Don’t let ACA compliance become a blind spot for your business. Here’s what you need to know to comply with the law’s requirements.

The play-or-pay threshold

The ACA’s employer shared responsibility rules apply to applicable large employers (ALEs). In general, ALEs are businesses with 50 or more full-time employees, including full-time equivalents (FTEs). Once a business crosses that threshold, it must comply with several requirements related to employee health coverage. An employer’s size for the year is determined by the number of full-time employees plus FTEs in its prior year. The challenge is that many business owners don’t realize they’re approaching the ALE threshold until it’s too late.

First, for ACA purposes, a full-time employee generally is an individual employed on average at least 30 hours of service per week or 130 hours per month. So some employees you might consider to be part-time because they work less than 40 hours a week may be considered full-time for ACA purposes.

Second, FTEs are determined by adding all hours of service for the month for employees who weren’t full-time employees (but no more than 120 hours per employee), and dividing by 120. This can push a company into ALE status faster than expected. For example, a small company with 35 full-time employees and a significant number of part-time workers could exceed the 50-full-time-employee threshold once part-time hours are aggregated.

2 types of penalties

Under the ACA, an ALE may incur a penalty if it doesn’t offer minimum essential coverage to its full-time employees and their eligible dependents or if it offers such coverage, but that coverage isn’t affordable and/or fails to provide minimum value. The penalty is typically triggered when at least one full-time employee receives a premium tax credit for buying individual coverage through a Health Insurance Marketplace.

One of two penalty structures may apply, depending on the circumstances. First, under Section 4980H(a), a penalty may be assessed if an ALE fails to offer coverage to at least 95% of its full-time employees and their dependents. This penalty is calculated based on the total number of full-time employees, excluding the first 30. Second, under Section 4980H(b), a penalty may apply for each full-time employee who receives a premium tax credit for purchasing coverage through a Health Insurance Marketplace because the employer’s coverage is unaffordable or doesn’t provide minimum value.

Updated penalties for 2026

The adjusted penalty amounts (per the applicable number of full-time employees used to calculate the specific penalty) for failures occurring in the 2026 calendar year are:

• $3,340 (up from $2,900 in 2025) under Sec. 4980H(a), for ALEs not offering health coverage, and
• $5,010 (up from $4,350 in 2025) under Sec. 4980H(b), for ALEs offering coverage but that have employees who qualify for premium tax credits or cost-sharing reductions.

The IRS uses Letter 226-J to inform ALEs of their potential liability for an employer shared responsibility penalty. A response form — Form 14764, “ESRP Response” — is included with Letter 226-J so that an ALE can inform the IRS whether it agrees with the proposed penalty. A response is generally due within 30 days. Be on the lookout for this letter so that you’re prepared to promptly review and respond if the IRS contacts you.

Considerations for growing businesses

As your workforce expands, it’s important to address the following questions:

• How close is your company to the 50-full-time-employee threshold?
• Are you properly identifying who’s a full-time employee under the ACA and calculating your number of FTEs based on part-timers’ hours?
• If your company becomes an ALE, how will it structure health coverage to satisfy affordability and minimum value requirements?
• Are your payroll and human resource systems prepared to support ACA reporting requirements, including Forms 1094-C and 1095-C?

Addressing these issues early can help ensure that expansion plans don’t come with unexpected ACA penalties.

For more information

Careful compliance with the ACA remains critical for companies that qualify as ALEs. Growing small businesses should be particularly wary as they become midsize ones. Contact us with questions about your obligations and ways to better manage the costs of health care benefits.

Without proper planning, your loved ones may face significant legal and logistical challenges in accessing or managing them. By taking steps now to inventory your digital assets and incorporate them into your estate plan, you can help ensure a smoother transition and protect your legacy in the digital age.

What digital assets do you possess?

The first step in planning for digital assets is to identify all online accounts and digital property you own. Financial accounts, such as online bank and brokerage accounts, should be listed alongside nonfinancial assets like email accounts, social media profiles, subscription services and cloud storage. Don’t forget emerging asset classes such as cryptocurrencies or monetized digital content.

For each asset, detail how to access it, including usernames, passwords and any multi-factor authentication methods. This sensitive information should be stored in a secure location, such as a password manager or encrypted document, rather than directly in your will.

How do you want the assets to be handled?

