Blog Posts

FINAL RULE ON BOI (Beneficial Ownership Information)

Mon, 21 Sep 2026 18:47:59 +0000

Published: September 21st, 2026

On August 11^th, 2026, the Financial Crimes Enforcement Network (FinCEN) announced their “final rule” of the BOI reporting requirements. FinCEN made the BOI reporting permanent that the U.S. government will remove the requirement of U.S. companies and U.S. persons to report the beneficial ownership information to the organization (“BOI reporting”) to the organization under the Corporate Transparency Act.

FinCEN also reported with the final rule that it will delete previously reported information by U.S. persons from the beneficial ownership information database.

The final rule included the exemptions included in the interim final rule. Below are the exemptions included as published on FinCEN’s website (www.FinCEN.gov/BOI).

Exemption of U.S. persons who obtained FinCEN IDs from any obligation to update/correct information
Exemption from foreign pooled investment vehicles registered in the United States from reporting the beneficial ownership information of the U.S. persons who control the entity
Eliminates requirement for foreign companies to report U.S. Persons to report company applicants.

Although domestic companies and U.S. Persons are fully exempt from beneficial ownership information reporting, certain foreign entities and non-U.S. persons are not exempt from reporting. See U.S. legal advice on this.

New York Beneficial Ownership Information Reporting

As of January 1^st, 2026, “The New York’s LLC Transparency Act” requires LLCs authorized to do business in New York but formed under a foreign country to report under the NY LLC Transparency Act, which is separate from the Federal BOI reporting requirement.

For more information on the NY BOI disclosure reporting click the link below

Beneficial Owner Disclosure | Department of State

For more information on the FinCEN beneficial ownership information reporting final ruling click here .

The above information is of a general nature only and should not be relied upon for specific situations. The information is to alert clients to bring this topic up as needed to their independent legal counsel.

Always seek professional US legal advice when it comes to BOI reporting as Marlies Y Hendricks CPA PLLC does not practice in this area.

Call Marlies Y Hendricks CPA PLLC at either 716-694-3500 or 910-769-8730 as required to set up an appointment for accounting, tax or cross-border CPA tax advice as a Certified Public Accountant.

What’s New-Paid Family and Medical Leave Tax Credit?

Fri, 18 Sep 2026 17:36:24 +0000

What’s New-Paid Family and Medical Leave Tax Credit?

Posted: September 18th, 2026

The Working Families Tax Cuts, enacted in 2025, permanently expanded the federal Paid Family and Medical Leave Tax Credit from a temporary provision to a permanent general business credit.

What is Paid Family and Medical Leave?

Paid Family and Medical Leave is paid leave that lets employees recover from serious health conditions or care for certain family members with serious health conditions. The change is to encourage more employers to offer 12 weeks of paid leave.

Key Changes & Eligibility

Permanent Credit: The credit is now a permanent general business credit.
Expanded Eligibility:

Employees who have been employed for the last six months.

Part-time employees working 20+ hours per week.

Broader Coverage: Employers can claim the credit for insurance premiums to provide leave or wages during the leave.
State & Local Mandates: Employers can count leave provided under state and local mandates toward eligibility for the credit.
Businesses can now take 12-25% of wages paid to qualifying employees for up to 12 weeks of family and medical leave.

Employers can choose between the wage & premium method to receive credit.

The above information is of a general nature only and should not be relied upon for specific situations. Click here for information.

Call Marlies Y Hendricks CPA PLLC at either 716-694-3500 or 910-769-8730 as required to set up an appointment.

TAX PLANNING WITH RETIREMENT ACCOUNTS- 2026 TAX YEAR

Wed, 26 Aug 2026 22:35:03 +0000

TAX PLANNING WITH RETIREMENT ACCOUNTS- 2026 TAX YEAR

Last Updated: 08/26/2026

Retirement may seem far away, but planning is essential. Different retirement accounts like 401(k), Roth IRA, Traditional IRA, 403(b), and SEP IRA can overwhelm your mind.

Although there are a variety of retirement accounts, they are easier to understand once broken down. Each account has different rules, though they all serve the purpose of saving money and investing for your future.

A tax-advantaged retirement account’s purpose is to save money for an individual’s retirement. Retirement accounts can provide tax benefits that help your investments grow over time.

The differences between retirement accounts are:

Who can contribute to your account
How much you are allowed to contribute
When can you receive your tax benefits
How withdrawals are taxed
Can an employer contribute to the account
What investment options are available

Types of Accounts

Traditional IRA:

A Traditional Individual Retirement Account is a type of retirement account that is established separate from the employer.

Contributions made to a Traditional IRA may be tax deductible depending on income, tax filing status, and whether the individual or spouse participates in an employer-sponsored retirement plan.

The money in this retirement account can be invested and raised tax deferred. Withdrawals made from the account are subject to ordinary income tax.

The Traditional IRA also can possibly create a tax deduction today while saving for retirement.

Catch-up are available for those 50 years or older.

Roth IRA:

A Roth Individual Retirement Account is a type of retirement account that is established separate from the employer.

Contributions to a Roth IRA account are made with money that is already taxed. This means the contributions do not provide a tax deduction like a traditional IRA, but qualified withdrawals can be tax-free.

Roth IRAs do not require a minimum distribution during the owner’s lifetime.

For individuals who are beginning their careers, this is an effective way to build a long-term retirement fund.

Catch-up are available for those 50 years or older.

401K:

A 401(k) is an employer sponsored retirement plan. Usually, employees participate in this plan through the workplace than opening the account independently.

One advantage of 401(K) is the high contribution limit compared to the IRA. Employers may offer matching contributions to the employer account. This is where the employer matches the amount the employee contributes.

Traditional 401(k) contributions are made before federal and state income taxes on the employee’s pay, while Roth 401(k) contributions are made with after tax dollars.

Roth 401K:

A Roth 401(K) combines both the traditional 401(k) with Roth tax treatment.

Contributions are made with after-tax dollars, so employees do not receive immediate tax deduction. Qualified withdrawals can be tax-free.

