How the U.S. Election Changes the Outlook for Taxes

The outcome of the November 5 election is likely to significantly impact taxes. Many provisions in President-elect Donald Trump’s signature tax legislation from his first time in the White House, the Tax Cuts and Jobs Act (TCJA), are scheduled to expire at the end of 2025. Now, there is a better chance that most provisions will be extended.

Expiring TCJA Provisions Could Significantly Alter the Federal Income Tax Landscape for Individuals after 2025

Because deep divisions exist in the current Congress, the risk is high that Congress will fail to take action the that would be needed to prevent the reversal of the temporary TCJA changes.  Therefore, you should prepare for the possibility that temporary TCJA changes will be reversed and plan accordingly.  This Client Alert highlights the more significant temporary TCJA provisions impacting income tax for individuals that are scheduled to be reversed for tax year’s beginning on or after January 1, 2026 and provides tax planning suggestions to reduce the impact these changes would otherwise have on your finances.

How Will the 2025 Inflation Adjustment Numbers Affect Your Year-End Tax Planning?

The IRS has issued its 2025 inflation adjustment numbers for more than 60 tax provisions in Revenue Procedure 2024-40. Inflation has moderated somewhat this year over last, so many amounts will increase over 2024 but not as much as in the previous year. Take these 2025 numbers into account as you implement 2024 year-end tax planning strategies.

Expiring TCJA Provisions Could Hike Your Federal Estate & Gift Tax Bills

While the Tax Cuts and Jobs Act (TCJA) brought sweeping changes to the U.S. tax system, many of the changes were only made on a temporary basis. Several critical provisions are scheduled to expire after 2025, absent congressional action. With strategic planning, you can reduce the impact on your finances.

Ease the Financial Pain of Natural Disasters with Tax Relief

If your family or business has been affected by a natural disaster, such as Hurricane Helene, you may qualify for a casualty loss deduction and federal tax relief.

Taxes Take Center Stage in the 2024 Presidential Campaign

Early voting for the 2024 election has already kicked off in some states, but voters are still seeking additional information on the candidates’ platforms, including their tax proposals. The details can be hard to come by — and additional proposals continue to emerge from the candidates. Here is a breakdown of some of the most notable tax-related proposals of former President Donald Trump and Vice President Kamala Harris.

IRS Ramps up Compliance Enforcement against Certain Businesses

The Inflation Reduction Act provided the IRS with billions of dollars of additional funding to reduce the so-called “tax gap” between what taxpayers owe and what they actually pay. The tax agency has already launched numerous initiatives aimed at this goal, including several business-related compliance campaigns.

IRS Issues Guidance on Tax Treatment of Energy Efficiency Rebates

The Inflation Reduction Act (IRA) established and expanded numerous incentives to encourage taxpayers to increase their use of renewable energy and adoption of a range of energy efficient improvements. In particular, the law includes funding for nearly $9 billion in home energy rebates. While the rebates are not yet available, many states are expected to launch their programs in 2024.

President Biden’s Proposed Budget Highlights His Tax Agenda

President Biden has released his proposed budget for the 2025 fiscal year, including numerous tax provisions affecting both businesses and individual taxpayers. While most of these provisions have little chance of coming to fruition while the U.S. House of Representatives remains controlled by the Republican Party, they might gain new life depending on the outcome of the November elections.

Independent Contractor vs. Employee Status: The DOL Issues New Final Rule

The test used by the U.S. Department of Labor (the “DOL”) for determining whether a worker should be classified as an independent contractor or an employee for purposes of the federal Fair Labor Standards Act (FLSA) has been revised several times over the past decade. Now, the DOL is implementing a new final rule to replace the employer-friendly test that was developed in 2021 (the “2021 Independent Contractor Rule”). The new, more employee-friendly rule takes effect March 11, 2024.

The IRS Unveils Employee Retention Tax Credit (ERC) Relief Program For Employers

Since July 2023, the IRS has taken a series of actions in response to what it has termed a “flood of ineligible claims” for the Employee Retention Tax Credit (ERC). Most recently, it launched a Voluntary Disclosure Program (VDP). The program presents a valuable, but temporary, opportunity for eligible employers.

