this applies to you, contact our office at 304-343-4126 or your Suttle & Stalnaker, PLLC representative. ### Saving for college: Tax breaks and strategies your family should know URL: https://www.suttlecpas.com/insights/saving-for-college-tax-breaks-and-strategies-your-family-should-know Published: 2025-01-14 As higher education costs continue to rise, you may be concerned about how to save and pay for college. Fortunately, several tools and strategies offered in the U.S. tax code may help ease the financial burden. Below is an overview of some of the most beneficial tax breaks and planning options for funding your child’s or grandchild’s education. Qualified tuition programs or 529 plans A 529 plan allows you to buy tuition credits or contribute to an account set up to meet your child’s future higher education expenses. State governments or private institutions establish 529 plans. Contributions aren’t deductible. They’re treated as taxable gifts to the child, but they’re eligible for the annual gift tax exclusion ($19,000 in 2025). If you contribute more than the annual exclusion limit for the year, you can elect to treat the gift as if it is spread out over five years. By taking advantage of the five-year gift tax election, a grandparent (or anyone else) can contribute up to $95,000 ($19,000 × 5) per beneficiary this year, free of gift tax. Earnings on 529 plan contributions accumulate tax-free until the education costs are paid with the funds. Distributions are tax-free to the extent they’re used to pay “qualified higher education expenses,” which can include up to $10,000 in tuition per beneficiary for an elementary or secondary school. Distributions of earnings that aren’t used for qualified higher education expenses are generally subject to income tax plus a 10% penalty. Coverdell education savings accounts (ESAs) You can establish a Coverdell ESA and make contributions of up to $2,000 for each child under age 18. This age limitation doesn’t apply to beneficiaries with special needs. The right to make contributions begins to phase out once AGI is over $190,000 for married couples filing jointly ($95,000 for singles). If income is too high, the child can contribute to his or her own account. These thresholds haven’t been adjusted for inflation in many years. Although Coverdell ESA contributions aren’t deductible, income in the account isn’t taxed, and distributions are tax-free if spent on qualified education expenses. If the child doesn’t attend college, you must withdraw the money when the child turns 30, and any earnings will be subject to tax plus a penalty. However, you can transfer unused funds tax-free to a Coverdell ESA of another family member who isn’t 30 yet. The age 30 requirement doesn’t apply to individuals with special needs. Savings bonds Series EE U.S. savings bonds offer two tax-saving opportunities when used for 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 proceeds are used for qualified college expenses. To qualify for the college tax exemption, you must purchase the bonds in your name (not the child’s) or jointly with your spouse. The proceeds must be used for tuition, fees, etc. — not room and board. If only some proceeds are used for qualified expenses, only that part of the interest is exempt. The exemption is phased out if your modified adjusted gross income exceeds certain amounts. Education tax credits Beyond saving vehicles, there are also tax credits you may be able to claim while paying college expenses: American Opportunity Tax Credit (AOTC). This is worth up to $2,500 per eligible student each year for the first four years of undergraduate study. It is subject to income limits and is partially refundable (up to $1,000). That means you could receive a refund even if you owe no tax. Lifetime Learning Credit (LLC). This is worth up to $2,000 per tax return (20% of up to $10,000 of qualified education expenses). There’s no limit on how many years you can claim it, so this credit can benefit graduate studies or professional development courses. It’s also subject to income limits. You can’t claim the AOTC and the LLC for the same student in the same year. However, you can claim each credit for different students in the same household if you meet eligibility requirements. Plan ahead These are just some of the tax-wise ways to save and pay for college. Suttle & Stalnaker, PLLC is ready to help. If you would like more information on how this applies to you, please contact our office at 304.343.4126 or your Suttle & Stalnaker, PLLC representative. ### Savings bonds and taxes: What you need to know URL: https://www.suttlecpas.com/insights/savings-bonds-and-taxes-what-you-need-to-know Published: 2025-01-10 When considering the advantages of U.S. Treasury savings bonds, you may appreciate their relative safety, simplicity and government backing. However, like all interest-bearing investments, savings bonds come with tax implications that are important to understand. Deferred interest Series EE Bonds dated May 2005 and after earn a fixed rate of interest. Bonds purchased between May 1997 and April 30, 2005, earn a variable market-based rate of return. Paper Series EE Bonds, issued between 1980 and 2012, were sold at half their face value. For example, you paid $25 for a $50 bond. The bond isn’t worth its face value until it matures. New electronic EE Bonds earn a fixed rate of interest that’s set before you buy the bond. They earn that rate for the first 20 years, and the U.S. Treasury may change the rate for the last 10 years of the bond’s 30-year life. Electronic EE bonds are sold at their face value. For example, you pay $100 for a $100 bond. The minimum ownership term is one year, but a penalty is imposed if the bond is redeemed in the first five years. Series EE bonds don’t pay interest currently. Instead, accrued interest is reflected in the redemption value of the bond. The U.S. Treasury issues tables showing redemption values. Series EE bond interest isn’t taxed as it accrues unless the owner elects to have it taxed annually. If the election is made, all previously accrued but untaxed interest is reported in the election year. In most cases, the election isn’t made so that the benefit of tax deferral can be enjoyed. On the other hand, if the bond is owned by a taxpayer with little or no other current income, it may be beneficial to incur the income in low or no tax years to avoid future inclusion. This may be the case with bonds owned by children, although the “kiddie tax” may apply. If the election isn’t made, all the accrued interest is taxed when the bond is redeemed or otherwise disposed of (unless it was exchanged for a Series HH bond). The bond continues to accrue interest even after reaching its face value but at “final maturity” (after 30 years) interest stops accruing and must be reported (again, unless it was exchanged for an HH bond). If you own EE bonds (paper or electronic), check the issue dates on your bonds. If they’re no longer earning interest, you probably want to redeem them and put the money into something more profitable. Bonds adjusted for inflation Series I savings bonds are designed to offer a rate of return over and above inflation. The earnings rate is a combination of a fixed rate, which will apply for the life of the bond, and the inflation rate. Rates are announced each May 1 and November 1. Series I bonds are issued at par (face amount). An owner of Series I bonds may either: Defer reporting the increase in the redemption value (interest) to the year of final maturity, redemption or other disposition, whichever