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Prepare for an Uncertain Federal Gift and Estate Tax Exemption Amount with a SLAT
Prepare for an Uncertain Federal Gift and Estate Tax Exemption Amount with a SLAT 1275 750 smolinlupinco

For 2023, the federal gift and estate tax exemption amount is set at $12.92 million (or $25.84 million for married couples). However, in the absence of action from Congress, on January 1, 2026, it’s scheduled to decrease to a mere $5 million ($10 million for married couples). 

According to current estimates, those numbers are expected to be adjusted for inflation to just over $6 million and $12 million, respectively.

If you anticipate the value of your estate will surpass estimated 2026 exemption thresholds, consider implementing planning techniques today that may assist in reducing or avoiding gift and estate tax liability in the future. 

One such planning technique is a spousal lifetime access trust (SLAT). In appropriate circumstances, a SLAT enables you to remove substantive wealth from your estate without incurring tax while also providing a safeguard if your circumstances change in the future.

SLAT fundamentals 

A SLAT is an irrevocable trust that permits the trustee to distribute funds to your spouse if a need arises during their lifetime. Usually, SLATs are designed to benefit your children or other beneficiaries while providing income to your spouse throughout their lifetime.

You can make completed gifts to the trust, thereby removing those assets from your estate. However, you can still maintain indirect access to the trust through your spouse if they are named a beneficiary of the trust. 

This is commonly achieved by appointing an independent trustee with complete discretion to distribute funds to your spouse.

Beware of potential complications

SLATs must be meticulously planned and drafted to avoid undesired consequences. For instance, to prevent the inclusion of trust assets in your spouse’s estate, your gifts to the trust must be made with your separate property. 

This may necessitate additional planning, particularly if you reside in a community property state. Additionally, after the trust is funded, it’s crucial to ensure that the trust assets aren’t commingled with community property or marital assets.

It’s essential to remember that the benefits of a SLAT rely on indirect access to the trust through your spouse, which means your marriage must be strong for this strategy to be successful.

There’s also a risk of losing the safety net a SLAT provides if your spouse passes away before you do. One way to mitigate this risk is to establish two SLATs: one created by you with your spouse as a beneficiary and one created by your spouse naming you as a beneficiary.

If both you and your spouse establish a SLAT, careful planning is required to avoid the reciprocal trust doctrine. Under this doctrine, if the IRS determines that the two trusts are interconnected and place you and your spouse in a similar economic position as if you had each created a trust for your individual benefit, it may invalidate the arrangement. To avoid this outcome, the terms of the trusts should be sufficiently varied.

Have questions? Smolin can help.

If you’re having issues wrapping your head around making a SLAT work for you or your spouse, contact the knowledgeable professionals at Smolin, and we’ll help you navigate this complex process.

Ease the Burden of Being a Member of the Sandwich Generation with these Action Steps
Ease the Burden of Being a Member of the Sandwich Generation with these Action Steps 1275 750 smolinlupinco

Are you raising children and supporting aging parents at the same time? If so, you can count yourself among those in the “Sandwich Generation,” a cohort “squeezed” by the demands of caring for children and older adults. 

While providing for your parents later in life may be gratifying, it can also be time-consuming. Deciding how best to handle the financial affairs of your parents as they age requires much thought.

You’ll need to incorporate their needs into your own estate plan. If necessary, you’ll also have to tweak some arrangements they’ve already made. Here are some essential steps you can take to manage your situation.

Identify key contacts

Just as you would do for yourself, you’ll need to collect the names and addresses of the professionals important to your parent’s medical and financial matters. Your list could include the following:

  • Stockbrokers 
  • Financial advisors
  • Attorneys
  • CPAs
  • Insurance agents
  • Physicians

List and value assets 

If you’re managing your parents’ financial matters, you’ll need an in-depth understanding of their assets. Maintain a list of their investment holdings, IRAs, other retirement accounts, and life insurance policies. Include current balances, account numbers, and projections for social security benefits.

Execute the proper estate planning documents. 

Make a plan to gather and review several legal documents involved in estate planning. If your parents already have some of this paperwork completed, be aware that it may need updating. 