Reporting Requirements for Recipients of Form 1099-K

The IRS is once again delaying the requirement for a third party settlement organization (“TPSO”) to issue a Form 1099-K to anyone who received more than $600 from the TPSO in third party payment network transactions. 

Five Strategies to Cut your Company’s 2023 Tax Bill

As another year ends with interest rates and markets in flux, one thing remains certain: Reducing your company’s tax bill can improve your cash flow and your bottom line. This Client Alert covers five strategies — some tried-and-true and others particularly timely — that you can execute before the turn of the new year to minimize your company’s tax liability.

The 2024 Cost-Of-Living Adjustment Numbers Have Been Released: How Do They Affect Your Year-End Tax Planning?

The IRS recently issued its 2024 cost-of-living adjustments for more than 60 tax provisions. With inflation moderating slightly this year over last, many amounts will increase over 2023 amounts but not as much as in the previous year. For instance, the Social Security wage base is increasing from $160,200 to $168,600, which is a lesser increase than the $13,200 increase that occurred from 2022 to 2023. As you implement 2023 year-end tax planning strategies, be sure to take these 2024 adjustments into account.

Take Action Now to Reduce Your 2023 Income Tax Bill and Your Taxable Estate

A number of factors are making 2023 a confounding tax planning year for many people. They include turbulent markets, stabilizing—but still high—interest rates and significant changes to the rules regarding retirement planning. While much uncertainty remains, the good news is that you still have time to implement year-end tax planning strategies that may reduce your income tax bill for the year. Here are some steps to consider as 2023 comes to a close.

IRS Offers a Withdrawal Option to Businesses That Claimed Employee Retention Tax Credits

Recent IRS warnings and announcements regarding the Employee Retention Tax Credit (ERC) have raised some businesses’ concerns about the validity of their claims for this valuable, but complex, pandemic-related credit — and the potential consequences of an invalid claim. In response, the IRS has rolled out a new process that certain employers can use to withdraw their claims.

IRS suspends processing of ERC claims

In the face of a flood of illegitimate claims for the Employee Retention Tax Credit (ERC), the IRS has imposed an immediate moratorium through at least the end of 2023 on processing new claims for the credit. The reason the IRS cites for the move is the risk of honest small business owners being scammed by unscrupulous promoters who submit questionable claims on their behalf.

IRS Issues Guidance on New Retirement Catch-Up Contribution Rules

In December 2022, President Biden signed the Setting Every Community Up for Retirement Enhancement (SECURE) 2.0 Act. Among other things, the sweeping new law made some significant changes to so-called catch-up contributions, with implications for both employers and employees.

Tax Relief for Hurricane Idalia Victims

The IRS postponed deadlines to file various individual and business tax returns and make tax payments for taxpayers affected by Hurricane Idalia in Florida and in South Carolina. Affected individuals and businesses in Florida will have until February 15, 2024 to file returns and pay any taxes that were originally due after August 26, 2023 in Florida and August 29, 2023 in South Carolina.

New Electronic Filing Requirements for W-2s and Certain Information Returns

Historically, businesses were not required to file information returns electronically unless 250 or more returns of one type were filed.  The Internal Revenue Service has now substantially modified the electronic filing threshold for information returns, including Form W-2, that are filed in calendar years after December 31, 2023.

Virtual Currency Lands in the IRS’ Crosshairs

While the value of virtual currency continues to fluctuate, the IRS’ interest in it has only increased, as seen in Operation Hidden Treasure in 2021 and the Inflation Reduction Act in 2022. However, the Fiscal Responsibility Act, enacted in May 2023, will claw back $21.39 billion of that amount by the end of 2025. The IRS’s strategic operating plan for 2023 through 2031 lays out the agency’s intention to ramp up enforcement related to digital assets. If you buy, sell or otherwise engage in transactions involving virtual currency, you need to stay up to date with the latest tax developments.