is earlier, or Elect to report the increase each year as it accrues. If the second choice is made, the election applies to all Series I bonds then owned by the taxpayer, those acquired later, and any other obligations purchased on a discount basis, (for example, Series EE bonds). You can’t change to the first option unless you follow a specific IRS procedure. State and local taxes, education expenses Although the interest on EE and I bonds is taxable for federal income tax purposes, it’s exempt from state and local taxes. And using the money for higher education may keep you from paying federal income tax on the interest. However, there’s an income limit for this tax break. In 2025, the interest exclusion from U.S. savings bonds for taxpayers who pay qualified higher education expenses begins to phase out for modified adjusted gross incomes (MAGIs) above $149,250 for joint returns and $99,500 for all other returns. (These are up from $145,200 and $96,800, respectively, in 2024.) The exclusion in 2025 is completely phased out for MAGIs of $179,250 or more for joint returns and $114,500 or more for all other returns. (These are up from $175,200 and $111,800, respectively, in 2024.) Suttle & Stalnaker, PLLC is ready to help you. If you would like more information on how this applies to you, contact our office at 304.343.4126 or your Suttle & Stalnaker, PLLC represenative. ### Understanding the Work Opportunity Tax Credit URL: https://www.suttlecpas.com/insights/understanding-the-work-opportunity-tax-credit Published: 2025-01-09 According to the U.S. Bureau of Labor Statistics, the unemployment rate continues to be historically low, ranging from 4.0% to 4.3% from May to November of 2024. With today’s hiring challenges, business owners should be aware that the Work Opportunity Tax Credit (WOTC) is available to employers that hire workers from targeted groups who face significant barriers to employment. The tax credit is generally worth as much as $2,400 for each eligible employee (higher for certain veterans and “long-term family assistance recipients”). It’s generally limited to eligible employees who begin working for the employer before January 1, 2026. To satisfy a requirement of the WOTC, a pre-screening notice must be completed by the job applicant and the employer on or before the day a job offer is made. This is done by filing Form 8850, Pre-Screening Notice and Certification Request for the Work Opportunity Credit. The targeted groups An employer is eligible for the credit only for qualified wages paid to a member of a targeted group. These groups are: Qualified IV-A recipients who are members of families receiving assistance under the Temporary Assistance for Needy Families (TANF) program, Qualified veterans, Qualified ex-felons, Designated community residents, Vocational rehabilitation referrals, Qualified summer youth employees, Qualified members of families in the Supplemental Nutritional Assistance Program (SNAP), Qualified Supplemental Security Income recipients, Long-term family assistance recipients, and Qualified long-term unemployed individuals. Details to qualify To qualify for the credit, there are a number of requirements. For example, each employee must have completed at least 120 hours of service in their first year of service for the employer. Also, the credit isn’t available for certain employees who are related to or who previously worked for the employer. There are different rules and credit amounts for certain employees. The maximum credit available for first-year wages is generally $2,400 for each employee, $4,000 for long-term family assistance recipients, and $4,800, $5,600 or $9,600 for certain veterans. Additionally, for long-term family assistance recipients, there’s a 50% credit for up to $10,000 of second-year wages, resulting in a total maximum credit over two years of $9,000. For summer youth employees, the wages must be paid for services performed during any 90-day period between May 1 and September 15. The maximum credit available for summer youth employees is $1,200 per employee. A win for you and your employees In some cases, employers may elect not to claim the WOTC. In limited circumstances, the rules may prohibit the credit or require allocating it. However, the credit can be advantageous for most employers hiring from targeted groups — and it can result in jobs for those who need them. Suttle & Stalnaker, PLLC is ready to help you. If you would like more information on how this applies to you, contact our office at 304.343.4126 or contact your Suttle & Stalnaker, PLLC represenative. ### How Section 1231 gains and losses affect business asset sales URL: https://www.suttlecpas.com/insights/how-section-1231-gains-and-losses-affect-business-asset-sales Published: 2025-01-07 When selling business assets, understanding the tax implications is crucial. One area to focus on is Section 1231 of the Internal Revenue Code, which governs the treatment of gains and losses from the sale or exchange of certain business property. Business gain and loss tax basics The federal income tax character of gains and losses from selling business assets can fall into three categories: Capital gains and losses. These result from selling capital assets which are generally defined as property other than 1) inventory and property primarily held for sale to customers, 2) business receivables, 3) real and depreciable business property including rental real estate, and 4) certain intangible assets such as copyrights, musical works and art works created by the taxpayer. Operating businesses typically don’t own capital assets, but they might from time to time. Sec. 1231 gains and losses. These result from selling Sec. 1231 assets which generally include 1) business real property (including land) that’s held for more than one year, 2) other depreciable business property that’s held for more than one year, 3) intangible assets that are amortizable and held for more than one year, and 4) certain livestock, timber, coal, domestic iron ore and unharvested crops. Ordinary gains and losses. These result from selling all assets other than capital assets and Sec. 1231 assets. Other assets include 1) inventory, 2) receivables, and 3) real and depreciable business assets that would be Sec. 1231 assets if held for over one year. Ordinary gains can also result from various recapture provisions, the most common of which is depreciation recapture. Favorable tax treatment Gains and losses from selling Sec. 1231 assets receive favorable federal income tax treatment. Net Sec. 1231 gains. If a taxpayer’s Sec. 1231 gains for the year exceed the Sec. 1231 losses for that year, all the gains and losses are treated as long-term capital gains and losses — assuming the nonrecaptured Sec. 1231 loss rule explained later doesn’t apply. An individual taxpayer’s net Sec. 1231 gain — including gains passed through from a partnership, LLC, or S corporation — qualifies for the lower long-term capital gain tax rates. Net Sec. 1231 losses. If a taxpayer’s Sec. 1231 losses for the year exceed the Sec. 1231 gains for that year, all the gains and losses are treated as ordinary gains and losses. That means the net Sec. 1231 loss for the year is fully deductible as an ordinary loss, which is the optimal tax outcome. Unfavorable nonrecaptured Sec. 1231 loss rule Now for a warning: Taxpayers must watch out for the nonrecaptured Sec. 1231 loss rule. This provision is intended to prevent taxpayers from manipulating the timing of Sec. 1231 gains and losses in order to receive favorable ordinary loss