Common elements in an estate plan include the following.

Wills. Your parents’ wills control where their possessions go and tie up other loose ends. (Jointly owned property with rights of survivorship automatically passes to the survivor.) It’s important to note that wills usually name an executor, and if you’re handling your parents’ financial matters, you may be the best choice.

Living trusts. A living trust can add to a will by providing for the distribution of selected assets. Unlike some of the assets in a will, a living trust isn’t required to go through probate, so you might be able to save time and money and avoid public disclosure.

Powers of attorney for health and finances. This authorizes someone to legally act on behalf of another person. A durable power of attorney is the most common version, and with this, the authorization continues after the individual becomes disabled. This document gives you the ability to better manage your parents’ affairs.

Living wills or advance medical directives. These documents provide guidance for end-of-life decisions. It’s essential to make sure that your parents’ doctors and other relevant medical professionals have copies of advance directives so they can act in accordance with your parents’ wishes.

Beneficiary designations. If your parents have completed beneficiary designations for their retirement plans, IRAs, and life insurance policies, these designations will take precedence over any references in a will, so it’s critical to keep them current.

Spread the wealth

If you decide that the best way to help your parents is to provide them with monetary gifts, avoiding a gift tax liability is relatively easy. Under the annual gift tax exclusion, you can give any recipient up to $17,000 (for 2023) without being required to pay gift tax. 

Also, payments made to medical providers are not considered gifts, so you may make these payments on your parents’ behalf without using any of your yearly exclusion or lifetime exemption amounts.

Have questions? Smolin can help

If you’re a member of the Sandwich Generation, you’ve probably got plenty on your plate. If you have questions about handling your parent’s estate plans or managing your own, contact the knowledgeable professionals at Smolin, and we’ll help you navigate this complex process with ease.

Is QuickBooks Right for your Nonprofit?
Is QuickBooks Right for your Nonprofit? 1275 750 smolinlupinco

Nonprofit organizations are created to serve nonfinancial or philanthropic goals rather than to make money or build value for investors. But they still need to keep track of their financial health, paying attention to factors like:

  • How much funding is coming in from donations and grants
  • How much the organization is spending on payroll
  • How much it’s spending on rent and other operating expenses

Many nonprofits use QuickBooks® for reporting their results to stakeholders and handling their finances more efficiently. Here’s an overview of QuickBooks’ specialized features for nonprofits.

Features of QuickBooks for nonprofits

Terminology and functionality. QuickBooks for nonprofits incorporates language used in the nonprofit sector to make it more user-friendly for nonprofits.

For example, the software comes with templates for donor and grant-related reporting. Accounting team members can also use it to assign revenue and expenses to specific funds or programs.

Expense allocation and compliance reporting. Many nonprofits often receive donations and grants with particular requirements regarding the expenses that can be applied. 

These organizations can use QuickBooks to establish approved expense types and track budgets for specific funding sources. They can also use the software to satisfy compliance-related accounting and reporting regulations.

Streamlined donation processing. Everyone likes convenience, and donors to nonprofits are no exception. The easier it is to donate to a nonprofit, the more likely it is that people will do so. 

QuickBooks allows for electronic payments from donors. The software also integrates with charitable giving and online fundraising sites, enabling nonprofits to process in-kind contributions, such as office furniture and supplies.

Tax compliance and reporting. Failure to comply with IRS reporting regulations could cause an organization to lose its tax-exempt status. QuickBooks provides a customized IRS reporting solution for nonprofits, which includes the ability to create Form 990, “Return of Organization Exempt from Income Tax.”

Donor management. With QuickBooks, nonprofits can store donor lists. This function includes the ability to divide the data according to location, contribution, and status.

Using these filters can make connecting with and nurturing donors who meet specific criteria easier. One example is reconnecting with significant donors who’ve stopped making regular contributions to your organization.

Data security. Data security is critical to building trust and encouraging donors to support your organization again in the future. 

QuickBooks protects donors’ personal identification and payment information by allowing the account administrator to limit access for viewing, editing, or deleting donor-related data. 