403(b) Plans:

403(b) is like 401(k), but are specific to certain public schools, universities, nonprofits, and other qualifying organizations.

A 403(b) can provide tax-advantaged retirement savings and may include employer contributions.

SEP IRA & SIMPLE IRA:

SEP IRAs & SIMPLE IRAs are retirement plan options designed for small businesses and self-employed individuals.

A SEP IRA allows an eligible employer to make contributions on behalf of employees, including the business owner.

A SIMPLE IRA is another retirement plan option for small businesses and their employees

These accounts provide valuable retirement saving opportunities for individuals who do not have access to a traditional employer-sponsored 401(k)

Solo 401(k):

Self-employed individuals may also consider the Solo 401(k), this is referred to as an individual 401(k).

This plan is designed for business owners with no employees other than a spouse.

For eligible self-employed individuals, a solo 401(k) can be a great retirement saving

option.

The above information is of a general nature only and should not be relied upon for specific situations. Click here for additional income tax service information.

Call Marlies Y Hendricks CPA PLLC at either 716-694-3500 or 910-769-8730 as required to set up an appointment.

Changes to 1099-NEC-2026 and 1099-MISC-2026 Tax Year

Tue, 18 Aug 2026 23:05:47 +0000

Changes to 1099-NEC-2026 and 1099-MISC-2026” Tax Year

Last Updated: August 18th, 2026

The IRS has released the 2026 Publication 1099 – General Instructions for Certain Information Returns, providing updated guidance for businesses, tax professionals, and anyone who hires independent contractors. The publication includes several important changes to information reporting requirements that businesses should understand before the 2026 filing season.

Reminder

In 2025, Third Party Payment app processors (Venmo, PayPal, and Cashapp) issued 1099K when the payee exceeds $20,000 in gross payments and 200 transactions.

Key Updates for 2026

Starting in 2026,

1099-NEC reporting threshold rose from $600 to $2,000 per Vendor
1099-MISC reporting threshold rose from $600 to $2,000 per Vendor

Beginning in 2027, the thresholds will be adjusted annually for inflation

New Reporting Fields

The IRS has updated Forms 1099-NEC, 1099-MISC, and 1099-K for the following reporting requirements:

Cash Tips
Treasury Tipped Occupation Codes
Overtime Compensation

The higher reporting threshold will reduce the number of Forms 1099 that is required to issue. Businesses should maintain proper recordkeeping and should continue to:

Keep a completed Form W-9 from vendors.
Verify taxpayer identification numbers.
Maintain accurate payment records throughout the year

By understanding these updates and maintaining accurate records, businesses can simplify the 2026 filing process while remaining compliant with IRS reporting requirements.

The above information is of a general nature only and should not be relied upon for specific situations. Click here for additional tax services information.

Call Marlies Y Hendricks CPA PLLC at either 716-694-3500 or 910-769-8730 as required to set up an appointment.

IRS Penalty Relief Options

Tue, 18 Aug 2026 23:10:23 +0000

IRS Penalty Relief Options

Last Updated: August 18th, 2026

The IRS recognizes that taxpayers sometimes make mistakes despite making a good-faith effort to comply with the tax law. Depending on your circumstances, you may qualify to have certain penalties reduced or removed.

Automatic Exemption Penalty Program (NEW)

Introduced in summer 2026, the Automatic Exemption Penalty Program (AEP) suppresses some failure-to-file, failure-to-pay, and failure-to-deposit penalties for taxpayers with strong compliance histories. The IRS will review the taxpayer history considering the taxpayer’s timely filing and payment records for the previous three years. This program will begin with 2025 tax year returns and 2026 quarterly returns.

Types of penalty relief:

First time penalty abate and administrative waiver:

The first-time penalty abate and administrative waiver is a common administrative penalty waiver provided by the IRS. This applied to taxpayers with three years of timely compliance history.See program is being phased out and replaced by the Automatic Exemption Penalty Program (see abov).

https://www.irs.gov/payments/administrative-penalty-relief

Reasonable cause:

Reasonable cause is determined on a case-by-case basis by the IRS and may have certain penalties removed or reduced if you acted with reasonable cause and in good faith. Examples may include:

Serious illness or death in the immediate family
Natural disasters or other unavoidable events
Destruction of records
Other situations where you acted in good faith

Below is more information regarding eligibility

https://www.irs.gov/payments/penalty-relief-for-reasonable-cause

Statutory exception

This penalty relief allows for penalty relief under certain statutory exemption. Below is more information regarding eligibility, such as:

Relied on incorrect written advice from us
Mailed a return on time
Lived in a federal disaster area
Were involved in military operations in a combat zone

https://www.irs.gov/payments/penalty-relief-due-to-statutory-exception

How to request relief if Automatic Penalty Relief was not realized

Follow the IRS Instructions on the notice sent by the IRS. You may need to fill out Form 843: “Claim for refund and request for abatement”. Because every taxpayer’s situation is unique, different methods apply to individual circumstances.

If you would like to learn more about IRS Penalty Relief to set up a consultation, call Marlies Y Hendricks CPA PLLC at either 716-694-3500 or 910-769-8730.

The above information is of a general nature only and should not be relied upon for specific situations.

Crypto Currency Tax Rules

Tue, 18 Aug 2026 23:06:12 +0000

Crypto Currency Tax Rules

Last Updated: August 18th, 2026

Virtual currency, also known as digital or cryptocurrency, has become a popular mainstream way of investing and a payment method. Popular cryptocurrencies such as Bitcoin, Ethereum, and many other cryptocurrencies continue to be subject to federal tax reporting requirements. The IRS treats cryptocurrency as property for federal tax purposes.

Buying, Selling, and Using Cryptocurrencies

When you sell, exchange, or use cryptocurrency to purchase a good or service, you recognize a capital gain or loss. Because Crypto is treated as property. Form 1099-DA is issued annually with the sale of digital assets. Taxpayers should maintain adequate records of the following to ensure accurate reporting on Form 8949:

Purchase dates
Purchase prices
Sale or exchange dates
Fair market value at the time of disposition
Transaction fees

The IRS continues to expand digital asset reporting requirements, and failure to comply with IRS requirements can result in penalties, additional tax, and interest.

