McCurdy & Associates, Inc.

Tax credits reduce tax liability dollar-for-dollar. So, 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 certain small businesses is the credit for providing health insurance to employees. 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 credit can equal as much as 50% of health coverage premiums paid. Contact us to learn more.

If you itemize deductions on your 2025 individual income tax return, you potentially can deduct your 2025 donations to qualified charities. If you made a donation of $250 or more, you must substantiate it with a “contemporaneous written acknowledgment” from the charity. “Contemporaneous” means you receive it by the date you file your return (or the due date, including extensions, if earlier). If you haven’t yet received an acknowledgement for a 2025 gift (or filed your 2025 return), request it from the charity now. Additional substantiation rules apply to certain types of donations, such as noncash contributions. Contact us for help determining what you can deduct on your 2025 tax return.

Did your business make repairs to tangible property, such as buildings, equipment or vehicles, in 2025? Such costs may be fully deductible on your 2025 income tax return, if they weren’t actually for “improvements” that must be depreciated over a period of years. Some IRS safe harbors can help: 1) the routine maintenance safe harbor, 2) the de minimis safe harbor, or 3) the small business safe harbor. However, improvements might also be eligible to be deducted immediately in certain circumstances. Contact us to discuss what you can deduct on your 2025 return and to start planning for tax-efficient repairs, maintenance and improvements in 2026.

A new tax-advantaged way to help children build savings for the future was created by the One Big Beautiful Bill Act: Trump Accounts (TAs). One way to set up a TA is to file Form 4547, “Trump Account Election(s),” with your 2025 income tax return. Under a pilot program, the federal government will fund a TA with $1,000 of free money for U.S. citizen children born in 2025 through 2028. But older children also are eligible for TAs, just not for the free money. After July 3, 2026, you can make nondeductible annual TA contributions up to $5,000 (adjusted for inflation after 2027) until the year your child turns 18, when the TA will turn into a traditional IRA. Contact us to learn more.

If you own a business or are self-employed and haven’t set up a tax-advantaged retirement plan, it’s not too late to establish one and contribute for 2025. You can set up a Simplified Employee Pension (SEP) and make 2025 contributions as late as the due date (including extensions) of your business’s income tax return, either March 16, 2026 (Sept. 15 if extended) or April 15, 2026 (Oct. 15 if extended), depending on entity type. SEPs are easy to set up, and contribution limits are generous, potentially providing a large deduction. If you have employees, you’ll generally have to include them and make contributions to SEP-IRAs on their behalf, which are also deductible. Contact us to learn more.

The IRS is opening the filing season for 2025 individual income tax returns on January 26. This is about the same time as when the agency began accepting and processing 2024 tax year returns last year, despite IRS staffing having been significantly reduced since then. The filing deadline is April 15, but filing earlier can be beneficial. If you’re getting a refund, you’ll likely receive it sooner. Filing early can also potentially protect you from tax identity theft, where a thief uses your personal information to file a fraudulent return and claim a bogus refund. Contact us to answer your tax filing questions or to discuss getting started on your 2025 return.

Businesses: Don’t cast a shadow over tax filing season by missing an important deadline that falls on Groundhog Day this year. Normally, by Jan. 31, businesses must furnish Forms W-2 to employees and file them with the Social Security Administration to show wages paid and taxes withheld for the previous year. But in 2026, that date falls on a Saturday. So the deadline is the next business day: Monday, Feb. 2. That deadline also applies to Form 1099-NEC. You generally must provide it to independent contractors who were paid $600 or more in 2025 to report nonemployee compensation and file it with the IRS. (The threshold will increase to $2,000 for payments made in 2026.) Questions? Contact us.

Eligible medical expenses are deductible 1) if they weren’t reimbursable by insurance or paid via tax-advantaged accounts, 2) to the extent that, in aggregate, they exceed 7.5% of your adjusted gross income, and 3) if you itemize deductions. Now is a good time to review your medical expenses for 2025 and see if you had enough so you can claim the medical expense deduction. Eligible expenses include many costs besides hospital and doctor bills, such as prescription drugs and certain costs related to transportation, insurance, therapy, dental and vision care, smoking cessation, and weight loss. Contact us to determine if you can benefit from the medical expense deduction on your 2025 return.

Pass-through entities generally don’t owe federal income tax at the entity level, but they still must file federal income tax returns. These entities include partnerships, limited liability companies treated as partnerships for tax purposes and S corporations. If your pass-through entity uses the calendar year for tax purposes, as most do, the filing deadline for the 2025 tax year is March 16, 2026 (because March 15 is on a Sunday). The deadline can be extended to Sept. 15, 2026, by filing for an extension by March 16. If you do that, you (and any other owners) will also likely need to file an extension to Oct. 15, 2026, for your individual return. Contact us to get things rolling.

Every year, many taxpayers experience damage to their homes or personal property from storms, floods, wildfires or other disasters. For 2025 income tax returns due April 15, 2026, personal casualty loss deductions are generally limited to those due to federally declared disasters. But, effective for losses occurring on or after Jan. 1, 2026, eligible disasters also include certain state-declared disasters. Even when the cause of a loss qualifies you for the deduction, additional limits apply. For example, your deduction is reduced by insurance proceeds received, a 10% of adjusted gross income floor applies, and you must itemize deductions. Contact us for help determining if you’re eligible.