With QuickBooks, team members can only access and share data with the administrator or owner’s permission.

Not just for for-profit businesses

QuickBooks may be known as an accounting solution for small and medium-sized companies, but it also provides solutions for the nonprofit sector. 

From streamlined processes and third-party integrations to security management and robust reporting, Quickbooks can help nonprofits improve their financial management and fulfill the mission of their organization.

Have questions? Smolin can help

If you’re unsure of whether QuickBooks is right for your organization or you require other accounting services, contact the knowledgeable team at Smolin, and we’ll help you choose the best option for your nonprofit.

What are the Advantages and Disadvantages of Claiming Big First-Year Real Estate Depreciation Deductions?
What are the Advantages and Disadvantages of Claiming Big First-Year Real Estate Depreciation Deductions? 850 500 smolinlupinco

Certain businesses may be allowed to claim large first-year depreciation tax deductions for eligible real estate costs instead of depreciating them over several years. Is this the right choice for your business? You may assume so, but the answer is not as simple as it seems.

Qualified improvement property

For eligible assets placed into service during tax years beginning in 2023, the maximum allowable first-year Section 179 depreciation deduction is $1.16 million. 

It’s important to note that the Sec. 179 deduction can be claimed for real estate qualified improvement property (QIP) up to the maximum yearly allowance.

QIP includes any improvement to an interior area of a nonresidential building that you placed in service after the building was first placed in service. 

For Sec. 179 deduction purposes, QIP also includes:

  • HVAC systems
  • Nonresidential building roofs
  • Fire protection and alarm systems
  • Security systems placed in service after the building was first placed in service

With that said, expenditures that are attributable to the enlargement of the building, such as elevators or escalators or the building’s internal structural frame do not count as QIP, and you must depreciate them over multiple years.

Mind the limitations

A taxpayer’s Sec. 179 deduction isn’t able to cause an overall business tax loss, and the maximum deduction is phased out if too much qualifying property goes into service within the tax year. 

The Sec. 179 deduction limitation rules can be complicated if you own a stake in a pass-through business entity (a partnership, an LLC treated as a partnership for tax purposes, or an S-corp). 

Last but not least, trusts and estates can’t claim Sec. 179 deductions, and noncorporate lessors face added restrictions.

First-year bonus depreciation for QIP

Aside from the Sec. 179 deduction, an 80% first-year bonus depreciation is also available for QIP that’s put into service in the calendar year 2023. If your aim is to maximize first-year write-offs, you’d want to claim the Sec. 179 deduction first. If you max out with 179, then you’d claim your 80% first-year bonus depreciation.

It’s essential to note that for first-year bonus depreciation purposes, QIP doesn’t include:

  • Nonresidential building roofs
  • HVAC systems
  • Fire protection and alarm systems
  • Security systems.

Consider depreciating QIP over time

There are two reasons why you should think carefully about claiming big first-year depreciation deductions for QIP.

1. Lower-taxed gain when the property is sold

First-year Sec. 179 deductions and bonus depreciation claimed for QIP can create what’s called depreciation recapture, which means your assets will be taxed at higher ordinary income rates when the QIP is sold. 

Under the current regulations, the maximum individual rate on ordinary income is 37%, but you may also end up owing the 3.8% net investment income tax (NIIT).

Conversely, for any QIP that’s held for more than one year, gain attributable to straight-line depreciation is taxed at an individual federal rate of only 25%, plus the 3.8% NIIT if eligible.

2. Write-offs may be worth more in the future

If you claim large first-year depreciation deductions for QIP, your depreciation deductions for future years will be reduced accordingly. If federal income tax rates go up in the future, you’ll have essentially traded potentially more valuable future-year depreciation write-offs for less-valuable first-year write-offs.

Have questions? Smolin can help

The decision to claim first-year depreciation deductions for QIP or not claim them can be complicated. If you have questions about this process or need help navigating and other tax issues, contact the team at Smolin, and we’ll make sure you have the answers you need to make the best choice for your business.