The above information is of a general nature only and should not be relied upon for specific situations. Click here for additional tax services information.

Call Marlies Y Hendricks CPA PLLC at either 716-694-3500 or 910-769-8730 as required to set up an appointment.

Education Tax Credit

Tue, 18 Aug 2026 23:06:38 +0000

Education Tax Credit

Last Updated: August 18th, 2026

The American Opportunity Tax Credit (“AOTC”) and the Lifetime Learning Tax credits are two current ways that taxpayers can help with the cost of higher education. Only one of the education credits can be claimed per qualifying student.

American Opportunity Tax Credit (AOTC)

The American Opportunity Tax Credit is available for eligible students during their first four years of post-secondary education. Key features of American Opportunity Tax Credit include:

Can claim up to $2,500 per eligible student
Up to 40% (maximum of $1,000) may be refundable
Qualified expenses cannot exceed $4,000 per eligible student

Lifetime Learning Credit

The Lifetime Learning Credit is designed to be used for undergraduate, graduate, and professional degree students, and individuals taking courses to acquire or improve job skills. Key features of the Lifetime Learning Credit include:

Up to $2,000 is eligible per tax return
Equal to 20% of the first $10,000 of qualified education expenses.
The Lifetime Learning credit is non-refundable.

Income Limits:

For current eligibility, your modified adjusted gross income must be less than:

$90,000 for single filing and most other individual filers
$180,000 for married filing jointly

Qualified Education Expenses

Qualified expenses include:

Tuition
Required enrollment fees
Required books, supplies, and course materials (AOTC rules are broader than LLC for course materials)

If you would like to learn more about the American opportunity & lifetime learning tax credits set up a consultation, call Marlies Y Hendricks CPA PLLC at either 716-694-3500 or 910-769-8730.

The above information is of a general nature only and should not be relied upon for specific situations.

Trump Accounts: A New Investment Opportunity for America’s Children

Tue, 18 Aug 2026 23:06:45 +0000

On July 4, 2025, the One Big Beautiful Bill under the Trump administration went into law. The bill included various tax cuts and increase in credits along with the introduction of the Trump Pilot Program.

The Trump Pilot Program allows for any child under the age of 18 to create a Trump investment account. Trump accounts functions as a traditional IRA for children, made to help families build wealth until the child reaches adulthood. Qualified children born between January 1, 2025, to December 31, 2028, will be eligible to receive a $1,000 deposit seed into their Trump account.

What are the eligibility requirements?

Be born between 2025 and 2028
Be a U.S. Citizen with a valid social security number
Be under the age of 18 by December 31 of the filing year

The investment account allows parents, relatives, and employers to make contributions up to $5,000 per year. Employers also may contribute up to $2,500 annually to their employees’ children, and this amount remains untaxable for the employee.

The Treasury Department and IRS announced that administration of the program would involve a new filing process using IRS Form 4547, titled “Trump Account Election(s).” In addition, the government launched an online portal, TrumpAccounts.gov, to assist registration and provide program guidance. Contributions are expected to begin no earlier than July 4, 2026.

https://www.trumpaccounts.gov/

If you would like to learn more about the Trump Accounts set up a consultation, call Marlies Y Hendricks CPA PLLC at either 716-694-3500 or 910-769-8730.

The above information is of a general nature only and should not be relied upon for specific situations.

Medical Expenses Deductions in Retirement Homes

Tue, 18 Aug 2026 23:07:04 +0000

Medical Expenses Deductions in Retirement Homes

Last Updated: August 18th, 2026

Many families must face the financial burden of placing their family members in Nursing homes to ensure that their loved ones receive the best care they can receive. The good news is that some nursing home expenses can be tax-deductible depending on circumstances. Understanding IRS tax rules can help alleviate some financial pressure.

When Nursing Home Costs Are Fully Deductible

If you, your spouse, or dependent lives in a nursing home primarily for medical care, the IRS allows you to deduct the cost of the nursing home expense as a medical expense. Qualified expenses are only deductible if the unreimbursed medical expenses exceeds 7.5% of the tax year's adjusted gross income (AGI).

The expenses deductibles include:

Medical Care
Meals
Lodging

If these expenses are not reimbursed by insurance or other sources, they can be deducted as medical expenses.

When Nursing Home Costs Are Partly Deductible

If the Individual who lives in the nursing home for “non-medical reasons”, such as personal care, only the portion of the cost related to medical care is tax-deductible.

In these situations, medical services may be deducted if not reimbursed, but meals and lodging will not be deductible.

Determining Dependency Status

To determine if your parent qualifies as a dependent for these purposes, refer to the section “Whose Medical Expenses Can You Include” and “Nursing Home” in Publication 502, Publication 502, Medical and Dental Expenses.

How To Deduct Medical Expenses
To deduct qualified medical expenses, including eligible nursing home costs, claim them on Schedule A (Form 1040), as Itemized Deductions.

If you would like to learn more about nursing home deductions or other medical deductions and to set up a consultation, call Marlies Y Hendricks CPA PLLC at either 716-694-3500 or 910-769-8730.

The above information is of a general nature only and should not be relied upon for specific situations.

2025 & 2026 Vehicle Tax Changes

Tue, 18 Aug 2026 23:07:26 +0000

2025 & 2026 Vehicle Tax Changes

Last Updated: August 18th, 2026

During the 2025 tax year, significant changes were introduced with the One Big Beautiful Bill, which directly impacts vehicle-related tax rules. Understanding these changes is valuable for maximizing tax deductions for present and future years.

Below are some of the key vehicle-related tax changes.

Bonus Depreciation

Qualified new and old business vehicles that were placed in service after January 19th, 2025, could be eligible for 100% bonus depreciation. This will allow businesses to deduct the full cost of vehicles in the year it is placed in service for heavy vehicles over 6,000 lbs. (i.e., SUVs, pick-ups). If the vehicle is under 6,000 lbs., it has a first-year bonus limit of $20,200. If business use falls to 50% or less in a future year, you may have recapture of depreciation meaning a portion of the deduction is taxable income.