You may want certain accounts memorialized, deactivated or deleted altogether. Many platforms, including Facebook and Google, allow users to designate legacy contacts or set instructions for account management after death. Taking advantage of these tools can simplify the process for your loved ones.

Also consider designating a family member or friend to manage your digital assets. You can give this person, sometimes referred to as a “digital executor,” the authority through your will or a separate legal document, depending on your state’s laws. His or her role is to carry out your instructions, access accounts and ensure that digital property is handled appropriately. Be sure to discuss your wishes with this individual in advance so he or she understands the responsibilities.

Any legal considerations?

Laws governing access to digital assets vary by state, and service providers often have their own policies that limit what can be shared. Fortunately, there are laws that govern access to digital assets in the event of your death or incapacity. Most states have adopted the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA), which provides a three-tier framework for accessing and managing your digital assets:

1. The act gives priority to providers’ online tools for managing the accounts of customers who die or become incapacitated. For example, Google offers an “inactive account manager,” which allows you to designate someone to access and manage your account. Similarly, Facebook allows users to determine whether their accounts will be deleted or memorialized when they die and to designate a “legacy contact” to maintain their memorial pages.
2. If the online provider doesn’t offer such tools, or if you don’t use them, access to digital assets is governed by provisions in your will, trust, power of attorney or other estate planning document.
3. If you don’t grant authority to your representatives in your estate plan, then access to digital assets is governed by the provider’s Terms of Service Agreement.

To ensure that your loved ones have access to your digital assets, use providers’ online tools or include explicit authority in your estate plan.

More questions?

By taking a proactive approach to digital asset planning, you can reduce uncertainty, avoid unnecessary complications and provide clear guidance for your loved ones. A well-structured plan can protect the financial value of your digital property and help ensure that your personal legacy is handled according to your wishes.

There are also important income tax compliance issues.  Digital assets are treated as property, not currency, and all gains/losses must be reported. 

We can answer your questions on properly addressing digital assets in your estate plan as well as for income tax planning & reporting purposes. Contact us today to learn more.

Future withdrawals by equity investors may result in double taxation. Conversely, repayments of shareholder loans are generally tax-free, while interest payments are taxable to the shareholder and deductible by the corporation. This setup provides a more tax-efficient way to get money out of your company. However, the IRS may reclassify shareholder loans as equity if not properly structured and documented. Contact us to evaluate your options and determine what’s right for your situation.

Defining IP

IP generally falls into four main categories: patents, copyrights, trademarks and trade secrets. We’ll focus here only on patents and copyrights. They’re protected by federal law to promote scientific and creative endeavors by providing inventors and artists exclusive rights to benefit economically from their work for a certain period.

Patents protect inventions, and the two most common are utility and design patents. Under federal law, utility patents protect an invention for 20 years from the patent application filing date. (It typically takes at least a year to a year and a half from the date of filing to the date of issue.) Design patents last 15 years from the patent issue date.

Copyrights protect the original expression of ideas that are fixed in a “tangible medium of expression,” typically in the form of written works, music, paintings, film and photographs. Unlike patents, which must be approved by the U.S. Patent and Trademark Office, copyright protection kicks in as soon as a work is fixed in a tangible medium. And copyrights last much longer than patents. The specific term depends on various factors.

Valuing and transferring IP

Valuing IP is a complex process. Unlike physical assets, the value of IP often depends on future income potential. Valuation may consider factors such as licensing agreements, royalty streams, market demand, brand recognition and comparable sales. Often, a professional appraiser is needed to determine fair market value. Accurate valuation is particularly important for estate tax reporting and equitable distribution among heirs.

After you know the IP’s value, it’s time to decide whether to transfer the IP to family members, colleagues, charities or others through lifetime gifts or bequests after your death. The gift and estate tax consequences will likely affect your decision. But you also should consider your income needs, as well as who’s in the best position to monitor your IP rights and take advantage of their benefits.

If you’ll continue to depend on the IP for your livelihood, hold on to it at least until you’re ready to retire or you no longer need the income. You also might want to retain ownership of the IP if you feel that your children or other beneficiaries lack the desire or wherewithal to take advantage of its economic potential and monitor and protect it against infringers.

