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Gift Tax, Explained: What It Is and How It Works

In 2024, the annual gift tax exemption remains $17,000, allowing individuals to gift up to $17,000 to as many people as they wish—without owing taxes on those gifts. So, for instance, a generous grandfather can give $17,000 to each of his 10 grandchildren this year, without worrying about any tax surprises.

But what if he decides to go bigger? If Grandpa gifts each grandchild $21,000, he’s exceeded the exemption by $4,000 per gift. This would mean he’s potentially on the hook for gift taxes on that $40,000 excess.

How about married couples? Both spouses can give away \$17,000 each, allowing a couple like Cynthia and Joe to gift up to \$34,000 per person annually—perfect for spoiling their nieces and nephews tax-free.

❓ What Is the Gift Tax?

When a person gives money or property to someone other than their spouse or dependent, they may be required to pay gift tax. This federal excise starts at 18% and can reach up to 40% on certain gift amounts. The responsibility for paying the tax typically lies with the donor, not the individual receiving the gift. While recipients don’t face any immediate tax consequences, they may have to pay capital gains tax if they sell gifted property in the future.

Not all gifts get taxed.

Certain types of gifts are totally tax-free, like:

✅ Payments for school tuition or medical bills
✅ Donations to charity
✅ Political contributions
✅ Gifts to your spouse or dependents

💡 Lifetime Gift Tax Exemption

If a gift exceeds the 2024 annual $17,000 limit, that does not automatically trigger the gift tax. Also, the IRS allows a person to give away up to $12.92 million in assets or property over the course of their lifetime and/or as part of their estate.

If a gift exceeds the annual exclusion limit, the difference is simply subtracted from the person’s lifetime exemption limit and no taxes are owed.

Don’t Let Gift Giving Become a Tax Headache 🤯

Navigating the federal gift tax is essential for anyone with a generous spirit—or a large estate. If your gifts exceed the annual exclusion, you’ll need to report them on IRS Form 706. Better to play it safe than get an unwelcome letter from the IRS!

Need help navigating gift taxes or have other tax concerns? Contact us today and let us handle the numbers, while you handle the gift wrapping this December!

Texas Tax Help: Top Year-End Tax Tips

We get it. Taxes can feel like one big puzzle — especially if you’re running a growing business or navigating investments. And then there’s the nagging question:

“Did I miss anything major?”

“Are there hidden deductions I should know about?”

“How much could these little mistakes cost me in the long run?”

Our award-winning tax pros take the guesswork out of it. From maximizing your deductions to giving you tailored tax help that fits your unique situation, we’ve got you covered. We’ll dive into your financials, gather all the right paperwork, and uncover more ways to save than you thought possible.

Download our Tax Preparation Checklist for Individual Taxpayers to help you organize your files.

💡 Learn more about what you can and cannot claim

The Power 8: Smart Year-End Tax Moves!

Ready to tackle your taxes like a pro?

Whether you need quick tax tips or deeper tax help, we’re here to make sure 2024 is your best tax year yet. Let’s chat and find those savings!

Reasons You Might Not Get a Tax Refund Next Year

With all the tax reform changes and reduced income tax withholding for most taxpayers, there’s growing concern that while more take-home pay is great now, it could mean an unpleasant surprise at tax time next year.

This is why you need to be extra cautious about your payroll withholding. One glance at the W-4 instructions can make anyone’s head spin, especially if you’re not trained in taxes. Spoiler: it’s not business as usual.

What adds to the problem is that many taxpayers count on a refund to pay property taxes, insurance, and other large expenses. The W-4 worksheets are designed to withhold the correct amount of tax with no substantial refund, and many tax practitioners are reporting that clients’ withholdings have been reduced to seriously low amounts.

In other years, most taxpayers can look at the tax from their prior year’s return and compare it to their projected payroll withholding to see if their current withholding amount is appropriate. But some taxpayers with multiple jobs, a working spouse, or complicated returns will find it difficult to adjust their withholding to achieve the desired results.