Section 179

The Section 179 deduction limit increased significantly, providing additional expense opportunities:

Maximum deduction increased from $1,250,000 to $2,560,000
Phase-out threshold increased from $3,130,000 to $4,000,000

Section 179 is limited to both new and old vehicles under 6,000 lbs.

While Section 179 also allows for immediate expensing, it has a specific cap of $31,300 for heavy SUVs (over 6,000 lbs.) in 2025. Bonus depreciation will maximize your tax deduction on high-value heavy vehicles (SUVs), because it has no dollar cap whereas Section 179 has the limit of $31,300.

Leasing Vehicles

Businesses may deduct the business-use portion of their lease payments as an ordinary business expense, whether the vehicle is new or old. However, leased vehicles are not eligible for depreciation, Section 179, or bonus depreciation.

Personal Loan Interest

Effective from 2025 to 2028, eligible individuals may deduct up to $10,000 of interest paid on qualified loans used to purchase a new or old qualified vehicle for personal use.

Qualified vehicles

To qualify for the personal vehicle loan interest deduction, the vehicle must:

be a car, minivan, pickup truck, or motorcycle
have a gross vehicle weight rating (GVWR) under 14,000 pounds.
have final assembly in the United States.

Qualified Loans

A qualified loan must meet all of the following requirements:

Loan must be acquired after December 31^st, 2024
Used to purchase a qualified vehicle
Vehicle used only for personal use
Have a secured lien on the vehicle.

Below is the IRS Guidance regarding the vehicle tax

https://www.irs.gov/newsroom/treasury-irs-provide-guidance-on-the-new-deduction-for-car-loan-interest-under-the-one-big-beautiful-bill

Business Mileage

If you are not accounting for the “actual vehicle expenses”, then you would use the standard business mileage rate of 72.5 cents per mile for 2026, up from 2025 self-employed and business mileage rate of 70 cents per mile.

If you would like to learn more about business vehicle write-offs and set up a consultation, call Marlies Y Hendricks CPA PLLC at either 716-694-3500 or 910-769-8730.

Tax Deductible Rules for Cruise Ship Travel

Tue, 06 Jan 2026 15:58:05 +0000

Tax Deductible Rules for Cruise Ship Travel

When most people think of business travel, they picture flights, hotels, rental cars, and conferences. What many taxpayers do not realize is that cruise ship travel can also be tax-deductible under strict IRS rules. Because cruise travel is essentially considered recreational, the IRS applies strict limitations and documentation requirements.

When Is Cruise Ship Travel Deductible?

Although heavily regulated, cruise ship travel is only deductible if the trip is related to your business or trade and meets IRS standards for business travel.

There are two primary methods for deducting cruise ship travel:

Luxury Water Travel
Cruise Ship Convention or Seminar Deduction.

Luxury Water Travel

If you travel by ocean liner, cruise ship, or other forms of water transportation for business purposes, you have a daily limit that you can deduct.

Under this method:

The deduction is limited to a daily maximum.
The limit is twice the highest federal per diem rate allowable at the time of your travel. (For updated Per Diem Rates refer to the General Services Administration Per Diem Rates )
Any cost above the limit is non-deductible.
Expenses must be allocated between business and non-business.

This method is best used when the cruise is not part of the formal business convention or seminar.

Refer to: https://www.irs.gov/publications/p463#en_US_2024_publink100033822

(For counting business days, refer to the link above)

Cruise Ship Convention/Seminar Deduction

A separate rule applies if you are attending a business convention, seminar, or continuing education program held on a cruise ship.

Taxpayers may be able to deduct up to $2,000 per year if the IRS requirements below are met.

The cruise ship must be U.S.-registered.
All ports of call must be in the U.S. or U.S. possessions.
The event must be directly related to your trade or business.
You must attach two statements to your tax return:

A statement from you detailing dates, hours, and business sessions
A statement from the sponsoring organization verifying the business schedule

Cruise ship travel can be deductible, but it is more restricted than traditional business travel. The deduction method depends on the nature of the trip, and strict IRS rules must be followed.

If you would like to learn more about if you could benefit from the cruise ship deductions or to set up a consultation, call Marlies Y Hendricks CPA PLLC at either 716-694-3500 or 910-769-8730.

The above information is of a general nature only and should not be relied upon for specific situations.

2025 Changes to SALT Deductions

Mon, 04 Aug 2025 17:47:26 +0000

The recently enacted One Big Beautiful Bill Act introduces significant changes to the State and Local Tax (SALT) deduction beginning with the 2025 tax year. These revisions impact individual taxpayers, high earners, and owners of pass-through entities. Here’s what you need to know.

Increased Deduction Cap

The SALT deduction cap has been raised from $10,000 to $40,000 for joint filers.
For married filing separately, the cap is $20,000.
Apply to state and local income, property, and elective sales taxes.
Particularly in high-tax states, more taxpayers may benefit from itemizing deductions rather than taking the standard deduction of $31,500 for joint filers and $15,750 single and MFS.

Income-Based Phase-Out

For joint filers with Modified Adjusted Gross Income (MAGI) over $500,000, the deduction is reduced by 30% of the amount above the threshold, down to a floor of $10,000.
For married filing separately, the phase-out starts at $250,000, with a floor of $5,000.
Taxpayers near the phase-out thresholds could consider strategic income deferral or timing to help manage this impact.

Annual Inflation Adjustments

From 2026 to 2029, the cap and thresholds will increase 1% annually.
The cap reverts to $10,000 in 2030 unless extended by future legislation.

If you would like to learn more about if you could benefit from these SALT deductions or to set up a consultation, call Marlies Y Hendricks CPA PLLC at either 716-694-3500 or 910-769-8730.

The above information is of a general nature only and should not be relied upon for specific situations.