Handle with Care: Including a Family Vacation Home in your Estate Plan
Handle with Care: Including a Family Vacation Home in your Estate Plan 1275 750 smolinlupinco

The fate of a family home can be an emotionally charged estate planning issue for many people, and emotions often run high when dealing with assets like vacation homes that can have a special place in one’s heart.

With that in mind, it’s essential to address your estate planning carefully when deciding what to do with your vacation home.

Keeping the peace

Before determining how to treat your vacation home in your estate plan, discuss it with your loved ones. If you simply divide ownership of the house equally among your relatives, it may cause unnecessary conflict and hurt feelings. 

Some family members may have a greater interest in keeping the family home than in any financial gain it might provide, and others may prefer to sell the property and use the proceeds for other things.

One viable solution is to leave the property to loved ones who wish to keep it and leave other assets to those who don’t. 

Alternatively, you can create a buyout plan that establishes the conditions under which family members who want to keep the property can purchase the interests of those who wish to sell.

Your plan should establish a reasonable price and payment terms, which can include payments in installments over several years.

Consider creating a usage schedule for nonowners who want to be allowed to continue using the vacation home. To help ease the costs of keeping the property in the family, consider setting aside some assets that will generate income to cover the costs of maintenance, property taxes, repairs, and other expenses that might arise.

Transferring your home

Once you’ve decided who will receive your vacation home, there are a variety of traditional estate planning tools you can use to transfer it tax-efficiently. It might make sense to transfer the interests in the property to your beneficiaries now, using tax-free gifts.

However, if you’re not ready to relinquish ownership just yet, consider using a qualified personal residence trust (QPRT). With a QPRT, you can transfer a qualifying vacation home to an irrevocable trust, which allows you to retain the right to occupy the property during the trust term.

When the term of the QPRT ends, the property will be transferred to your family, though it’s possible to continue occupying the home while paying them fair market rent. The transfer of the home is a taxable gift of your beneficiaries’ remainder interest, which is only one small part of the home’s current fair market value.

You’re required to survive the trust term, and the property must qualify as a “personal residence,” which means that, among other things, you must use it for the greater of 14 days per year or more than 10% of the total number of days you rent it out.

Discussing your intentions

These are just a few issues that can come with passing a vacation home down to your loved ones. Estate planning for this process may be complicated, but it doesn’t have to be. The key is to discuss all the options with your family so that you can create a plan that meets everyone’s needs.

Have questions? Smolin can help

Are you unsure of the best way to pass down your vacation home to your children or other relatives? Consult with the knowledgeable professionals at Smolin, and we’ll help you find the solution that meets your needs.

The IRS has Just Announced 2024 Amounts for Health Savings Accounts
The IRS has Just Announced 2024 Amounts for Health Savings Accounts 850 500 smolinlupinco

Recently. the IRS released updated guidance providing the 2024 inflation-adjusted amounts for Health Savings Accounts (HSAs).

HSA basics

An HSA is a trust established or organized exclusively for the purpose of covering the “qualified medical expenses” of an “account beneficiary.” 

An HSA can only be established for the advantage of an “eligible individual” who is covered under a “high-deductible health plan.” Additionally, the participant is not allowed to be enrolled in Medicare or have other health coverage. Exceptions include:

  • Vision
  • Dental
  • Long-term care
  • Accident
  • Specific disease

Within specified dollar limits, an above-the-line tax deduction is allowed for an individual’s contributions to an HSA. This annual contribution limit, along with the yearly deductible and out-of-pocket expenses under the tax code, is adjusted each year for inflation.

Inflation adjustments for the upcoming year

In Revenue Procedure 2023-23, the IRS released the 2024 inflation-adjusted figures for HSA contributions, which are as follows:

Annual contribution limit

For the 2024 calendar year, the annual contribution limit for an individual with self-only coverage under a high-deductible health plan (HDHP) will be $4,150. For an individual with family coverage, the amount will be $8,300. This is up from $3,850 and $7,750, respectively, in 2023.

There is an additional $1,000 “catch-up” contribution amount for those aged 55 and older in 2024 (and 2023).

