Don’t let the name “nanny tax” fool you. It’s a tax that applies to the wages of a variety of types of household help you hire, such as…
Continue readingYou May Owe the “Nanny Tax” Even Without a Nanny
The Tax Impact of Business Bartering
Bartering is simply the exchange of services or property, and it’s a taxable event. For example, if a computer consultant trades services…
Continue readingWhat Could Happen if You Don’t File a Required Tax Return?
Taxpayers who are required to file a federal tax return but don’t may be in for a costly surprise. If the IRS receives a document like a Form W-2 indicating taxable income, it may file a Substitute for Return (SFR) on your behalf.
Before doing so, the IRS typically will attempt to contact you and encourage voluntary filing. If you fail to file by the deadline, the IRS can move forward with an SFR. The resulting tax bill will likely be higher than necessary because it won’t include deductions or credits you qualify for.
If you receive a Notice of Deficiency with a proposed assessment, don’t delay. Respond within 90 days to avoid further action and additional penalties. Contact the office for help.
408-252-1800
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Choosing the Optimal Accounting Method for Tax Savings
The accounting method your business uses to report income for tax purposes, either cash or accrual, can significantly impact your tax bill.
Continue readingMarriage and Taxes: Key Changes After Saying ‘I Do’
It may not be as fun to plan as the wedding venue, invitations and attire, but marriage can result in changes affecting essential tax issues that need prompt attention following the wedding.
Name
If your name has changed, report it to the Social Security Administration (SSA) so that the name on your Social Security card matches the name on your tax return. To make this change, file Form SS-5, “Application for a Social Security Card,” available from www.ssa.gov.
Tax Withholding
Both spouses must furnish their employer(s) with new Forms W-4, “Employee’s Withholding Allowance Certificate.” This is because combined incomes may move taxpayers into a different bracket. Search www.irs.gov for the IRS Withholding Calculator tool to help you complete the new Form W-4.
Filing Status
Marital status is determined as of December 31 each year. Spouses can choose to file jointly or separately each year. Contact the office and ask to have your tax liability calculated both ways.
408-252-1800
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CA Passthrough Entity Tax: Estimate Due June 16th
If you have a passthrough entity (Partnership, LLC, S Corporation) and would like the opportunity to make the Passthrough Entity Tax election for 2025, you have a California PTET deposit due for your entity on Monday, June 16th.
- If your entity made the election in 2024, your PTET deposit due on June 16th is 50% of your total 2024 Passthrough Entity Tax amount. You can find this amount on Form 3893 (PTE) in your 2024 California business entity tax return: it will indicate a due date of June 16th.
- If your entity did NOT make the election in 2024, you need to make a payment of $1,000 by June 16th for the opportunity to elect in 2025. This voucher is Form 3893 (PTE).
- If your entity has not yet filed its 2024 tax return, but you intend to make the election for 2025, follow instructions that were provided to you with your extension documents for the amount to pay for your estimated PTET deposit by the June 16th due date.
- Please note that making this estimated payment does not lock your entity into making the 2025 election. However, your entity will be unable to make the election if you do not make this payment.
Instructions for Making Estimated Payment
Your PTET deposit payment can be made via the Franchise Tax Board Direct Pay website. We recommend that you make the payment using this method and send your preparer the confirmation for your tax files once completed.
We also recommend making this payment ahead of time to avoid any deadline related issues with the FTB Direct Pay website. If you mail the payment, please send certified and save a copy of the certified receipt.
FTB Direct Pay:
- California Web Pay for Business
- Enter entity type
- Enter entity ID
- Enter Contact Info
- Select Payment Type –> Passthrough Entity Elective Tax
- Be sure to choose 1/1/25 – 12/31/25 as period beginning and end date
- Save down payment confirmation
Mailing Address:
Franchise Tax Board
PO Box 942857
Sacramento, CA 94257-0531
If you have any additional questions that were not covered above, let us know by reaching out to your preparer or our front desk.
408-252-1800
Tax-Advantaged Savings Accounts That Benefit Those With Disabilities
Eligible individuals with disabilities and their family members can use ABLE accounts to pay for qualified expenses.
Continue readingTraveling With Your Spouse on Business? Know What’s Deductible
If you own a company and travel for business, you may wonder whether you can deduct all the costs of having your spouse accompany you on trips. It’s possible, but the rules are restrictive.
When Your Spouse Is Also Your Employee
If your spouse is your employee, you may be able to deduct most of his or her travel expenses. But there are strict rules: You can deduct travel costs only if his or her presence on the trip serves a bona fide business purpose. For example, if you’re attending a trade show and your spouse is one of your company’s leading sales reps, negotiating and closing sales at the show would likely qualify as a bona fide business purpose. But it isn’t sufficient for your spouse to merely be “helpful” in incidental ways, such as by typing your meeting notes.