Tax Tips: 2026 Changes in Charitable Contributions

Tue, 18 Aug 2026 23:07:56 +0000

Tax Tips: 2026 Changes in Charitable Contributions

Last Updated: August 18th, 2026

Starting in tax year 2026, the One Big Beautiful Bill Act introduces a significant tax benefit: taxpayers can now deduct up to $1,000 for single filers and $2,000 for married couples filing jointly in charitable contributions, even if they take the standard deduction.

Key Information:

$1,000 deduction for single filers and $2,000 for married couples filing jointly.
Available regardless of whether you itemize your deductions.

Qualified Charitable Contributions:

Donations must be made to qualified charitable organizations (501(c)(3) nonprofits). This includes most charitable groups, religious organizations, educational institutions, and certain foundations. You can verify whether an organization qualifies by using the IRS Tax Exempt Organization Search tool.

Record Keeping:

Although the new deduction does not require itemization, you must keep documentation of your donations. This includes:

Receipts or bank records.
The name of the charity.
The date and amount of the donation.

Final Thoughts:

This change offers an opportunity for many taxpayers to benefit from charitable giving without needing to itemize. By taking advantage of this new deduction, you can lower your taxable income while supporting causes you care about. Just remember to keep thorough records and stay within the annual limits to maximize your tax savings in 2026.

If you would like to learn more or to set up a consultation, call Marlies Y Hendricks CPA PLLC at either 716-694-3500 or 910-769-8730.

The above information is of a general nature only and should not be relied upon for specific situations.

Understanding the 2025 Tax Law Changes: Child Credits & Trump Investment Accounts

Wed, 16 Jul 2025 22:55:53 +0000

Understanding the 2025 Tax Law Changes: Child Credits & Trump Investment Accounts

On July 4, 2025, President Donald J. Trump signed the One Big Beautiful Bill into law, which included various tax cuts and an increase in credits such as the Child Tax Credit and the Trump Pilot Program. These programs are intended to provide support to parents and provide a boost for the child’s financial future.

Child Tax Credit Changes:

Effective at the end of 2025, the Child Tax Credit will increase to $2,200 (from $2,000) for each qualifying child under the age of 17, with a refundable portion capped at $1,700. The credit begins to phase out at $400,000 for married individuals filing jointly and at $200,000 for all other filers. For dependents aged 17 and older, as well as other qualifying dependents, a credit of $500 per individual is still available.

To be eligible for the tax credit, at least one parent and the child must have a Social Security number.

Trump Account Pilot Program

The Trump Pilot Program permits any child under the age of 18 to establish a Trump investment account. Eligible children born between January 1, 2025, and December 31, 2028, will receive a $1,000 seed deposit into their Trump investment account. Additionally, the investment accounts allow for parents, relatives, and employers to make contributions of up to $5,000 post-tax.

Employers may contribute up to $2,500 annually to their employees’ children, and this amount would not be taxable to the employee.

Withdrawing From Trump Accounts

All withdrawals are subject to income taxation.
No withdrawals are permitted before the beneficiary reaches the age of 18.
Between the ages of 18 and 24, up to 50% of the funds may be withdrawn without penalty for qualifying expenses, including higher education, first-time home purchases, or business capital.
From ages 25 to 29, up to 100% of the funds may be withdrawn without penalty for qualified expenses.
Beginning at age 30, all funds may be withdrawn with no usage restrictions.

The Trump accounts are scheduled to open in 2026, and parents will be able to begin making contributions in July 2026.

If you would like to learn more about the employer-provided Childcare Tax Credits or to set up a consultation, call Marlies Y Hendricks CPA PLLC at either 716-694-3500 or 910-769-8730.

The above information is of a general nature only and should not be relied upon for specific situations.

Tax Tip: Take Advantage of the Employer-Provided Childcare Tax Credit

Wed, 18 Jun 2025 18:46:43 +0000

What is the employer-provided childcare tax credit?

The employer-provided Childcare Tax Credit is an incentive to encourage businesses to provide childcare services to their employees. The tax credit allows businesses to claim a credit of up to $150,000 per year to cover the costs of childcare resources, referrals, and qualified childcare facilities for employees.

Businesses can claim up to:

25% of the cost for qualified childcare facilities
10% of qualified childcare resources and referral costs

Who is eligible to claim the tax credit?

Employers who pay or incur qualified childcare costs during the tax year to provide childcare services for employees. These costs include

Facility-related costs: Expenses to acquire, build, renovate, or expand a qualified childcare facility. A qualified childcare facility must meet the requirements of all applicable state and local laws and regulations in which it operates.

Operating expenses: Costs associated with running the facility, including training childcare workers, offering scholarships, and compensating staff with specialized childcare training.

Childcare resource and referral services: Fees paid under contract with a qualified provider to help employees find childcare services.

The credit is part of the general business credit, meaning unused amounts can be:

Carried back one year or
Carried forward for up to 20 years.

If you would like to learn more about the employer-provided Childcare Tax Credits or to set up a consultation, call Marlies Y Hendricks CPA PLLC at either 716-694-3500 or 910-769-8730.

The above information is of a general nature only and should not be relied upon for specific situations.

Tax Tips: Don’t Forget to Claim your Energy Efficiency Tax Credits

Tue, 30 Jun 2026 18:13:15 +0000

Last updated June 30th, 2026

Energy Efficient Home Improvement Credit

Don’t overlook any home energy efficiency you made in the 2025 tax year.

The nonbusiness energy property credit is now the “energy efficient home improvement credit” is divided into two sections:

1. qualified energy efficiency improvements, and

2. residential energy property expenditures.

On Tax Form 5695, a 30% credit, up to a maximum of $1,200, may be allowed for new (not used) “qualified energy efficiency expenditures” on your “main” home (house, houseboat, mobile home, cooperative apartment, condominium) located in the USA for the following:

• Insulation material or air sealing material or systems;

• Exterior doors;

• Windows and skylights;

• Central air conditioners;

• Natural gas, propane or oil water heaters;

• Natural gas, propane or oil furnaces or hot water boilers;

• Improvements or replacement of panelboards, sub panelboards, branch circuits or feeders; and

• Home energy audits.