High-deductible health plan defined 

For the calendar year 2024, an HDHP will be defined as a health plan with an annual deductible that isn’t less than $1,600 for self-only coverage or $3,200 for family coverage (up from $1,500 and $3,000, respectively, in 2023). 

Additionally, yearly out-of-pocket expenses (deductibles, co-payments, and other amounts, but not premiums) won’t be able to go above $8,050 for self-only coverage or $16,100 for family coverage (up from $7,500 and $15,000, respectively, in 2023).

Advantages of HSAs

HSAs offer numerous benefits. Contributions to these accounts are made on a pre-tax basis. Funds can accumulate tax-free year after year and can be withdrawn without tax implications to pay for a variety of medical expenses such as:

  • Doctor visits
  • Chiropractic care
  • Premiums for long-term care insurance

Additionally, an HSA is “portable.” It stays with an account holder if they switch employers or leave the workforce. 

Have questions? Smolin can help

If you’re unsure of how these new adjustments could impact your business or you have more questions about HSAs, contact the professional team at Smolin and they’ll walk you through the implications of these changes.

How to reduce the impact of the 3.8% net investment income tax
How to reduce the impact of the 3.8% net investment income tax 1275 750 smolinlupinco

For high-income taxpayers, there’s already a regular tax rate of 35% or 37%. In addition to this, they might be required to pay a 3.8% net investment income tax (NIIT) on top of regular income tax. Luckily, there are a few ways you may be able to reduce the impact of the NIIT.

Who are the affected taxpayers?

The NIIT applies to you only if your modified adjusted gross income (MAGI) is greater than:

  • $250,000 for married taxpayers filing jointly and surviving spouses
  • $200,000 for unmarried taxpayers and heads of household
  • $125,000 for married taxpayers filing separately

The total amount that is subject to the tax is the lesser of your net investment income or the amount by which your MAGI exceeds the threshold that applies to you.

Net investment income includes dividend, interest, royalty, annuity, and rental income—unless those items were acquired in the ordinary course of an active trade or business. Additionally, other gross income derived from a passive activity in a trade or business, as well as income from a business trading in financial instruments or commodities, are all subject to the NIIT. 

Which items are exempt?

There are various forms of income that are exempt from the NIIT. For instance, tax-exempt interest and excluded gain from the sale of your main place of residence aren’t subject to the tax.

Distributions from qualified retirement plans are not subject to the NIIT either. Social Security benefits are also excluded. Wages and self-employment income are also not subject to the NIIT, although they may be subject to a different Medicare surtax. 

It’s essential to remember that the NIIT applies only if you possess net investment income and your MAGI exceeds the relevant thresholds mentioned above. With that said, you can still reduce your net investment income by implementing certain strategies. 

Shifting your investments 

If your income is substantial enough to trigger the NIIT, reallocating some income investments to tax-exempt bonds could lead to reduced exposure to the tax. Tax-exempt bonds reduce your MAGI and help you to avoid the NIIT.

As a result of the NIIT, dividend-paying stocks are more heavily taxed. The maximum income tax rate on qualified dividends is only 20%, but that rate increases to 23.8% with the NIIT.

Consequently, you might want to consider rebalancing your investment portfolio to prioritize growth stocks over dividend-paying stocks. While the capital gains from these investments will be included in the net investment income, there are two potential advantages:

  1. The tax will be deferred because the capital gains won’t be subject to the NIIT until the stocks are sold
  2. Capital gains can be offset by capital losses, which isn’t the case with dividends

Retirement plan distributions 

Since distributions from qualified retirement plans are exempt from the NIIT, high-income taxpayers who have some control over their circumstances (such as small business owners) might want to consider making greater use of qualified plans.

Have questions? Smolin can help

These are just a few of the strategies you may be able to employ to offset the NIIT. You may also be able to make moves related to passive activities, charitable donations, and rental income that might help you minimize the NIIT. 

If you’re subject to the tax and want to know how to offset its impact, contact the knowledgeable professionals at Smolin, and we’ll walk you through the process.