Similarly, a spouse’s participation in social functions, such as being a host or hostess, generally isn’t enough to establish a business purpose. That is, if his or her purpose is to develop general goodwill for customers or associates, this is usually insufficient. Further, if there’s a vacation element to the trip (for example, if your spouse spends time sightseeing), it will be more challenging to establish a business purpose for his or her presence on the trip. On the other hand, a bona fide business purpose exists if your spouse’s presence is necessary to care for your serious medical condition while you’re traveling for business.
If these tests are satisfied in relation to your spouse, you can claim the typical deductions allowed for business travel away from home. These include the costs of transportation, meals, lodging and incidentals such as dry cleaning and phone calls.
When Your Spouse Isn’t Your Employee
If your spouse isn’t your employee, then even if your spouse has a bona fide business purpose for making the trip with you, you won’t likely qualify to deduct all of his or her travel costs. But you may still be able to deduct a substantial portion of the trip’s costs. This is because the rules don’t require you to allocate 50% of your travel costs to your spouse, only any additional costs you incur for him or her.
For example, in many hotels, the cost of a single room isn’t much lower than a double. If a single room would cost you $150 a night and a double room would cost you and your spouse $200, the disallowed portion of the cost allocable to your spouse would only be $50. In other words, you can write off the cost of what you’d have paid traveling alone. To prove your deduction, ask the hotel for a room rate schedule showing single rates for the days you stay.
If you drive your car or rent one, the cost will be fully deductible even if your spouse is along. Of course, public transportation, meals and any separate expenses incurred by your spouse won’t be deductible.
What Can You Deduct?
While the employee and bona fide business purpose requirements prevent tax deductibility of a spouse’s travel costs in most cases, there are circumstances when some expenses can be deducted. Contact the office if you have questions about this or other tax-related topics.
408-252-1800
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Your Return Is Filed! 3 Things to Keep in Mind Post-Filing
Most people feel some relief after filing their income tax returns each year. But even if you’ve successfully filed your 2024 return, you may still have questions. Here are three common ones.
1. What's the Status of Your Refund?
You can learn the status of your tax refund using an IRS online tool. Go to irs.gov and click on “Get Your Refund Status.”
You’ll need your Social Security number, filing status and refund amount.
2. What if You Forgot to Report Something?
In general, you can file an amended tax return and claim a refund within three years after you filed your original return or within two years of the date you paid the tax, whichever is later. So, if you filed your 2024 tax return on April 15, 2025 (the due date for 2024 returns), and barring any changes in the rules, you’ll generally have until April 18, 2028 (because April 15 is a Saturday and April 17 is a holiday in Washington, DC) to amend your return.
However, there are a few situations when you’re allowed more time to file an amended return. One example is claiming a bad debt deduction. Generally, you may amend your tax return to claim a bad debt for seven years from the tax return’s due date for the year the debt became worthless.
3. How Long Must You Keep Tax Records?
Retain tax records as long as the IRS can audit your return or assess additional taxes. The statute of limitations is generally three years after filing, meaning most 2021 tax year records can now be discarded if you filed by the April deadline in 2022. If you filed an extension, keep records from the extended due date for three years.
The statute extends to six years for substantial underreporting (over 25% of gross income). There’s no time limit if you never filed or filed fraudulently. So, keep actual tax returns indefinitely to prove legitimate filing.
Retirement account records should be kept until the account is depleted, plus three (or six) years. Real estate and investment records should be kept for as long as you own the asset, plus at least three years after selling, or six years to be extra cautious.
Being diligent with recordkeeping can help you avoid IRS issues down the line.
Still Have Questions?
Contact the office for help finding answers about your refund, filing an amended return or record retention.
408-252-1800
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Helping a Family Member Buy a Home
Making a family loan isn’t the only way to assist a loved one with purchasing a home. If you aren’t concerned about being paid back, a straightforward option is gifting cash. In 2025, you can give up to $19,000 to anyone without federal gift tax consequences under the gift tax annual exclusion.
If your loved one is married, you can gift up to $38,000 to the couple tax-free. If you’re married, you and your spouse can jointly give up to $76,000 to the couple, all without federal gift tax consequences (4 x $19,000).
Gifts exceeding these limits reduce your lifetime gift and estate tax exemption, which for 2025 is $13.99 million ($27.98 million for married couples). State tax consequences must also be considered. Contact the office to explore the best approach for your situation.
408-252-1800
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