treatment for a net Sec. 1231 loss, followed by receiving favorable long-term capital gain treatment for a net Sec. 1231 gain recognized in a later year. The nonrecaptured Sec. 1231 loss for the current tax year equals the total net Sec. 1231 losses that were deducted in the preceding five tax years, reduced by any amounts that have already been recaptured. A nonrecaptured Sec. 1231 loss is recaptured by treating an equal amount of current-year net Sec. 1231 gain as higher-taxed ordinary gain rather than lower-taxed long-term capital gain. For losses passed through to an individual taxpayer from a partnership, LLC, or S corporation, the nonrecaptured Sec. 1231 loss rule is enforced at the owner level rather than at the entity level. Tax-smart timing considerations Because the unfavorable nonrecaptured Sec. 1231 loss rule cannot affect years before the year when a net Sec. 1231 gain is recognized, the tax-smart strategy is to try to recognize net Sec. 1231 gains in years before the years when net Sec. 1231 losses are recognized. Conclusion Achieving the best tax treatment for Sec. 1231 gains and losses can be a challenge. We can help you plan the timing of gains and losses for optimal tax results. If you would like more information on how this applies to you, contact our office at 304.343.4126 or contact your Suttle & Stalnaker, PLLC represenative. ### 1099 Filing Requirement Reminder URL: https://www.suttlecpas.com/insights/1099-filing-requirement-reminder Published: 2025-01-06 There is an important deadline on January 31, 2025, regarding the filing of your 1099. Form 1099 is often misunderstood and underemphasized. Businesses are required to issue a Form 1099 to each third party to whom they have paid at least $600 in rents, services, prizes and awards, or other income payments. Form 1099-NEC was first introduced for the year 2020 year, and is only used to report nonemployee compensation (NEC). Form 1099-MISC is used to report other payments such as rents, royalties, prizes, or awards paid to third parties. These two type of 1099s are unpopular on both sides of the table: individuals aren’t eager to receive a 1099 and most companies are not anxious to issue 1099s. 1099s are important because they help achieve balance – so that the deductions business take for payments to independent contractors are, in turn, reported as income by the recipients of the payments. Correctly issuing 1099s can be a minefield and errors commonly occur. Read on for questions and answers that address common issues surrounding 1099-NEC and 1099-MISC. What are common errors on 1099-MISC and 1099-NEC? Not issuing any 1099s at all Not issuing 1099s to all eligible recipients Not issuing 1099s to certain vendors because you didn’t get a completed W-9 (always get this prior to the first payment!) Misclassifying employees as independent contractors and issuing them 1099s, when they should be issued a W-2 Using the wrong form (reporting nonemployee compensation on Form 1099-MISC, instead of the new Form 1099-NEC) Not including payments to independent contractors paid by cash or trade Incorrect amount reported Incorrect or missing vendor mailing addresses Incorrect or missing taxpayer identification numbers, either Employer Identification Number (EIN) or Social Security Number (SSN) Mismatching Names and Taxpayer Identification numbers (Individual name used with Business EIN, or Business name used with individual’s SSN) Including payments made by credit card Including payments that did not clear the bank Reporting payments in the wrong box on the Form 1099 Who gets a 1099-NEC? 1099-NECs should be issued to workers who are not on payroll, if they are paid more than $600 in one year for services performed for business purposes. This applies to payments for services, but does not apply to physical goods purchased. Recipients include individuals, independent contractors, freelancers, sole proprietors, self-employed individuals, third-parties, attorneys, and certain businesses that are providing services. Examples: janitorial, legal, consulting, handyman, and landscaping service providers. There is no penalty if you file a 1099-NEC that is not required, if the information reported is accurate. However, penalties can be assessed for not filing a required 1099-NEC. 1099s are generally mailed directly to recipients at their home or business. The due date for providing recipient and IRS copies of 1099-NEC is January 31st. Who gets a 1099-MISC? The 1099-NEC was new for the 2020 year, replacing Box 7 of Form 1099-MISC. The 1099-MISC form is still in use for other purposes. In general, a person will now receive 1099-MISC to report payments that are not subject to self-employment taxes. Example: an individual who earns an honorarium for a one-time speaking event. Other examples: rents, royalties, prizes, and awards paid to third parties. The due date for providing recipient copies of 1099-MISC is January 31st, and IRS copies are due February 28th (or March 31st if e-filing). Who does not get a 1099-NEC or 1099-MISC? Employees Corporations – C Corps and S Corps Vendors paid for physical goods only Vendors paid by an individual for non-business services What information do I need to complete a 1099? Tracking 1099 vendors and reportable payments can be a challenge, so be proactive when on-boarding new vendors and recording payments in your accounting system, with the end in mind. Most of the information needed to a 1099 can be gathered with a Form W-9 Request for Taxpayer Identification Number and Certification completed by your vendor. Always obtain the completed Form W-9 before you issue payments to any vendor who may require a 1099. Aside from the W-9 information, your accounting books and records, in conjunction with our vendor invoices, should provide the necessary information on the type of 1099 form required and the dollar amount to be reported as paid to the vendor. Important Note: Payments made in cash or by check are reportable on Forms 1099-NEC and 1099-MISC, however, payments made by credit card are not. (The credit card processor is responsible for reporting payments made by credit card on Form 1099-K.) 1099s may not be highly anticipated by the recipient or the payer, but filing complete and accurate 1099s is required and important in business world. Suttle & Stalnaker, PLLC is ready to help. In order to file your 1099 before the 1/31/2025 deadline, please contact our office at 304.343.4126 and/or reach out to your Suttle & Stalnaker, PLLC representative in a timely manner. ### BOI Reporting Update URL: https://www.suttlecpas.com/insights/boi-reporting-update Published: 2024-12-31 As you may have heard, the Corporate Transparency Act (CTA) was enacted by FinCEN and establishes reporting requirements for certain businesses registered to do business in or formed in the US. The CTA required business entities to report information regarding beneficial owner information (BOI), including name, date of birth, address, unique identifying number, and an image of an identification document. For businesses in existence prior to January 1, 2024, this information is to be submitted through FinCEN’s website by January 1, 2025. For businesses established between January 1, 2024 and January 1, 2025, there was a 90-day deadline for filing the initial report. However, on December 3, 2024, a US District Court in Texas ordered an injunction keeping FinCEN from enforcing the BOI reporting rule. This was a temporary injunction, meaning that businesses were not required to comply with deadline, pending an appeal. Then on December 23, 