Traveling for business this summer? Here’s what you can deduct
Traveling for business this summer? Here’s what you can deduct 1275 750 smolinlupinco

If you and your employees are hitting the road for work-related travel this summer, there are several considerations to keep in mind. To claim deductions under tax law, you must meet specific requirements for out-of-town business travel within the United States. These rules apply if the business you’re conducting reasonably requires an overnight stay.

Note that, due to the Tax Cuts and Jobs Act, employees are unable to deduct their unreimbursed travel expenses on their own tax returns until 2025. This is because unreimbursed employee business expenses fall under the category of “miscellaneous itemized deductions,” which aren’t deductible until 2025.

With that said it’s also important to note that self-employed individuals can continue to deduct business expenses, including away-from-home travel expenses.

Rules that come into play

The actual cost of travel—things like plane fare and rides to the airport—are deductible for out-of-town business trips. You can also deduct the cost of lodging and meals. Your meals are deductible while you’re on the road, even if they’re not connected to a business conversation or related function.

There was a temporary 100% deduction for business food and beverages provided by a restaurant in 2021 and 2022, however, it was not extended to 2023. This means that there’s once again a 50% limit on deducting your eligible business meals this year. 

Please be aware that no deduction is allowed for meal or lodging expenses that are categorized as “lavish or extravagant,” a term that’s generally interpreted to mean “unreasonable.”

Any personal entertainment costs on your trip aren’t deductible, but business-related costs like dry cleaning, computer rentals, and phone calls can be written off.

Mixing business with pleasure

If your trip includes a mix of business and pleasure, you may need to make allocations. For instance, if you fly to a destination for four days of business meetings and stay an additional three days for vacation, only the expenses for meals, lodging, and other related costs incurred during your business days are deductible.

Note that if your business activities spanned over a weekend (say you had meetings Wednesday through Friday and again on Monday), the costs incurred during the weekend portion of your trip can still be deducted.

On the other hand, if the trip is primarily for business purposes, the entire cost of the travel, including plane fare and other expenditures, may be deducted without any allocations required. 

Remember that if the trip is largely personal, none of the travel costs are deductible. The amount of time spent on each aspect of the trip is a significant factor in determining whether it is primarily a business or personal trip, though this is not the sole factor.

If the trip does not involve actual business activities but is intended for attending a convention, seminar, or similar events, the IRS may closely scrutinize the nature of the meeting to ensure it is not just a disguised vacation. Keep any documentation that will aid in establishing the business or professional nature of your travel.

Other expenses

The rules for deducting the costs of a spouse accompanying you on a business trip are quite restrictive. No deduction is allowed unless the spouse is your employee or an employee of your company, and their travel is also for business reasons.

Finally, please be aware that personal expenses incurred at home as a result of the trip are not deductible. For example, if you need to board a pet or pay for babysitting while you’re on the road, this cost cannot be claimed as a deduction. 

Have questions? Smolin can help.

If you’re looking for ways to get the most benefit from your travel deductions this summer, contact the knowledgeable professionals at Smolin, and we’ll help you navigate all of the ins and outs of deducting travel expenses for your business.

Pay Attention to These DOs and DON’Ts When Deducting Business Meal and Vehicle Expenses
Pay Attention to These DOs and DON’Ts When Deducting Business Meal and Vehicle Expenses 1275 750 smolinlupinco

If you plan on claiming tax deductions for auto expenses or business meals, you should expect them to be closely reviewed by the IRS. 

In some situations, taxpayers may have incomplete documentation or try to create records months or years after the fact. In doing so, they fail to meet the strict substantiation requirements that exist under federal tax laws. 

Tax auditors are trained to root out inconsistencies, omissions, and errors in taxpayer records as is evidenced by a recent U.S Tax Court case involving a couple of unscrupulous taxpayers whose poor documentation of expenses came back to haunt them.

Details of the case

In this case, a married couple claimed over $13,000 in car and truck expenses, supported only by mileage logs that weren’t kept contemporaneously and were created using estimates instead of odometer readings. 

The court disallowed the entire reduction, stating that “subsequently prepared mileage records do not have the same amount of credibility as those made at or near the time the vehicle was used and supported by documentary evidence.”

