Families looking for another way to save for a child’s future may want to consider Section 530A accounts. Created by the 2025 tax legislation commonly referred to as the One Big Beautiful Bill Act, these tax-advantaged savings accounts are designed to help children build long-term assets.
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Getting a large inheritance can create new financial opportunities. But it’s important to handle inherited assets carefully, especially when it comes to taxes and planning.
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It’s not too late to boost your IRA for 2025. You have until April 15, 2026, to make contributions for the 2025 tax year.
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You have until April 15, 2026, the tax filing deadline, to make 2025 contributions to an IRA.
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Here’s a sampling of some significant tax law changes going into effect this year…
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Employers seeking to offer low-cost, family-friendly benefits may want to consider flexible spending accounts (FSAs) for dependent care.
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The accounting method your business uses to report income for tax purposes, either cash or accrual, can significantly impact your tax bill.
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If you’re thinking about helping a child or grandchild pay for school, you’re not alone, and you’re not without help. While families have always saved for education, Section 529 plans have made it easier and more tax-efficient.
With a 529 plan, your contributions grow tax-deferred, and no taxes are due when the money is used for qualified education expenses. These include postsecondary school expenses such as tuition, mandatory fees, books, supplies, computer equipment, software, internet service and, generally, room and board (for students enrolled at least half-time). Contributions aren’t deductible for federal purposes, but many states offer tax breaks or matching grants for contributions.
Contributions to a 529 plan may be shielded from gift tax by the annual gift tax exclusion, which for 2025 is $19,000 per recipient ($38,000 for joint gifts by a married couple). You can even choose to front-load five years’ worth of annual exclusion gifts into a 529 plan contribution in a single year. For instance, you and your spouse can contribute up to $190,000 per recipient in 2025, exempt from gift tax. Any excess contributions can potentially be made gift-tax-free under the federal gift and estate tax exemption ($13.99 million in 2025).
Before the Tax Cuts and Jobs Act (TCJA), the tax exclusion for qualified expenses was strictly limited to postsecondary education. The TCJA expanded this tax break to $10,000 of tuition per year at an elementary or secondary public, private, or religious school.
More recently, thanks to the SECURE Act, you may use up to $10,000 in a 529 plan to repay the beneficiary’s student loans, plus another $10,000 to repay student loans held by the beneficiary’s siblings. It also allows 529 funds to pay for apprenticeships (for example, classroom instruction at a community college).
In addition, under SECURE 2.0, from 2024 forward, up to $35,000 (lifetime limit) in unused 529 plan funds can be rolled into a Roth IRA for the beneficiary, subject to various rules.
Also, changing how financial aid is calculated on the Free Application for Federal Student Aid (FAFSA) form may help grandchildren. Gifts from grandparents to 529 accounts no longer affect the allowable aid.
Finally, legislation has been proposed that would allow tax-free 529 plan distributions for even more types of education-related expenses. Contact the office for the latest information.
408-252-1800
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Eligible individuals with disabilities and their family members can use ABLE accounts to pay for qualified expenses.
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If you’re preparing to file your 2024 federal income tax return and your tax bill is higher than you’d expected or your tax refund is smaller than you’d hoped, there might still be an opportunity to change it. If you qualify, you can make a deductible contribution to a traditional IRA until the filing date of April 15, 2025, and benefit from the tax savings on your 2024 return.
You can make a deductible contribution to a traditional IRA if:
For 2024, if you’re married, filing jointly and covered by an employer plan, your deductible IRA contribution phases out over $123,000 to $143,000 of MAGI. For single filers or those filing as head of household, this phaseout range is $77,000 to $87,000. It’s only $0 to $10,000 if you’re married and filing separately. If you’re not an active participant in an employer-sponsored retirement plan, but your spouse is, your deductible IRA contribution phases out with MAGI between $230,000 and $240,000.
Deductible IRA contributions reduce your current tax liability, and earnings within the IRA are tax-deferred. However, every dollar you take out will be taxed in full (and subject to a 10% penalty before age 59½, unless an exception applies).
Roth IRA holders may also contribute to their accounts until April 15, though these contributions aren’t tax deductible, and some income-based limits apply. Withdrawals from a Roth IRA are tax-free if the account has been open for at least five years and you’re 59½ or older. Certain withdrawals are tax-free before age 59½ or within the first five years.
If eligible, an individual can make a deductible traditional IRA contribution of up to $7,000 for 2024. The contribution limit is $8,000 for those age 50 and up by December 31, 2024. If you’re a small business owner, you can establish and contribute to a Simplified Employee Pension (SEP) plan up until the due date for your return, including extensions. For 2024, the maximum SEP contribution is $69,000.
Contact the office for more information about IRAs or SEPs, as well as additional strategies to reduce your 2024 taxes. During your tax preparation appointment, you can also ask how to save the maximum tax-advantaged amount for retirement.
408-252-1800
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