What’s in the Fiscal Responsibility Act?

President Biden has signed into law the Fiscal Responsibility Act of 2023, thereby finalizing the new debt ceiling agreement that he reached with U.S. House of Representatives Speaker Kevin McCarthy. The FRA suspends the debt ceiling through January 1, 2025, increasing on January 2, 2025, to accommodate the obligations issued during the suspension period. The FRA also makes a variety of changes related to domestic spending, although it falls far short of the cuts included in the Republican bill that the House passed in April.

Social Security’s Looming Crisis: Understanding the Problem and the Proposed Solutions

The future of Social Security is a topic of concern due to the program’s impending insolvency. There are several proposals to address the issue, including increasing the payroll tax rate, raising the taxable wage base, adjusting the cost-of-living adjustments (COLAs) and increasing the retirement age. While each proposal has its pros and cons, it is crucial for policymakers to find a solution that ensures the sustainability of Social Security for current and future generations.

Proposed Regulations Regarding the IRA’s Clean Vehicle Credit

The Inflation Reduction Act (IRA) extended and expanded the Section 30D New Clean Vehicle (CV) Credit, previously known as the Electric Vehicle (EV) Credit. The IRS explained that the purpose of these amendments is to promote the purchase and use of “clean vehicles” by lower and middle-income Americans, to promote resilient supply chains and domestic manufacturing, to strengthen supply chains with trusted trading partners, to protect against improper credit claims and to achieve significant carbon emissions reductions.

Noncompliance with Unclaimed Property Reporting Requirements Can Prove Costly

Every state has an unclaimed property (UCP) law that requires businesses to regularly report their UCP holdings. Some states, including Illinois, even require “negative reporting” by businesses that believe they do not hold any UCP. Noncompliance can lead to costly state audits, and nearly every business is at risk.

U.S. Supreme Court Rules Against the IRS on Critical FBAR Issue

The U.S. Supreme Court recently weighed in on an issue regarding a provision of the Bank Secrecy Act (BSA) that has split two federal courts of appeal. Its 5-4 ruling is welcome news for U.S. residents who “non-willfully” violate the law’s requirements for the reporting of certain foreign bank and financial accounts on what is generally known as an FBAR.

Reading the Tea Leaves: Potential Tax Legislation in the New Congress

The 2022 mid-term election has shifted the scales in Washington, D.C., with the Democrats no longer controlling both houses of Congress. While it remains to be seen if — and when — any tax-related legislation can muster the requisite bipartisan support, a review of certain provisions in existing laws may provide an indication of the many areas ripe for action in the next two years.

Extension of Federal Tax Deadlines for Taxpayers Impacted by Storms in Illinois

Based on the disaster declaration issued by the Federal Emergency Management Agency (FEMA) for the severe storms and flooding that occurred in parts of Illinois (DR-4728-IL) between June 29, 2023 and July 2, 2023, the Internal Revenue Service (IRS) announced (IL-2023-06) that federal tax filing and payment deadlines falling between the dates of June 29, 2023 and October 30, 2023 have been extended to October 31, 2023 for certain taxpayers, including taxpayers residing in or having their principal place of business located in Cook County, Illinois. 

Tax Relief for Hurricane Ian Victims

If your home or personal property was damaged this year by Hurricane Ian or other natural disasters, you may be entitled to tax relief that can help soften the blow. Individuals who itemize their deductions are permitted to deduct casualty losses caused by a “sudden, unexpected or unusual event,” such as a hurricane, tornado, earthquake, volcanic eruption, fire or flood. This Client Alert will provide a brief overview of the rules for deducting personal casualty losses.

ORBA Welcomes New Hires to Cloud CFO and Tax Groups

ORBA, one of Chicago’s largest public accounting firms, is pleased to announce that Dave Gnatek, MBA, CPA, Muzammil Chaudhry, CPA, Michael Loesevitz, CPA, JD, LLM and Katherine St. Clair have joined the firm.