2024, a panel from the Fifth Circuit Court of Appeals voted to lift the injunction – and on December 26, 2024, a different panel from the Fifth Circuit Court of Appeals reinstated the injunction. So the question is – What does this mean to you? As of the time of this article, you are not required to comply with the requirement to report beneficial ownership information; however, according to the FinCEN website, reporting companies can voluntarily provide this information. We recommend that you continue to gather the necessary information from beneficial owners in the event the injunction is again lifted. We will continue to provide updates as they become available. ### Senior tax-saving alert: Make charitable donations from your IRA URL: https://www.suttlecpas.com/insights/senior-tax-saving-alert-make-charitable-donations-from-your-ira Published: 2024-12-30 If you’ve reached age 70½, you can make cash donations directly from your IRA to IRS-approved charities. These qualified charitable distributions (QCDs) may help you gain tax advantages. QCD basics QCDs can be made from your traditional IRA(s) free of federal income tax. In contrast, other traditional IRA distributions are wholly or partially taxable, depending on whether you’ve made nondeductible contributions over the years. Unlike regular charitable donations, you can’t claim itemized deductions for QCDs. That’s OK because the tax-free treatment of QCDs equates to a 100% deduction. To be a QCD, an IRA distribution must meet the following requirements: It can’t occur before you’re age 70½. It must meet the normal tax-law requirements for a 100% deductible charitable donation. It must be a distribution that would otherwise be taxable. New provision Under the SECURE 2.0 Act, the annual QCD limit is now adjusted for inflation. In 2024, the limit is $105,000, up from $100,000 last year. In 2025, it will jump again to $108,000. If both you and your spouse have IRAs set up in your respective names, each of you is entitled to a separate QCD limit. If you inherited an IRA from the deceased original account owner, you can make a QCD with the inherited account if you’ve reached age 70½. Tax-saving advantages QCDs have at least five tax-saving advantages: 1. They aren’t included in your adjusted gross income (AGI). That lowers the odds that you’ll be affected by unfavorable AGI-based rules or hit with the 3.8% net investment income tax on your investment income. 2. They always deliver a tax benefit, while “regular” charitable donations might not. The Tax Cuts and Jobs Act significantly increased standard deduction amounts, and you only get a tax benefit from a charitable donation if your total itemizable deductions exceed your standard deduction. Also, deductions for “regular” charitable donations can’t exceed 60% of your AGI. QCDs are exempt from that limitation. 3. For 2024 and 2025, you’re subject to the IRA required minimum distribution (RMD) rules if you turn 73 during the year or are older. RMD amounts will be fully or partially taxable depending on whether you made any nondeductible contributions over the years. QCDs made from your traditional IRA(s) count as RMDs. That means you can donate all or part of your annual RMD amount — up to the applicable annual QCD limit — that you’d otherwise be forced to receive and pay taxes on. In effect, you can replace taxable RMDs with tax-free QCDs. 4. Say you own one or more traditional IRAs to which you’ve made nondeductible contributions over the years. Your IRA balances consist partly of a taxable layer (from deductible contributions and account earnings) and partly of a nontaxable layer (from nondeductible contributions). Any QCDs are treated as coming first from the taxable layer but they’re tax-free. Any nontaxable amounts are left behind in your IRA(s). Later, you or your heirs can withdraw the nontaxable amounts tax-free. 5. They decrease your taxable estate. However, that’s not a concern for most folks with today’s large federal estate tax exemption ($13.61 million in 2024 and $13.99 million in 2025). Act before year end The QCD strategy is a tax-smart opportunity for many people. It’s especially beneficial for seniors with charitable inclinations and more IRA money than they need for retirement. Contact us if you have questions or want assistance with QCDs. Suttle & Stalnaker, PLLC is ready to help you. If you would like more information on how this applies to you, contact our office at 304.343.4126. ### Drive down your business taxes with local transportation cost deductions URL: https://www.suttlecpas.com/insights/drive-down-your-business-taxes-with-local-transportation-cost-deductions Published: 2024-12-26 Understanding how to deduct transportation costs could significantly reduce the tax burden on your small business. You and your employees likely incur various local transportation expenses each year, and they have tax implications. Let’s start by defining “local transportation.” It refers to travel when you aren’t away from your tax home long enough to require sleep or rest. Your tax home is the city or general area in which your main place of business is located. Different rules apply if you’re away from your tax home for significantly more than an ordinary workday and you need sleep or rest to do your work. Your work location The most important feature of the local transportation rules is that your commuting costs aren’t deductible. In other words, the fare you pay or the miles you drive to get to work and home again are personal and not for business purposes. Therefore, no deduction is available. This is the case even if you work during the commute (for example, via a cell phone or laptop, performing business-related tasks on the subway). An exception applies for commuting to a temporary work location outside of the metropolitan area where you live and normally work. “Temporary,” for this purpose, means a location where your work is realistically expected to last (and does, in fact, last) for no more than a year. Work location to other sites On the other hand, once you get to your work location, the cost of any local trips you take for business purposes is a deductible business expense. So, for example, the cost of travel from your office to visit a customer or pick up supplies is deductible. Similarly, if you have two business locations, the cost of traveling between them is deductible. Recordkeeping If your deductible trip is by taxi or public transportation, save a receipt or note the expense in a logbook. Record the date, amount spent, destination and business purpose. If you use your own car, note the miles driven instead of the amount spent. Also, note any tolls paid or parking fees, and keep receipts. You must allocate your automobile expenses between business and personal use based on miles driven during the year. Proper recordkeeping is crucial in the event the IRS challenges you. Your deduction can be computed using: The standard mileage rate (for 2024, 67 cents per business mile) plus tolls and parking, or Actual expenses (including depreciation, subject to limitations) for the portion of car use allocable to the business. For this method, you’ll need to keep track of all costs for gas, repairs and maintenance, insurance, interest on a car loan, and any other car-related costs. Employees vs. self-employed From 2018–2025, under the Tax Cuts and Jobs Act, employees can’t deduct unreimbursed local transportation costs. That’s because “miscellaneous itemized deductions” — including employee business expenses — are suspended (not allowed) for these years. (Self-employed