Heat pumps and heat pump water heaters, biomass stoves and biomass boilers have a separate annual credit limit of $2,000.

You may be able to take a credit of 30% of your costs of qualified solar electric property, solar water heating property, small wind energy property, geothermal heat pump property, battery storage technology, and fuel cell property.

Refer to instructions on Form 5695 for further details.

The Energy Efficent Home Improvement Credit only applies to projects from 2023 through 2025.

If you would like to learn more or to set up a consultation, call Marlies Y Hendricks CPA PLLC at either 716-694-3500 or 910-769-8730.

The above information is of a general nature only and should not be relied upon for specific situations.

Maximizing Tax Benefits and Liability Protection for Rental Properties with LLCs

Tue, 18 Aug 2026 23:08:31 +0000

Maximizing Tax Benefits and Liability Protection for Rental Properties with LLCs

Last Updated: August 18th, 2026

If you're a landlord renting out properties, understanding how the IRS classifies your rental property for taxes is crucial. Essentially, there are two categories: investments and businesses. Knowing this helps ensure you claim the right deductions.

Here's a breakdown:

Investment Rental Properties: Typically, if you're not actively involved in managing the property and mainly rely on rental income for bills, it's considered an investment by the IRS. However, proving continuous management involvement can shift this classification to a business.

Business Rental Properties: Your property qualifies as a business if it generates profits and you're actively involved in its management, even if you hire help like property managers. If you do consider the rental a business, you may have social security and medicare taxes to pay.

Residential Rental Properties: These are properties leased to tenants for residential use, regardless of type (e.g., single-family homes, apartments). To be considered residential, it must be a dwelling unit and under a lease agreement with third-party tenants.

IRS 80% Rule: Residential properties should derive more than 80% of revenue from dwelling units to be classified as such, ensuring compliance in mixed-use buildings.

Depreciation: A significant tax advantage for residential rental properties is depreciating the property's cost annually, including certain items like appliances and furniture.

In 2025, the One Big Beautiful Bill act permanently restored 100% bonus depreciation.

Vacation Homes: IRS categorization depends on rental days versus personal use. Less than 15 days rented makes it tax-free; more if more than 14 days deems it a residential rental property.

Business Structures: Landlords may operate under various structures like sole proprietorship, general partnership, estate, limited liability company (LLC), or tenants in common, each with distinct legal and tax implications.

Tips for Business Conversion:

Maintain separate records for each property.
Ensure at least 250 hours annually of property-related work.
Keep detailed time reports.
Consider real estate and business education.
Choose partners wisely for complementary skills.
Hire assistance to meet business activity requirements.

Owning rental property can be complex, especially when navigating tax implications. Understanding these distinctions can optimize deductions and maximize returns during tax season.

Now, let's explore how forming a limited liability company (LLC) can enhance tax benefits and provide liability protection for your rental properties.

What Is an LLC? An LLC, or limited liability company, offers owners personal asset protection by shielding their assets from the liabilities of the business. This business structure is regulated at the state level, so it's crucial to research specific requirements for your location.

Using an LLC for Rental Properties Utilizing an LLC for rental property management provides several benefits, including:

Creating a separate business bank account to streamline financial transactions.
Accessing broader tax deductions, such as maintenance and repairs.
Contracting work under the LLC to improve tax deductions and limit personal liability.
Better management of operations by formalizing roles like property manager and maintenance staff.

Setting Up the Rental Property After Registering After registering your LLC, follow these steps to set up your rental property effectively:

Transfer the property title into the LLC's name to establish legal ownership.
Update insurance policies to reflect the LLC as the property owner and protect against unforeseen events.
Open a dedicated LLC bank account to maintain financial separation.
Revise lease agreements to indicate the LLC as the landlord for clarity and compliance.
Ensure compliance with local and state regulations and maintain detailed records for the LLC.

How Is Rental Income Taxed in an LLC for Rental Properties? Rental income in an LLC is typically considered pass-through income, meaning it's reported on owners' personal tax returns rather than being taxed at the entity level. LLC owners can deduct various business expenses related to rental properties, such as mortgage interest, property taxes, and maintenance costs.

Maximizing Tax Benefits While rental property owners can't legally avoid paying taxes, there are strategies to minimize tax liabilities, including:

Utilizing a 1031 exchange to defer capital gains taxes by reinvesting proceeds into another property.
Qualifying for a qualified business income deduction, which can cover up to 20% of rental business income.
Consulting with tax professionals to identify additional deductions and tax-saving strategies.

Best Practices for Managing Your Rental Property LLC Implement these best practices to effectively manage your rental property under an LLC:

Maintain rigorous financial records with separate accounts for the LLC to ensure transparency and simplify tax preparation.
Regularly review the operating agreement to ensure compliance with current laws and regulations.
Obtain adequate insurance tailored to rental properties to protect against unforeseen events and liabilities.
Stay compliant with local and state regulations to avoid fines and legal challenges.
Consult with tax professionals familiar with real estate and LLCs to optimize tax benefits and ensure compliance with IRS regulations.
Implement time-saving practices like utilizing landlord software to streamline property management tasks.

Commonly Asked Questions About LLCs for Rental Properties Here are answers to some frequently asked questions about using LLCs for rental properties:

Any landlord can benefit from creating an LLC, especially if multiple owners or properties are involved.
It's preferable to create an LLC before purchasing a rental property to avoid complications with title transfer and financing.
To transfer title to the LLC, create a quitclaim deed and file it with the county clerk's office.
Transferring a property into an LLC may affect existing mortgages, potentially leading to changes in interest rates or loan terms.
Costs associated with creating an LLC vary by state and may include filing fees, publication fees, and annual franchise taxes.
Ongoing costs may include annual franchise taxes and state registration fees.
Choose a unique and relevant name for your LLC, often based on the property address, and ensure it's available in your state.
While umbrella policies provide additional coverage, they may not offer the same level of asset protection as an LLC.