Whichever strategy you choose, it’s important to plan the transaction carefully to ensure your objectives are achieved. There’s a common misconception that when you transfer ownership of the tangible medium on which IP is recorded, you also transfer the IP rights. But IP rights are separate from the work itself and are retained by the creator.

Working with us

If you hold intangible assets, such as a patent or copyright, contact us. We can help ensure that these potentially valuable assets are properly accounted for in your estate plan.

Making 2025 contributions to an IRA

It may be 2026, but you can still make a 2025 contribution to a traditional or Roth IRA until April 15. For 2025, eligible taxpayers can contribute up to $7,000 ($8,000 if they’re age 50 or older). The limit applies to traditional and Roth IRAs on a combined basis.

If you contribute to a traditional IRA, you may be able to deduct the amount on your 2025 income tax return. But if you (or your spouse, if applicable) participate in a work-based retirement plan such as a 401(k) and your income exceeds certain limits, your deduction will be subject to a phaseout.

Roth contributions aren’t tax-deductible, but qualified distributions will be tax-free. Roth contributions are subject to an income-based phaseout, whether or not you (or your spouse) participate in a 401(k) or similar plan. If your Roth IRA contribution is partially or fully phased out, you can make nondeductible traditional IRA contributions instead, assuming you’re otherwise eligible.

Be aware that the 2025 IRA contribution deadline is April 15 regardless of whether you file for an income tax return extension.

Making 2025 contributions to a SEP

If you own a business or are self-employed, you still can reduce your 2025 tax liability by making deductible contributions to a Simplified Employee Pension (SEP) plan by April 15. If you don’t already have a SEP in place, you can contribute for 2025 as long as you set up the plan by the contribution deadline. The 2025 contribution limit is 25% of your eligible compensation up to $70,000 (though special rules apply if you’re self-employed).

Keep in mind that, if you have employees who work enough hours and meet other qualification requirements, generally they must be allowed to participate in the plan. And you’ll have to make contributions on their behalf at the same percentage you contribute for yourself.

If you file to extend your 2025 return, you have until the extended October 15 deadline to set up your plan and make deductible 2025 contributions.

Filing for an automatic six-month extension

If you’re unable to file your individual return by April 15, you generally must file for an extension (Form 4868) by April 15 to avoid failure-to-file penalties. But this isn’t an extension of the tax payment deadline. If you expect to owe taxes, you should project and pay the amount due by April 15 to minimize interest and late payment penalties.

If you live outside the United States and Puerto Rico or serve in the military outside these two locations, you’re allowed an automatic two-month extension without filing for one. But you still must pay any tax due by April 15.

Paying the first installment of 2026 estimated taxes

If you make estimated tax payments, the first 2026 payment is due April 15. You can be subject to penalties if you don’t pay enough tax during the year through estimated tax payments and withholding. Generally, you’ll need to make estimated tax payments if you have taxable income without withholding, such as self-employment income, interest, dividends or capital gains from asset sales, and will likely owe $1,000 or more when you file your 2026 tax return next year.

For you to avoid penalties, your estimated payments and withholding must equal at least 90% of your tax liability for 2026 or 110% of your tax for 2025 (100% if your adjusted gross income for 2025 was $150,000 or less or, if married filing separately, $75,000 or less). Paying the appropriate amount of estimated taxes on time can help you avoid or reduce interest and penalties.

Filing a 2025 income tax return for a trust or estate

If you’re the trustee of a trust or the executor of an estate that follows a calendar tax year, you may be required to file an income tax return (Form 1041) for the trust or estate — and pay any tax due — by April 15. Filing is required when a trust or estate has gross income of $600 or more during the tax year or if any beneficiary is a nonresident alien.

For the year of death, a Form 1041 must also be filed for the deceased to report any income, as well as deductions and credits, up until the date of death. If the deceased’s assets immediately passed to the heirs, a Form 1041 generally won’t be required because the estate won’t have any post-death income.

If you’re not ready to file Form 1041 by April 15, you can file an automatic five-and-a-half-month extension (Form 7004) to September 30, 2026 (or a six-month extension to October 15, 2025, if it’s a bankruptcy estate). But any tax due still needs to be paid by April 15.

Meet your deadlines

As you can see, depending on your situation, you may have more to do by April 15 than just file your Form 1040. And this isn’t a complete list. For example, April 15 is also the deadline for individuals to file a federal gift tax return and a Report of Foreign Bank and Financial Accounts (FBAR). We can help you determine which April 15 deadlines apply to you and assist you with meeting them so you can stay in compliance and potentially save taxes and avoid becoming subject to interest and penalties.