taxpayers can deduct the expenses discussed in this article.) But beginning in 2026, business expenses (including unreimbursed employee auto expenses) of employees are scheduled to be deductible again, as long as the employee’s total miscellaneous itemized deductions exceed 2% of adjusted gross income. However, with Republican control in Washington, this unfavorable provision may be extended by Congress, and miscellaneous itemized deductions won’t be allowed. Suttle & Stalnaker, PLLC is ready to help you. If you would like more information on how this applies to you, contact our office at 304.343.4126. ### The tax treatment of intangible assets URL: https://www.suttlecpas.com/insights/the-tax-treatment-of-intangible-assets Published: 2024-12-20 Intangible assets, such as patents, trademarks, copyrights and goodwill, play a crucial role in today’s businesses. The tax treatment of these assets can be complex, but businesses need to understand the issues involved. Here are some answers to frequently asked questions. What are intangible assets? The term “intangibles” covers many items. Determining whether an acquired or created asset or benefit is intangible isn’t always easy. Intangibles include debt instruments, prepaid expenses, non-functional currencies, financial derivatives (including, but not limited to, options, forward or futures contracts, and foreign currency contracts), leases, licenses, memberships, patents, copyrights, franchises, trademarks, trade names, goodwill, annuity contracts, insurance contracts, endowment contracts, customer lists, ownership interests in any business entities (for example, corporations, partnerships, LLCs, trusts and estates) and other rights, assets, instruments and agreements. What are the expenses? Some examples of expenses you might incur to acquire or create intangibles that are subject to the capitalization rules include amounts paid to: Obtain, renew, renegotiate or upgrade business or professional licenses, Modify certain contract rights (such as a lease agreement), Defend or perfect title to intangible property (such as a patent), and Terminate certain agreements, including, but not limited to, leases of tangible property, exclusive licenses to acquire or use your property, and certain non-competition agreements. IRS regulations generally characterize an amount as paid to “facilitate” the acquisition or creation of an intangible if it’s paid in the process of investigating or pursuing a transaction. The facilitation rules can affect any business and many ordinary business transactions. Examples of costs that facilitate the acquisition or creation of an intangible include payments to: Outside counsel to draft and negotiate a lease agreement, Attorneys, accountants and appraisers to establish the value of a corporation’s stock in a buyout of a minority shareholder, Outside consultants to investigate competitors in preparing a contract bid, and Outside counsel for preparing and filing trademark, copyright and license applications. Why are intangibles so complex? IRS regulations require the capitalization of costs to: Acquire or create an intangible asset, Create or enhance a separate, distinct intangible asset, Create or enhance a “future benefit” identified in IRS guidance as capitalizable, or “Facilitate” the acquisition or creation of an intangible asset. Capitalized costs can’t be deducted in the year paid or incurred. If they’re deductible, they must be ratably deducted over the life of the asset (or, for some assets, over periods specified by the tax code or under regulations). However, capitalization generally isn’t required for costs not exceeding $5,000 and for amounts paid to create or facilitate the creation of any right or benefit that doesn’t extend beyond the earlier of 1) 12 months after the first date on which the taxpayer realizes the right or benefit or 2) the end of the tax year following the tax year in which the payment is made. Are there any exceptions to the rules? Like most tax rules, these capitalization rules have exceptions. Taxpayers can also make certain elections to capitalize items that aren’t ordinarily required to be capitalized. The examples described above aren’t all-inclusive. Given the length and complexity of the regulations, transactions involving intangibles and related costs should be analyzed to determine the tax implications. For assistance and more information Properly managing the tax treatment of intangible assets is vital for businesses to maximize tax benefits and ensure compliance with tax regulations. Contact us to discuss the capitalization rules and determine whether any costs you’ve paid or incurred must be capitalized, or whether your business has entered into transactions that may trigger these rules. You can also contact us if you have any questions. Suttle & Stalnaker, PLLC is ready to help you. If you would like more information on how this applies to you, contact our office at 304.343.4126. ### Self-employment tax: A refresher on how it works URL: https://www.suttlecpas.com/insights/self-employment-tax-a-refresher-on-how-it-works Published: 2024-12-16 If you own a growing, unincorporated small business, you may be concerned about high self-employment (SE) tax bills. The SE tax is how Social Security and Medicare taxes are collected from self-employed individuals like you. SE tax basics The maximum 15.3% SE tax rate hits the first $168,600 of your 2024 net SE income. The 15.3% rate is comprised of the 12.4% rate for the Social Security tax component plus the 2.9% rate for the Medicare tax component. For 2025, the maximum 15.3% SE tax rate will hit the first $176,100 of your net SE income. Above those thresholds, the SE tax’s 12.4% Social Security tax component goes away, but the 2.9% Medicare tax component continues for all income. How high can your SE tax bill go? Maybe a lot higher than you think. The real culprit is the 12.4% Social Security tax component of the SE tax, because the Social Security tax ceiling keeps getting higher every year. To calculate your SE tax bill, take the taxable income from your self-employed activity or activities (usually from Schedule C of Form 1040) and multiply by 0.9235. The result is your net SE income. If it’s $168,600 or less for 2024, multiply the amount by 15.3% to get your SE tax. If the total is more than $168,600 for 2024, multiply $168,600 by 12.4% and the total amount by 2.9% and add the results. This is your SE tax. Example: For 2024, you expect your sole proprietorship to generate net SE income of $200,000. Your SE tax bill will be $26,706 (12.4% × $168,600) + (2.9% × $200,000). That’s a lot! Projected tax ceilings for 2026–2033 The current Social Security tax on your net SE income is expensive enough, but it will only worsen in future years. That’s because your business income will likely grow, and the Social Security tax ceiling will continue to increase based on annual inflation adjustments. The latest Social Security Administration (SSA) projections (from May 2024) for the Social Security tax ceilings for 2026–2033 are: 2026 – $181,800 2027 – $188,100 2028 – $195,900 2029 – $204,000 2030 – $213,600 2031 – $222,900 2032 – $232,500 2033 – $242,700 Could these estimated ceilings get worse? Absolutely, because the SSA projections sometimes undershoot the actual final numbers. For instance, the 2025 ceiling was projected to be $174,900 just last May, but the final number turned out to be $176,100. But let’s say the projected numbers play out. If so, the 2033 SE tax hit on $242,700 of net SE income will be a whopping $37,133 (15.3% × $242,700). Disconnect between tax ceiling and benefit increases Don’t think that Social Security tax ceiling increases are linked to annual Social Security benefit increases. Common sense dictates that they should be connected, but they aren’t. For example, the 2024 Social Security tax ceiling is 5.24% higher than the 2023 ceiling, but benefits for Social Security recipients went up by only 3.2% in 2024 compared to 2023. The 2025 Social Security tax ceiling is 4.45% higher than the 2024 ceiling, but benefits are going up by only 2.5% for 2025 compared to 2024. The reason is that different inflation measures are used for the two calculations. The increase in the Social Security tax ceiling is based on the increase in average wages, while the increase in benefits is based on a measure of general inflation. S corporation strategy While your SE tax bills can be high and will probably get even higher in future years, there may be potential ways to cut them to more manageable levels. For instance, you could start running your business as an S corporation. Then, you can pay yourself a reasonably modest salary while distributing most or all of the remaining corporate cash flow to yourself. That way, only your salary would be subject to Social Security and Medicare taxes. Suttle & Stalnaker, PLLC is ready to help. If you have questions or want more information about the SE tax and ways to manage it, contact our office at 304.343.4126. ### When can you deduct business meals and entertainment? URL: https://www.suttlecpas.com/insights/when-can-you-deduct-business-meals-and-entertainment Published: 2024-12-12 You’re not alone if you’re confused about the federal tax treatment of business-related meal and entertainment expenses. The rules have changed in recent years. Let’s take a look at what you can deduct in 2024. Current law The Tax Cuts and Jobs Act eliminated deductions for most business-related entertainment expenses. That means, for example, that you can’t deduct any part of the cost of taking clients out for a round of golf or to a football game. You can still generally deduct 50% of the cost of food and beverages when they’re business-related or consumed during business-related entertainment. Allowable food and beverage costs IRS regulations clarify that food and beverages are all related items whether they’re characterized as meals, snacks, etc. Food and beverage costs include sales tax, delivery fees and tips. To be 50% deductible, food and beverages consumed in conjunction with an entertainment activity must: be purchased separately from the entertainment or be separately stated on a bill, invoice, or receipt that reflects the usual selling price for the food and beverages. You can deduct 50% of the approximate reasonable value if they aren’t purchased separately. Other rules Per IRS regulations, no 50% deduction for the cost of business meals is allowed unless: 1. The meal isn’t lavish or extravagant under the circumstances. 2. You (as the taxpayer) or an employee is present at the meal. 3. The meal is provided to you or a business associate. Who are business associates? They’re people with whom you reasonably expect to conduct business — such as established or prospective customers, clients, suppliers, employees or partners. IRS regulations make it clear that you can deduct 50% of the cost of a business-related meal for yourself — for example, because you’re working late at night. Traveling on business Per IRS regulations, the general rule is that you can still deduct 50% of the cost of meals while traveling on business. The longstanding rules for substantiating meal expenses still apply. Message: keep receipts. IRS regulations also reiterate the longstanding general rule that no deductions are allowed for meal expenses incurred for spouses, dependents, or other individuals accompanying you on business travel. (This is also true for spouses and dependents accompanying an officer or employee on a business trip.) The exception is when the expenses would otherwise be deductible. For example, meal expenses for your spouse are deductible if he or she works at your company and accompanies you on a business trip for legitimate business reasons. 100% deductions in certain situations IRS regulations confirm that some longstanding favorable exceptions for meal and entertainment expenses still apply. For example, your business can deduct 100% of the cost of: Food, beverage, and entertainment incurred for recreational, social, or similar activities that are primarily for the benefit of all employees (for example, at a company holiday party); Food, beverages, and entertainment available to the general public (for example, free food and music you provide at a promotional event open to the public); Food, beverages and entertainment sold to customers for full value; Amounts that are reported as taxable compensation to recipient employees; and Meals and entertainment that are reported as taxable income to a non-employee recipient on a Form 1099 (for example, a customer wins a dinner cruise for ten valued at $750 at a sales presentation). In addition, a restaurant or catering business can deduct 100% of the cost of food and beverages purchased to provide meals to paying customers and consumed at the worksite by employees who work in the restaurant or catering business. Bottom line Business-related meal deductions can be valuable, but the rules can be complex. Suttle & Stalnaker, PLLC is ready to help. If you would like more information on how this applies to you, contact our office at 304.343.4126. ### 2024 Year-End Reminders & Planning Tips URL: https://www.suttlecpas.com/insights/2024-year-end-reminders-and-planning-tips Published: 2024-12-10 As the end of the year quickly approaches, we want to remind you of things to consider before December 31 and to provide you with some important reminders as you prepare for the tax filing season. Protect Your Personal Information – Identity Theft continues to be an issue for the IRS and state tax authorities. The IRS and state do not initiate contact by email or phone unless they have previously contacted you by mail regarding a matter. No legitimate organization will ever ask for sensitive information through emails or other unsecured methods. Here are some steps you can follow to protect your information: Please forward all notices to us so we can review and respond expeditiously to the IRS or State Tax. Do not open attachments in suspicious emails. Read your credit card, banking, and health insurance statements carefully and often – watch for even the smallest charge that appears. Shred any documents with personal and financial. Beware of phishing scams requesting you update or verify your accounts. Obtain an Identity Protection PIN from the IRS at the following website: https://www.irs.gov/identity-theft-fraud-scams/get-an-identity-protection-pin Secure emails from our office – We use a secure portal system called Share File to send and receive sensitive information electronically. If you wish to send us information securely using Share File, please contact us to send you the link. Unexpected refund checks – If you receive an unexpected tax refund, DO NOT deposit or cash the check until you discuss it with us. If the overpayment should have been applied to your estimated taxes, the refund may cause you to be subject to underpayment penalties. The check can be returned to avoid incurring any penalties. Tax Law Updates – We continue to provide up to date information on our website and our News You Can Use e-blasts including the 2024 Year-End Tax Planning Guide, other articles and planning tips for individuals and businesses, financial tools, and any late breaking tax news. Please visit our website www.SuttleCPAs.com (if you do not have access to our website and want us to send a copy of the 2024 Year-End Tax Planning report, please let us know). If you are not receiving our email e-blasts please subscribe to our newsletter on our website or contact us and we will make sure you are on the contact list. The information below is general in nature. You should consult with us before acting upon the information to be sure of the tax ramifications based on your specific situation. 