Paragraph 1: Year-End Tax Updates and Legal Challenges
As the year draws to a close, the tax landscape remains dynamic. A recent court ruling has temporarily halted the Corporate Transparency Act (CTA), which mandates reporting companies to disclose beneficial ownership information (BOI) to the U.S. government. This injunction, resulting from a lawsuit involving the National Federation of Independent Business (NFIB), has nationwide implications, relieving businesses from immediate compliance obligations. While the government has appealed the decision, the future of the CTA remains uncertain, with multiple cases pending in various circuit courts and the possibility of Supreme Court review. This legal battle underscores the need for businesses and advisors to carefully consider their next steps regarding BOI reporting.
Paragraph 2: IRS Leadership Transition and Tax Policy Debates
Adding to the flurry of year-end tax developments is the unexpected nomination of former Congressman Billy Long as the next IRS Commissioner. This move, initiated by President-elect Donald Trump, replaces current Commissioner Danny Werfel, whose term was set to extend until 2027. Long’s lack of formal training in tax, law, or accounting, coupled with his involvement in the controversial Employee Retention Tax Credit (ERTC) industry, has drawn criticism. His nomination requires Senate confirmation and is likely to face scrutiny. Concurrently, discussions surrounding the expiring provisions of the Tax Cuts and Jobs Act are gaining momentum. Steve Forbes emphasizes the importance of renewing and strengthening these tax cuts to avoid economic harm. The upcoming tax policy debates will likely revolve around tariffs and the extent to which Congress chooses to fund income tax cuts.
Paragraph 3: Year-End Tax Planning Strategies and Charitable Giving
With 2025 approaching, taxpayers are seeking strategies to minimize their tax burdens. However, navigating the complexities of interconnected tax rules requires careful consideration. Selling depreciated stock, for example, can impact college tax credits, while choosing pre-tax retirement contributions over Roth contributions can affect the pass-through deduction for the self-employed. Roth conversions can also have unintended consequences on dividend taxes and foreign tax credits. One reliable year-end tax reduction strategy, for those who itemize, is charitable giving. Giving USA reports that overall charitable giving in the U.S. increased in 2023, driven by growth in the stock market and GDP. Although the dollar amount increased, when adjusted for inflation, giving actually declined.
Paragraph 4: Charitable Giving Trends and Workplace Giving Platforms
Workplace giving programs offer a convenient way to contribute to charitable causes. Platforms like Benevity facilitate employee giving, often with employer matching, empowering workers to choose their preferred charities. Benevity’s analysis of employee giving reveals the top recipients in 2024 were the Red Cross, St. Jude Children’s Research Hospital, Doctors Without Borders, Planned Parenthood Federation of America, and the Palestine Children’s Relief Fund. Maximizing retirement savings also presents a valuable tax-saving opportunity. New contribution limits for 2025 have been announced. Consulting with a tax advisor is crucial for personalized guidance on year-end tax planning.
Paragraph 5: Tax Implications of Plasma Donation and IRS Funding
Addressing a reader’s question, the newsletter clarifies that income from plasma donation is reportable on tax returns. While donating plasma at Red Cross centers is typically unpaid, selling plasma to for-profit centers can generate substantial income, ranging from $30 to $200 per donation. This income is considered ordinary income and should be reported on Schedule 1 (Form 1040), Line 8z, "Other income." Taxpayers should maintain accurate records of their plasma donation earnings. The newsletter also highlights the importance of adequate IRS funding, as emphasized by IRS Commissioner Daniel Werfel. He argues that sufficient resources are essential for the IRS to function effectively, ensuring timely processing of refunds, efficient taxpayer services, and the development of digital solutions.
Paragraph 6: Legal Case, Industry News, and Upcoming Events
The newsletter covers the legal challenges faced by Roger Ver, an early Bitcoin investor, who is facing charges of mail fraud, tax evasion, and filing false tax returns. His case raises questions about the U.S. expatriation tax regime and serves as a reminder of the extended statute of limitations in criminal tax cases. The newsletter also provides a list of upcoming tax deadlines, conferences, and industry news. Several mergers and acquisitions within the accounting and tax industry are noted, along with PCAOB’s release of a report on audit firm culture. Finally, the newsletter includes a trivia question regarding presidential appointments within the IRS and offers readers an opportunity to provide feedback.