If your company operates a calendar-year FSA with a 2½-month grace period, employees have until March 15 to incur eligible expenses for their 2025 plan balances. After that, any unused 2025 funds may be forfeited under the “use-it-or-lose-it” rule. Here’s a refresher on how FSAs work and what employers can do with forfeited balances.

The basics

Under an employer-sponsored FSA plan, employees may be able to contribute a portion of their pay to a:

Health care FSA. These accounts may be used for qualifying out-of-pocket medical, dental and vision expenses for the employee and his or her spouse and/or qualified dependents. For 2026, the maximum employee contribution to a health care FSA increases to $3,400 (from $3,300 in 2025). (The limit is annually indexed for inflation.)

Dependent care FSA. These accounts may be used for qualifying child care or adult dependent care expenses. For 2026, under 2025 tax legislation, the dependent care FSA contribution limit increases to $7,500 per household ($3,750 for married couples filing separately). The limit for 2025 was $5,000 ($2,500 for separate filers). (The limit isn’t inflation-indexed, so it won’t go up in the future unless another increase is passed by Congress and signed into law.)

Employee contributions are made on a pretax basis, reducing federal income tax, Social Security tax and Medicare tax (and often state income tax). The FSA plan directly pays or reimburses employees for qualified expenses, and the payments or reimbursements are tax-free.

Use-it-or-lose-it rule

If employees don’t use their full FSA balances by the end of the plan year, leftover balances generally revert to the employer under the use-it-or-lose-it rule. However, there are two exceptions:

1. An FSA plan can allow a grace period of up to 2½ months. Most FSA plans operate on a calendar-year basis. For a calendar-year FSA plan, the grace period gives employees until March 15 of the following year to incur qualified expenses to drain their unused FSA balances from the previous year.
2. A health care FSA plan can allow employees to carry over up to an annually inflation-indexed amount of unused balances from one year to the next. The amount that can be carried over from 2026 to 2027 is $680 (up from the $660 that could be carried over from 2025 to 2026).

It’s important to note that a health care FSA plan can offer either the carryover or the grace period, but not both. Dependent care FSA plans can offer only the grace period, not the carryover.

Options for forfeited FSA funds

After any applicable grace period ends, or after applying any permitted health care FSA carryover, employers may retain forfeited balances under IRS cafeteria plan rules. Many businesses use the funds to offset plan administrative expenses.

Other permitted uses generally include, on a reasonable and uniform basis: 1) reducing the amount employees need to contribute in a future year to reach a certain FSA balance (for example, employees need to contribute only $950 to have a $1,000 FSA balance, with the extra $50 funded by forfeited balances from a previous year), or 2) returning amounts to participants (typically treated as taxable wages and subject to payroll taxes and income tax withholding).

Forfeitures can’t be returned to plan participants based on individual claims experience. Any allocation of returned funds must be nondiscriminatory and consistent with plan terms.

Natural check-in point

Around the grace-period deadline is a natural time for business owners to review how their FSA plans handle unused balances. It’s also a good opportunity to confirm that your current plan design, including grace period or carryover provisions, aligns with your employees’ needs and your administrative practices. Contact us to help review and modify your FSA plan provisions, handle forfeitures properly and prepare for next year’s enrollment cycle.

Actual expenses plus depreciation

The year you place a vehicle in service, you can choose to deduct the actual expenses attributable to your business vehicle use or, if the vehicle is a car, SUV, van, pickup or panel truck, claim the cents-per-mile deduction (discussed later). Deductible expenses include gas, oil, tires, insurance, repairs, licenses and vehicle registration fees. You’ll need to track and substantiate these expenses.

If you use the actual expense method, you also can claim a depreciation deduction for the vehicle by making a separate depreciation calculation for each year until the vehicle is fully depreciated. According to the general rule, you calculate depreciation over a six-year span for a percentage of the purchase cost as follows:

• Year 1 — 20%
• Year 2 — 32%
• Year 3 — 19.2%
• Year 4 — 11.52%
• Year 5 — 11.52%
• Year 6 — 5.76%

If a vehicle is used 50% or less for business purposes, you must use the straight-line method (10% in Years 1 and 6 and 20% in Years 2 through 5) to calculate depreciation deductions instead of the percentages listed above.