The same problem exists for retirees with pension income, the difference being that they use a W-4P instead of a W-4.

💡 Taxpayers with Multiple Jobs

The same problem exists for retirees with pension income, the difference being that they use a W-4P instead of a W-4.

Get Help Projecting Your Taxes

If you want a clearer picture of your potential tax refund or need help tweaking your payroll withholding, give us a call. We’ll help you avoid surprises—and make sure you’re still in control when tax season rolls around.

Remote Work and Taxes: Does Your Remote Workforce Create Income Tax Nexus in 2024?

Remote work has become the new normal, but it’s not without its tax implications. As companies navigate the post-pandemic landscape, one important question remains: does remote working create income tax nexus for your business? In other words, if your employees are working from different states, could this mean you owe taxes in those states too? Let’s break it down.

Nexus is the connection a business has with a state that subjects it to that state’s tax laws. Whether through sales, property, or employee activities, your business could be responsible for taxes in any state where it has nexus. With remote work now more prevalent than ever, this is a question all businesses need to ask themselves.

❓ How to Know If Remote Working Creates Nexus

The shift to remote work has resulted in employees working from different states—states they may not have worked from before. If your employees have been working remotely in other states, your company may have created nexus in those states. Nexus can mean having to comply with payroll withholding, income tax, and even sales tax regulations in each new location.

While some states have offered temporary relief for businesses due to the pandemic, those rules are often changing, so it’s essential to stay informed.

💡 Individual Income Tax Payment and Withholding

Any individual income tax and related payroll withholdings are usually sourced to the state where the employee performed their work. As many employees are now telecommuting due to COVID-19, certain states and cities have adopted the ‘Convenience of the Employer’ test.

This means that the wages of those remote workers are sourced to the employer’s location unless it was decided to have the employee in another state based on the employer’s necessity, rather than the employee’s convenience. For example, Philadelphia-based employers who are working outside the city are exempt from the city’s wage tax for the days spent working.

📆 Apportionment

There’s also the issue of apportionment; many states still use a three-factor method of property, payroll, and sales to help calculate the business tax apportionment factor. As employees are now working from home, states could insist that the compensation paid is creating a payroll factor numerator.

💡 State Taxes

Remote work can also affect your company’s state tax obligations. Normally, a business would have nexus for state tax purposes if it has a physical presence in the state. However, with employees working remotely, your company may have a tax presence in multiple states without ever setting foot there.

While some states have temporarily suspended nexus rules due to the pandemic, others have not provided guidance, leaving businesses in uncertain territory.

❓ What States Are Doing

As of now, states are handling nexus rules in different ways. Some, like Alabama, have stated that remote work won’t create nexus, while others, such as Utah and Nebraska, have taken a stricter approach. With the tax landscape constantly evolving, it’s important to stay up-to-date with the latest guidance.

Make Your Next Move

Remote work isn’t going anywhere, and neither are its tax implications. To ensure your business stays compliant with the latest nexus rules, it’s essential to have a proactive strategy in place.

Reach out to us today! Whether your team is working from Texas or telecommuting from across the country, we’ll help you navigate the complexities of remote work and individual income tax in 2024. Let’s make sure your business is covered, no matter where your employees are.

When Can a Taxpayer Deduct Disaster Losses?

A disaster loss is a tax-deductible loss that occurs in federally declared disaster areas—think floods, forest fires, or earthquakes. Much like a casualty loss, it involves damage to property, but only if the President has declared the area a federal disaster zone.

💡 Disaster Loss Deductions

The IRS states, “Generally, you may deduct casualty and theft losses related to your home, household items, and vehicles on your federal income tax return if the loss is caused by a federally declared disaster.”

However, don’t count on claiming losses covered by insurance unless you file a timely reimbursement claim and adjust the deduction by any amount you expect to recover.