The court observed that the taxpayers appeared to have tried to deduct their commuting costs. However, it stated that the “expenses a taxpayer incurs traveling between his or her home and place of business generally constitute commuting expenses, which… are nondeductible.”

Taxpayers aren’t relieved of their obligation to substantiate business mileage, even if they opt to use the standard mileage rate of 65.4 cents per business mile instead of keeping track of actual expenses. 

The court also ruled that the couple was not entitled to deduct over $5,000 of meal, travel, and entertainment expenses due to the fact that they didn’t meet the strict substantiation requirements of the tax code. (See TC Memo 2022-113).

Stay on the right track

The case mentioned above is an example of why it’s essential to maintain precise records to support business expenses for vehicle and meal deductions. Here’s a list of “DOs and DON’Ts” to assist you in meeting the strict IRS and tax law substantiation requirements for these write offs.

DO maintain meticulous and accurate records. For every expense, you need to document the amount, date, location, business purpose, and the business relationship with any individual for whom you provided a meal. If you have employees whom you reimburse for meals and auto expenses, ensure they’re in compliance with all the rules.

DON’T reconstruct your expense logs at the end of the year or wait to do so until you get a notice from the IRS. Take the time to record the details in a log or diary or on a receipt at the time of the event or soon thereafter. Require your employees to submit monthly expense reports.

DO recognize the clear distinction between personal and business expenses. Be careful about trying to combine business and pleasure. Your business checking account shouldn’t be used for any of your personal expenses.

DON’T be surprised if the IRS requires you to prove your deductions. Vehicle and meal expenses attract a great deal of attention. Be prepared to substantiate your claims in the event of a challenge.

Have questions? Smolin can help

With help from the professionals at Smolin, your tax records will stand up to scrutiny by the IRS. There may even be opportunities to substantiate deductions that you haven’t thought of, as well as a way to estimate certain deductions (under the Cohan rule) if your records are lost to theft, flood, fire, or other disaster.

Contact us today to make sure you keep your business in the clear when writing off expenses.

Questions You May Still Have After Filing Your Tax Return
Questions You May Still Have After Filing Your Tax Return 1275 750 smolinlupinco

Tax season is officially over, and if you’ve completed your 2022 tax return and sent it to the IRS, you might think you’re finished with taxes for another year. But you may still have some lingering questions about your return your return. Here are the answers to three frequently asked questions that come up for many people after they file a tax return.

When will I get my refund?

The IRS provides an online tool that can inform you of the status of your refund. Simply go to http://irs.gov and click the section marked “Get Your Refund Status.” You’ll be required to provide your Social Security number, filing status, and the exact amount of your 2022 refund.

Which tax records can I get rid of now?

It’s highly advisable to keep your tax records related to your return for as long as the IRS can audit your return or assess additional taxes. The standard statute of limitations is three years after you file your return. 

This means you can now technically throw away most of your records for tax returns for 2019 and earlier years. If you filed an extension for your 2019 return, be sure to hold on to your records until at least three years after the date you filed.

With that said, it’s important to note that the statute of limitations extends to six years for any taxpayer that understates their gross income by more than 25%. If this could be the case for you, you’ll need to hang on to certain tax-related records for longer.

For example, keep your 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 filed a fraudulent return.

When dealing with retirement accounts, keep the records associated with them until you’ve emptied the account and reported your final withdrawal on your tax return, plus three (or six) years. Make sure to keep records related to real estate or investments for as long as you own the asset, plus a minimum of three years after you’ve sold it and reported the sale on your tax return.

Can I still collect a refund for a tax credit or deduction if I overlooked claiming it?

Generally speaking, you can file an amended tax return 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.

You should know that there are a few opportunities in which you have more time to file an amended return. For instance, the statute of limitations for bad debts is a bit longer than the standard three-year time limit for most items on your tax return. You can typically amend your tax return for the year that the debt became worthless.

Still have questions? Smolin is available to help all year long

If you still have questions about keeping your tax records, receiving your refund, or filing an amended return, contact the professionals at Smolin, and we’ll provide you with the accurate information and ensure you receive the best results possible.

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