Conner Ash PC

The IRS announced plans to issue automatic payments to eligible taxpayers who didn’t claim the Recovery Rebate Credit on their 2021 tax returns. IRS data showed that many taxpayers filed a return but didn’t claim the credit. The Recovery Rebate Credit is a refundable credit for taxpayers who didn’t receive one or more Economic Impact Payments. No action is needed for eligible taxpayers to receive these payments, which will go out automatically in December and should arrive in most cases by late January 2025. The payments will be direct deposited or sent by paper check. Eligible taxpayers will also receive a separate letter notifying them of the payments. Contact us with questions.

If you work from home, you may wonder if your workspace qualifies for a home office tax deduction. To qualify for the deduction, there are specific requirements you must meet. For example, if you’re an employee and your employer requires you to work remotely, your home office currently doesn’t qualify. If you’re self-employed, to qualify, a portion of the home must be used regularly and exclusively to conduct business. Also, the home must be the taxpayer’s principal place of business. There are two methods for determining the value of a home office tax deduction: the simplified method and the actual expenses method. Contact us for additional information or visit: https://bit.ly/4fuGfKF

When deciding on the best business structure, one option is a C corporation. There are pros and cons to doing business this way. For example, a C corporation allows a business to be taxed separately from you as the owner. The corporate tax rate is currently 21%, which is lower than the highest 37% noncorporate tax rate. One potential disadvantage: Earnings can be subject to double tax, once at the corporate level and again when distributed to you. One big advantage is the liability protection a C corporation offers. Shareholders aren’t personally liable for the corporation’s debts and liabilities. So personal assets are generally protected if the corporation faces legal issues or bankruptcy.

If you receive education assistance fringe benefits from your employer, you may be able to exclude up to $5,250 of the benefits annually from your taxable income. This means your employer can reimburse you for eligible expenses and won’t include those benefits with your wages, tips, and other compensation shown on your Form W-2. You also don’t have to include the benefits on your tax return. There are requirements to qualify, including that there must be a formal, written educational assistance program. You can’t use any of the tax-free education expenses paid for by your employer as the basis for other tax breaks, including the American Opportunity Credit and Lifetime Learning Credit.

Could your organization be losing precious dollars to fraud? It’s possible. One way to stay on guard is to conduct fraud risk assessments regularly. A fraud risk assessment is a formal, comprehensive process for identifying risks, evaluating their severity, developing mitigation strategies, and strengthening monitoring and response procedures. Large employers may be able to perform one internally; small to midsize organizations often engage external auditors, such as Certified Fraud Examiners. Assessments generally involve scrutinizing internal controls, conducting interviews with executives and key employees, and performing statistical and financial analyses. Contact us for more info.

The IRS recently stated on its website that it “remains very focused on offshore tax evasion through unreported financial accounts and structures.” The tax agency explained that it’s “employing existing tools and data analytics to address the various forms of offshore tax evasion that undermine fairness in the tax system.” However, it added that “certain schemes only come to light because of the courage of a whistleblower to come forward.” Those with credible information are encouraged to consider filing a whistleblower claim. The IRS pays monetary awards to eligible individuals whose information leads to collection of taxes and other amounts. To learn more: https://bit.ly/3VJoAYQ

Crypto assets are reported as intangibles on the balance sheet, but favorable new rules go into effect in 2025 for calendar-year entities that require certain crypto assets to be reported at “fair value.” Prior guidance required crypto assets to be measured at historical cost less impairment. The updated guidance also requires companies to present these assets separately from other intangibles on the balance sheet and to provide more detailed disclosures. If your company owns crypto, contact us for implementation guidance, including whether early adoption makes sense for your situation.

ALERT: There has been another federal court ruling regarding the beneficial ownership information (BOI) reporting requirements. Many companies are once again required to file BOI reports with the Financial Crimes Enforcement Network (FinCEN). Companies created or registered before Jan. 1, 2024, now have until Jan. 13, 2025, to file their initial BOI reports. Previously, a court issued a nationwide preliminary injunction on the requirement to file by Jan. 1. But on Dec. 23, the 5th U.S. Circuit Court of Appeals lifted the injunction. There are some exceptions to the Jan. 13 deadline. Contact us for assistance. For more information from FinCEN: https://bit.ly/4gtKeZb