In summary, forming an LLC for your rental property can provide significant tax benefits and liability protection. By following best practices and consulting with professionals, landlords can maximize the advantages of LLC ownership while effectively managing their rental properties.

you would like to learn more or to set up a consultation call Marlies Y Hendricks CPA PLLC at either 716-694-3500 or 910-769-8730.

The above information is of a general nature only and should not be relied upon for specific situations.

Paying Your Family

Tue, 18 Aug 2026 23:09:13 +0000

Paying Your Family

Last Updated: August 18th, 2026

Understanding your tax situation is always important for both taxpayers and employers. Employee’s tax situation changes when working with a family member, whether it be spouses running a business together or a child working at a family business. The tax implications depend on the relationship of the family members and the type of business.

Married people in a business together

Wages for someone who works for their spouse are subject to income tax withholding, Social Security and Medicare taxes, but not FUTA tax if they are organized as a business (filing Schedule C on their 1040 tax return) and not a corporation, estate or partnership.

Children Employed by their parents

In the case of a child working for their parents’ sole proprietorship or a partnership of both parents, the child’s tax situation depends on the age of the child.

A child of any age is subject to income tax withholding
Children 18+ are then subject to Social Security and Medicare taxes
Wages paid to a child 21+ become subject to Federal Unemployment Tax Act (FUTA)

If however, the business is instead a corporation, estate, or a partnership in which only one or none of the partners are the child parent then the child’s wages are subject to all the above except FUTA taxes regardless of their age.

Parents employed by their child

The tax implications of the parents’ wages depend on the business type.

If the business of the child is a sole proprietorship the parents’ wages are subject to income tax withholding, Social Security and Medicare taxes, but not FUTA tax.
If the business is a corporation, partnership, or estate then the parents’ wages are subject to income tax withholding, Social Security and Medicare taxes, and FUTA tax.

If the parent is performing nondomestic services for the child but not for the child’s business then the parents’ wages are not subject to Social Security and Medicare taxes. The wages are not subject to FUTA tax regardless of the services provided.

If you would like to learn more or to set up a consultation call Marlies Y Hendricks CPA PLLC at either 716-694-3500 or 910-769-8730.

The above information is of a general nature only and should not be relied upon for specific situations.

College Savings & Affordable Online Learning

Tue, 18 Aug 2026 23:08:44 +0000

Last updated: June 30, 2026

College Savings & Affordable Online Learning

Below are two web-site links to resources for students and parents. The first covers 529 plans and the benefits of early college savings using other options.

The second link includes a collection of resources to help students find affordable online flexible and cost-effective learning options.

College Savings & 529 Plans:
https://www.irs.gov/newsroom/529-plans-questions-and-answers

Find Affordable Online Colleges:
http://www.affordablecollegesonline.org/

MARLIES Y HENDRICKS CPA PLLC does not endorse any of these articles or confirm their accuracy. If tax planning or tax preparation services are required, contact us at 716-694-3500 or 910-769-8730 for an appointment.

How Does Working in a New Location Affect Your Tax Home?

Tue, 18 Aug 2026 23:09:46 +0000

How Does Working in a New Location Affect Your Tax Home?

Last Updated: August 18th, 2026

A person’s “tax home” is where they choose to live in order to work. Married couples can have more than one tax home, depending on where their jobs are located. If a taxpayer has to travel away from their tax home in order to work, their expenses, to a degree, will be deductible. However, if a taxpayer chooses to live further away from their place of work, those commuting expenses to and from work are not allowed to be deductible.

There are instances where a taxpayer has already established a tax home in one location, but is offered a long-distance job. The ruling on this to allow travel expenses to be deductible is that the job must be temporary, meaning that “If employment at a work location is realistically expected to last…for 1 year or less, the employment is temporary.” This means that expenses could be deducted provided that the work is subject to end within a year’s time limit.

There is also a difference between the “temporary” job and the “uncertain” job. If a taxpayer accepts a job outside their current tax home with the knowledge that the job will only last a maximum of a year, that job can be considered temporary. However, if a taxpayer is only accepting work outside of their tax home on a “temporary” basis because they are uncertain of the job market and do not wish to commit to moving, that is not considered a temporary job, and the expenses will not be deductible.

Couples should consider this when purchasing homes, and accepting positions to cut down on their expected expenses.

The above information is of a general nature only and should not be relied upon for specific situations. Click here for additional tax services information.

Call Marlies Y Hendricks CPA PLLC at either 716-694-3500 or 910-769-8730.

2023 IRS Changes for Car and Truck Depreciation Limits

Tue, 18 Aug 2026 23:10:10 +0000

2023 IRS Changes for Car and Truck Depreciation Limits

Last Updated: August 18th, 2026

Every year the IRS issues an inflation-adjusted update to the depreciation limits for passenger automobiles placed in service for that year. These limits are updated for the inflation according to the automobile component of the chained consumer price index. Here are the changes made for the 2023 tax year:

For vehicles in which bonus first-year deprecation applies, the depreciation limit is $20,200 (increased from $19,200) for the first tax year, $19,500 (increased from $18,000) for the second tax year $11,700 (increased from 10,800) for the third tax year; and $6,960 (increased from $6,460) for each following year.

For vehicles in which bonus first-year deprecation does not apply, the depreciation limit is $12,200 (increased from $11,200) for the first tax year; $19,500 (increased from $18,000) for the second tax year; $11,700 (increased from $10,800) for the third tax year; and $6,960 (increased from $6,460) for each following year. These changes are shown under Sec. 280F(d)(7).

Deductions on the cost of leasing automobiles is limited under Sec. 280F(c) where the limitation is calculated using the formula and tables directed under Regs. Sec. 1.280F-7.

https://www.irs.gov/pub/irs-drop/rp-23-14.pdf

If you would like to learn more or to set up a consultation call Marlies Y Hendricks CPA PLLC at either 716-694-3500 or 910-769-8730.

The above information is of a general nature only and should not be relied upon for specific situations.