Casualty Loss Categories

There are three main categories of casualty losses related to federally declared disasters, as outlined in IRS Publication 547 or Form 4684:

📌 Federal casualty losses
📌 Disaster losses
📌 Qualified disaster losses

From 2018 through 2025, personal-use property losses—whether from fire, storm, or theft—are only deductible if tied to a federally declared disaster. You can claim a casualty loss deduction in the same year the damage happened, but only if you’re not expecting reimbursement from insurance.

💡 Calculating Your Casualty Deduction

When claiming a casualty deduction, subtract the salvage value from the asset’s adjusted basis, then reduce that by any insurance payouts. The remainder is your casualty loss deduction.

❓What Qualifies as a Deductible Casualty Expense?

To qualify for a deduction, casualty losses must result from sudden, unexpected events. Theft losses, on the other hand, require proof that the property was actually stolen—not just misplaced.

💡 Which Losses Don’t Qualify?

Certain types of losses are not deductible, including:

Long-term damage from erosion, drought, or termite damage
Losses resulting from foreseeable events (i.e., something you could anticipate)

❓How to Claim Your Disaster Loss Deduction

To claim a disaster loss deduction, fill out Part I of Section D on Form 4684 and attach it to your tax return or amendment. This process ensures your disaster loss is reflected accurately for tax purposes.

✅ Claiming or Amending Your Tax Return

Need more details on disaster loss deductions or thinking about amending your return? We’re just a phone call away to help guide you through the process.

Need Help?

Dealing with a disaster is stressful enough—don’t let tax deductions add to the chaos. Contact us today for personalized guidance on how to maximize your disaster loss deduction and get your tax situation back on track

Urgent: New Federal Filing Requirement for LLCs and Corporations – Act Before the December 31 Deadline!

If you’re a business owner with an LLC or corporation, we’ve got an important update for you. There’s a new federal requirement under the Corporate Transparency Act that means you need to file a Business Ownership Information (BOI) Report with FinCEN. But before you start worrying about complicated filing processes or hefty fines, let’s break it down.

⚠️ Don’t Get Ripped Off

You may have already come across some alarming emails or ads warning of severe penalties or offering to file this report for outrageous fees. Don’t fall for it. We’ve seen people charging hundreds or even thousands of dollars for something that takes only 5–10 minutes to complete. These high fees are totally unnecessary, and it’s nothing more than taking advantage of business owners.

❓ Why Is This Required?

In a nutshell, the U.S. government is asking if your LLC or INC has any foreign ownership. That’s the key focus of this filing – simple as that.

📆The Deadline You Need to Know

This filing isn’t optional. Your BOI Report is mandatory and needs to be submitted by December 31, 2024. If you don’t file it in time, there could be penalties, so don’t let this slip through the cracks.

❓ How to File

We’ve partnered with FinCEN Advisors to make this process quick and easy for you. You can e-File your BOI Report in just a few minutes! It’s a one-time filing, unless your LLC or INC ownership changes down the road, in which case you’ll need to submit an updated report.

What You Need to e-File

Filing is simple, but you’ll want to have these details ready before you start:

📌 Your company’s legal name and any trade names (if applicable)
📌 The address of your principal place of business
📌 The state of formation where your LLC or INC was originally registered
📌 Your company’s EIN number
📌 Information on each beneficial owner: name, date of birth, residential address, identification number, and a copy of their driver’s license or passport

Which Plan Should You Choose?

When filing your BOI Report with FinCEN Advisors, go for the most affordable starter plan if you’re only reporting one LLC or corporation. If you have more entities, choose the best pricing option to save money.

Why We Can’t File This for You

While we’d love to handle this for you, our firm’s professional liability limits us from filing legal documents on your behalf. That’s why we’re informing you about this requirement and providing you with an easy way to e-File and avoid penalties.

Don’t Miss the Deadline!

To avoid potential fines, be sure to e-File your BOI Report by December 31, 2024. Or, if you prefer, you can file it yourself on the official FinCEN website.