2024 Tax Projections – If you have had any changes to your income, deductions or withholding that could significantly alter your 2024 estimated taxes, please contact our office as soon as possible. It is important that you review your projected tax and projected tax withholding from all sources for the current year. Bonus depreciation phase out begins – Beginning in 2023, there is an annual reduction in the bonus depreciation deduction allowed for taxpayers under the Tax Cuts and Jobs Act of 2017. For any assets placed into service in 2024 that qualify for bonus depreciation, only 60% of their cost can be deducted this year versus 80% for 2023. The deduction will continue to reduce by 20% annually through 2026. Required minimum distribution rules changed – The SECURE 2.0 Act, passed in 2022, increased the starting age for RMDs from 72 to 73 as of January 1, 2023. Just a reminder, if you are 70½ you can take advantage of the exclusion for direct charitable donations of IRA funds (up to $105,000). This exclusion is not available to non-IRA accounts. Roth IRA conversions – If you expect your 2024 income is lower than usual or if you expect your income in 2025 to push you into a higher tax bracket, a Roth IRA conversion may be an advantageous way to convert traditional-IRA money invested in any beaten-down stocks (or mutual funds) into a Roth IRA in 2024 if eligible to do so. Keep in mind that the conversion will increase your income for 2024, possibly reducing tax breaks subject to phase-out at higher AGI levels. This may be desirable, however, for those potentially subject to higher tax rates under pending legislation. Year-end investment moves – Tax considerations should not drive your investment decisions. However, it is worth considering the tax implications of any year-end investment decisions you make. If you have capital gains from sales of investments, you may want to consider selling securities in loss positions to reduce your tax. If you plan to make substantial donations by selling stock, consider donating appreciated stock or digital assets. You will receive a deduction for the stock’s fair market value and will not have a reportable capital gain. Deduction timing – Tax planning has become more complex due to the uncertainty of whether Congress will pass any Legislation and when it might pass and become law. When paying deductible items, you should pay them in the year (2024 vs. 2025) you expect to be in a higher tax bracket. Keep the following in mind: An expense is only deductible in the year it is paid for cash basis taxpayers. Expenses paid in 2024 by credit card are deductible when posted, even though you pay your credit card bill in 2025. Retirement Plans – There are several types of retirement plans available for self-employed individuals and small businesses. Some of the plans must be established by December 31. If you plan to set up a 2024 plan, please give us a call to discuss which plan would be best for your business. Taxes – If itemizing, you may deduct up to $10,000 ($5,000 if married filing separately) for a combination of property taxes and both state and local income taxes or sales taxes. Therefore, it is not tax advantageous to prepay your fourth quarter state estimate if you are already over the $10,000 limit. WV Motor Vehicle Property Tax Adjustment Credit – West Virginia has implemented a new tax credit for motor vehicle taxes paid on time to be credited to your WV tax liability. You will receive a tax credit certificate in January 2025 from the WV Tax Division or online (tax.wv.gov). Please provide this form to us to claim this credit. Charitable Contributions – The IRS may be conducting more audits related to charitable contribution values and required documentation especially for non-cash contributions. Be sure you are receiving the required documentation (letter confirming no goods or services were received) from the charity for all gifts of $250 or more. Visit our website for more information. Digital assets – If you have bought, sold, received, sent, transferred, or otherwise transacted with digital assets please let us know. There will be additional work required to capture and report this data within your tax return. Note that digital assets are treated as property by the IRS and therefore digital asset transactions may result in short-term or long-term capital gains. Make year-end friends and family gifts before December 31 – A person can make gifts to any other person (related and non-related) totaling up to $18,000 for 2024 ($19,000 for 2025) without requiring a gift tax return or starting to use the lifetime exemption. The 2024 annual exclusion amount increases to $36,000 per donee if the donor and spouse make gifts to the donee ($38,000 for 2025), including gift splitting. The unused exclusion does not carry over to the next year. Direct payment to the provider for education and medical expenses do not count against the annual exclusion. The 2024 lifetime estate and gift tax exemption is $13.61 million ($27.22 if married). The 2025 lifetime estate and gift tax exemption will be $13.99 million ($27.98 if married). It is anticipated this lifetime amount will be much lower in future years and will revert back to the prior law’s $7 million (to be adjusted for inflation) after 2025. Special rules allow a donor to contribute more than $18,000 in the current year to a §529 College Savings Plan and have the annual exclusion for up to four subsequent years apply without incurring any gift tax. The contribution to a 529 Plan may also entitle you to a state income tax deduction if you contribute to a plan sponsored by your state of residence. Keep in mind, 529 contribution maximums vary by state. Carryover tax basis – For gifted property, the donee has the same income tax basis and holding period as the donor. There are special rules if the fair market value of the asset at the time of the gift is lower than the adjusted basis. Generally, the tax basis of inherited property is the fair market value on the date of death. These rules may be changed with any new tax laws. Review All Planning Documents – Each year as you gather and organize your tax information, it is the perfect time to review all of your estate planning documents – wills, trusts, powers of attorney, medical directives, etc. – to account for births, deaths, divorce and other changes which have occurred. It is also important to review your beneficiary designations included in your life insurance policies, annuities, IRAs, and other retirement plans. Beneficial Ownership Information (BOI) Reporting – There is a new federal reporting requirement that affects most businesses and the penalties for not complying are significant. If your business can be defined as a “reporting company” under the Corporate Transparency Act (CTA), you may need to comply with new beneficial ownership information (BOI) reporting rules that took effect on January 1, 