Navigating the latest business tax changes

As we approach the end of 2024, several significant updates in the business tax landscape are making headlines. Staying informed about these changes is crucial for business owners and tax professionals alike. Here’s a quick breakdown of the most notable updates.

1. **Corporate Transparency Act (CTA) Requirements**

Starting this year (2024), the Corporate Transparency Act mandates that business owners disclose the actual owners of their businesses. This new requirement aims to increase transparency and combat illicit activities such as money laundering and fraud. Business owners must file a new form detailing their ownership structure. This compliance requirement known as Beneficial Ownership Information reporting (BOI) should be kept top of mind because subsequent to the initial 2024 filing due January 1, 2025, new filings are required 30 days after a new ownership change.

2. **IRS Inflation Adjustments for 2025**

IRS releases tax inflation adjustments for tax year 2025 | Internal Revenue Service              

Key changes include:

**Standard Deductions**: Increased to $15,000 for single filers and $30,000 for married couples filing jointly.

**Marginal Tax Rates**: The top tax rate remains at 37% for high-income earners, with adjustments to other brackets.

**Earned Income Tax Credit (EITC)**: The maximum EITC for taxpayers with three or more children rises to $8,046.

These adjustments are designed to reflect the cost-of-living increases and ensure that tax brackets and deductions remain fair and relevant.

3. **Enhanced IRS Compliance Efforts**

IRS announces sweeping effort to restore fairness to tax system with Inflation Reduction Act funding; new compliance efforts focused on increasing scrutiny on high-income, partnerships, corporations and promoters abusing tax rules on the books | Internal Revenue Service.

The agency is leveraging advanced technology and artificial intelligence to identify and address tax evasion more effectively. This initiative aims to restore fairness in the tax system and ensure that all taxpayers pay their fair share.

4. **Voluntary Disclosure Program for Employee Retention Credit**

IRS reopens Voluntary Disclosure Program to help businesses with problematic Employee Retention Credit claims; sending up to 30,000 letters to address more than $1 billion in errant claims | Internal Revenue Service

This move provides an opportunity for businesses to rectify past errors without facing severe penalties, promoting a more transparent and compliant tax environment.

What This Means for Your Business

These updates underscore the importance of staying current with tax regulations and leveraging professional advice to navigate the complexities of the tax system. Here are some steps you can take:

**Review Ownership Structures**: Ensure compliance with the CTA (aka BOI reporting) by accurately reporting your business’s ownership.

**Adjust Financial Plans**: Incorporate the new IRS inflation adjustments into your financial planning for 2025.

**Enhance Record-Keeping**: Maintain thorough and accurate records to support any claims and deductions.

**Seek Professional Guidance**: Consult with tax professionals to understand how these changes impact your specific situation and to ensure compliance.

By staying informed and proactive, you can navigate these changes effectively and position your business for continued success.

Feel free to share this article with your network to help others stay informed about these critical tax updates! If you have any questions or need further clarification, please reach out to us at chad.hagger@hagger-tax.com or 305-762-9587.

Or schedule a free consultation for your business accounting and tax here: Free consultation

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