Real Estate Tax Tips

Wed, 26 Aug 2026 22:23:47 +0000

Updated July 6, 2026

Real Estate Tax Tips

Many people do not know that you may qualify to have all or part of any gain from the sale of your main home to be excluded from your income. It is important your main home is the home you live in most of the time.

To qualify and claim the exclusion you must meet certain requirements. These are:

- that you must have owned the home for at least 2 years, and

- that you lived in the home as your main home for at least 2 years.

Both conditions must happen during the 5-year period ending on the date of the sale.

Once you know you qualify, you can exclude up to $250,000 of the gain from your main home from your income if your filing status is single, married filing separately, or head of household. You may exclude $500,000 gain from your income if your filing status is married filing joint and surviving spouse.

This means that you do not have to report the sale of your main home on your tax return unless you have a gain in the sale and cannot exclude all of it or choose not to exclude all of it. If you have a loss on your principal residence (main home), you cannot use this as a deduction on your tax return.

You may only exclude up to a maximum of $250,000 or $500,000 depending on your filing status on your main house. If you have a secondary house, these exemptions do not apply in whole or part. You must report the sale and any capital gain or capital loss on the secondary house regardless.

Taxpayers who do not meet the full two-year ownership and use requirements may still qualify for a partial exclusion if the sale is due to certain qualifying circumstances, such as a job relocation, health reasons, or other unforeseen events.

If you would like to learn more or to set up a consultation call Marlies Y Hendricks CPA PLLC at either 716-694-3500 or 910-769-8730.

The above information is of a general nature only and should not be relied upon for specific situations.

First Time Home Buyers Tax Tips

Tue, 30 Jun 2026 22:27:51 +0000

Under Internal Revenue Code 72(t), taxpayers who are under age 59½ may withdraw up to $10,000 lifetime limit from a IRA for qualified first-time homebuyer expenses without being subject to the 10% early withdrawal penalty. The rule applies to both tradditional and roth IRAs. For traditional IRAs, the distribution is generally subject to ordinary income tax.

This specification was later clarified in the 2015 court case: Lily Hilda Soltani-Amadi and Bahman Justin Amadi v. Commissioner. To assist in paying for their new home, Ms. Amadi made an early withdrawal from her 401(k) plan. The court determined that had they withdrawn from an IRA they would have been penalty free. However, an early withdrawal from a 401(k) requires a 10% penalty. Judge Armen summarized the issue by stating, “Congress chose to grant relief… for distributions from IRAs but not for distributions from other qualified plans, such as a section 401(k) retirement plan.”

In short, if you decide that it is in your best interest to withdraw money from your retirement plan to help pay for your first home – ensure that you are withdrawing from an IRA; the no 10% penalty relief granted by Congress, does not extend to any other retirement plan.

The above information is of a general nature only and should not be relied upon for specific situations. Click here for additional tax services information.

Call Marlies Y Hendricks CPA PLLC at either 716-694-3500 or 910-769-8730.

Charitable Contributions and State and Local Tax Credits New Regulations

Tue, 18 Aug 2026 23:10:48 +0000

Charitable Contributions and State and Local Tax Credits New Regulations

Last Updated: August 18th, 2026

New regulations imposed by the US Department of the Treasury and the Internal Revenue Service now require taxpayers to reduce their charitable contribution deduction by the amount of state and/or local tax credits they receive. Taxpayers may also treat any payments made as credits.

As part of the new regulations, taxpayers making charitable payments to entities that can receive tax-deductible contributions must reduce their federal deduction amount by the amount of state or local tax credits they receive in their return.

An example of this would be if a state grants a 70 percent credit for charitable contributions and a taxpayer contributes $1,000 to an entity, the taxpayer will receive $700 as a state tax credit. In order to itemize deductions, the taxpayer needs to reduce the $1,000 federal charitable contribution by the state tax credit of $700, which leaves a federal charitable contribution deduction of $300.

There are exceptions for the state tax deductions and tax credits that do not exceed 15 percent of the amount transferred. If a taxpayer receives a state tax deduction of $1,000 for a contribution, they are not required to reduce their federal contribution in order to account for the state tax deduction. Also, if a taxpayer makes a $1,000 contribution it is not required for them to reduce their contribution if the state tax credit is no more than $150.

The IRS also is providing a safe harbor for taxpayers who itemize deductions by allowing them to treat payments that will be disallowed as charitable contribution deductions. For those who have already filed may be able to claim a great deduction by filing an amended return if they have not yet claimed the $10,000 maximum ($5,000 for married filing joint).

The above information is of a general nature only and should not be relied upon for specific situations. Click here for additional tax services information.

Call Marlies Y Hendricks CPA PLLC at either 716-694-3500 or 910-769-8730 as required to set up an appointment.

New Connecticut Pass-Through Entity Tax

Tue, 18 Aug 2026 23:11:15 +0000

New Connecticut Pass-Through Entity Tax

Last Updated: August 18th, 2026

Connecticut enacted a new pass-through entity (PET) income tax that is taxed at the top personal income tax rate and is offset by a credit at the personal or corporate income tax rate.

This new tax requires pass-through entities to pay at the entity level. This is Connecticut’s way of providing relief from the $10,000 federal limit that is imposed on state and local tax deductions.

The PET tax is imposed on partnerships, S corporations, and LLCs. There are several ways to calculate the PET, and those are as follows:

Separately and non-separately computed items under the IRC
Derived from or connected to Connecticut sources as determined by the sourcing rules that are currently applied to the Connecticut income tax
Adjusted by applicable Connecticut state modifications
Multiplied by 6.99%

If the calculation results in a loss, the entity may carry forward until it is utilized fully.

Credits and Overpayments

All those, whether individuals or corporate members, of affected business entities are entitled to have an offsetting credit against their respective taxes. The credit is 93.01% of the member’s direct and indirect pro rata share of the tax paid. Any portion of the credit that exceeds the tax liability is then treated as an overpayment.

The above information is of a general nature only and should not be relied upon for specific situations. Click here for additional tax services information.

Call Marlies Y Hendricks CPA PLLC at either 716-694-3500 or 910-769-8730 as required to set up an appointment.