2024. Depending on when your business was (or is) first organized, your due date can be 30 days, 90 days, January 1, 2025, or already passed. You can find more information on our website. UPDATE: On Tuesday, December 3, 2024, a federal district court in Texas halted the requirement to report BOI under the CTA citing that it is likely unconstitutional. This is currently under review by FinCEN and the ruling has been appealed by the Department of Justice. More to come! Filing Forms 1099 – If you have paid over $600 in your trade or business to an individual or other entity (excluding corporations) you may have Form 1099 filing requirements. Form 1099s are due January 31 to the recipient and IRS. If you need our assistance with your filing requirements, please let us know. You will be asked on your tax return if all required Forms 1099 were filed. The IRS will impose a per form penalty if you do not file a Form 1099 when required. As you prepare your business for year-end, please review your vendors to determine if this rule applies to you. TAX SEASON REMINDERS Individual Tax Organizers – Your 2024 Tax Organizer, customized from your prior year return information, will be mailed to you in the coming weeks. Additional information regarding your tax data and documents will be included. Remember, you do not need to transcribe information already contained on the tax documents. Use the Organizer as a guide to be sure you have everything or to note new items and those that did not reoccur this year. We will pick up the details from the tax documents. If you have some information in another form (Excel schedules, QuickBooks reports, etc.), you can provide those schedules in lieu of entering the detail in the related section of the Organizer. Please provide the original copies of all tax documents. We use a scan technology in which copies do not work as well. This includes Forms W-2’s, 1099’s, 1098’s, K-1’s, and complete year-end brokerage statements. We will return all original documents to you. The Organizer and your tax data must be returned to our office by March 10, 2025. All tax documents, with the exception of Schedule K-1s and certain brokerage statements, should be received by then. Please hold your information until complete, with those limited exceptions. Tax information received after the deadline may require an extension of time to file the returns. Safe Send – We are encouraging our clients to use a program called Safe Send Returns to electronically deliver and sign their tax returns. If you choose this method of delivery, you will not receive a bound, paper copy of your return (unless you request it). We will have additional information on this in your year-end tax Organizer packet. Tax Season Office Hours – Monday through Friday from 8:30 a.m. to 5:00 p.m. We are available by appointment outside of regular office hours. Satisfaction and Referrals – Our goal is to provide the highest level of professional service. If this is not happening, please let us know so we can correct any problems. Thank you for your referrals. If you know of others who will benefit from the service we provide, please let them know. We appreciate your confidence. ### Get tax breaks for energy-saving purchases this year because they may disappear URL: https://www.suttlecpas.com/insights/get-tax-breaks-for-energy-saving-purchases-this-year-because-they-may-disappear Published: 2024-12-10 The Inflation Reduction Act (IRA), enacted in 2022, created several tax credits aimed at promoting clean energy. You may want to take advantage of them before it’s too late. On the campaign trail, President-Elect Donald Trump pledged to “terminate” the law and “rescind all unspent funds.” Rescinding all or part of the law would require action from Congress and is possible when Republicans take control of both chambers in January. The credits weren’t scheduled to expire for many years, but they may be repealed in 2025 with the changes in Washington. If you’ve been thinking about making any of the following eligible purchases, you may want to do it before December 31. 1. Home energy efficiency improvements Homeowners can benefit from several tax credits for making energy-efficient upgrades to their homes. These include: Energy Efficient Home Improvement Credit: This credit covers 30% of the cost of eligible home improvements, such as installing energy-efficient windows, doors, and insulation, up to a maximum of $1,200 this year. There’s also a credit of up to $2,000 for qualified heat pumps, water heaters, biomass stoves or biomass boilers. Residential Clean Energy Credit: This credit is available for installing solar panels, wind turbines, geothermal heat pumps, and other renewable energy systems. It covers 30% of the cost. Energy Efficient Property Credit: For those investing in clean energy for their homes, this credit offers a significant incentive. It covers 30% of the cost of installing solar water heaters and other renewable energy sources. 2. Clean vehicle tax credit One of the most notable IRA provisions is the clean vehicle tax credit. If you purchase a new electric vehicle (EV) or fuel cell vehicle (FCV), you may qualify for a tax credit of up to $7,500. The credit for a pre-owned clean vehicle can be up to $4,000. To be eligible, the vehicle must meet specific criteria, including price caps and income limits for the buyer. The credit can be claimed when you file your tax return. Alternatively, you can transfer it to an eligible dealer when you buy a vehicle, which effectively reduces the vehicle’s purchase price by the credit amount. 3. Electric Vehicle Charging Equipment Credit If you install an EV charging station at your home, you can claim a credit of 30% of the cost, up to $1,000. This credit is designed to encourage the adoption of electric vehicles by making it more affordable to charge at home. Act now These are only some of the tax breaks in the IRA that may reduce your federal tax bill while promoting clean energy. IRS data has shown that the tax breaks are popular. For example, in 2023 (the first year available), approximately 750,000 taxpayers claimed the credit for rooftop solar panels. Keep in mind that a tax credit is more valuable than a tax deduction. A credit directly reduces the amount of tax you owe, dollar for dollar, while a deduction reduces your taxable income, which is the amount subject to tax. So, act now if you want to take advantage of these credits. There may also be state or local utility incentives. Suttle & Stalnaker, PLLC is ready to help. If you would like more information on how this applies to you, contact our office at 304.343.4126. ### Beneficial Ownership Information (BOI) Reporting Update URL: https://www.suttlecpas.com/insights/beneficial-ownership-information-boi-reporting-update Published: 2024-12-10 As you may remember, we notified you on August 30, 2024 about the Beneficial Ownership Information report due to be filed by December 31, 2024. On December 3, 2024, a federal district court in Texas issued an order granting a nationwide preliminary injunction that stayed all deadlines to comply. Today, The Financial Crimes Enforcement Network (FinCEN) has responded that as long as the preliminary injunction remains in effect: reporting companies are not required to report BOI to FinCEN; and reporting companies will not be subject to liability for failing to report their BOI. FinCEN also indicated that reporting companies may continue to voluntarily submit BOI reports. We will continue to monitor this issue and update you as soon as we have any further information.