Depending on the cost of a passenger auto, your deduction may be less than the percentage of cost above because “luxury auto” annual depreciation ceilings apply. These are indexed for inflation and may change annually. For a passenger auto placed in service in 2025, generally the ceilings are as follows:

• Year 1 — $20,200 ($12,200 if you don’t claim first-year bonus depreciation)
• Year 2 — $19,600
• Year 3 — $11,800
• Each remaining year until the vehicle is fully depreciated — $7,060

These ceilings are proportionately reduced for any nonbusiness use.

More favorable depreciation rules apply to heavier SUVs, pickups and vans. For example, 100% bonus depreciation or the normal Section 179 expensing limit ($2.5 million for 2025) generally is available for vehicles with a gross vehicle weight rating (GVWR) of more than 14,000 pounds. A reduced Sec. 179 limit of $31,300 applies to vehicles (typically SUVs) rated at more than 6,000 pounds but no more than 14,000 pounds. Again, this favorable tax treatment is available only if the vehicle is used more than 50% for business.

The cents-per-mile method

The 2025 cents-per-mile rate for the business use of a car, SUV, van, pickup or panel truck is 70 cents (increasing to 72.5 cents for 2026). This rate applies to gasoline- and diesel-powered vehicles as well as electric and hybrid-electric vehicles. A depreciation allowance is built into the rate, so you can’t claim both the depreciation deductions discussed earlier and the cents-per-mile rate for the same vehicle.

The rate is adjusted annually. It’s based on an annual study commissioned by the IRS about the fixed and variable costs of operating a vehicle, including gas, maintenance, repairs and depreciation. Occasionally, if there’s a substantial change in average gas prices, the IRS will change the cents-per-mile rate midyear.

The cents-per-mile rate is beneficial if you don’t want to keep track of actual vehicle-related expenses or worry about depreciation calculations. Although you don’t have to account for all your actual expenses, you still must record certain information, such as the mileage for each business trip, the date and the destination.

Choosing or changing your method

There’s much to consider before deciding whether to use the actual expense method or cents-per-mile method to deduct expenses for a vehicle your business placed in service in 2025. For a vehicle placed in service earlier, if you previously deducted actual expenses for the vehicle, you can’t use the cents-per-mile rate for 2025 (or any other future year). However, if you previously used the cents-per-mile rate, you can switch to the actual expense method in a later year — but you can claim only straight-line depreciation.

If you lease a business vehicle, there also are deduction opportunities but the rules are different. Contact us if you’d like more information. We can also answer questions about claiming 2025 business vehicle expenses on your 2025 return or planning for and tracking 2026 expenses.

Tax deferral privilege

Accrual-basis businesses can elect to postpone including all or part of an eligible advance payment in taxable income until the year after it’s received. To be eligible for the deferral election, among other requirements, an advance payment must:

• At least partially be included in revenue for a later year according to your business’s applicable financial statement (AFS) or, if your business doesn’t have an AFS, treated as earned in a later year, and
• Be received for goods, services or other eligible items listed in IRS guidance.

If your accrual-basis business received eligible advance payments in 2025, you potentially can elect to defer reporting some or all of that income until 2026 for federal tax purposes.

What is an AFS?

An AFS can be an audited financial statement used for credit or financial reporting purposes or certain reports submitted to federal or state agencies. A form filed with the Securities and Exchange Commission, such as a 10-K or annual report, also can be an AFS.

If your business doesn’t have an AFS and elects to use the deferral method for advance payments, the payment must be included in taxable income in the year received to the extent of the amount that is treated by your business as earned in that year. The remaining portion of the advance payment must be included in taxable income the following year.

What types of payments are eligible?

Advance payments that may be eligible for deferral include payments for:

• Services,
• The sale of goods,
• Gift cards,
• The use of intellectual property,
• The sale or use of computer software,
• Warranty contracts, and
• Subscriptions.

Other payments specified in IRS guidance also may be eligible.

Eligible advance payments don’t include rents (with some exceptions), certain insurance premiums, payments for financial instruments, payments for certain service warranty contracts, and other payments specified in IRS guidance.

Some examples

The following examples illustrate how eligible advance payments can be deferred for federal income tax purposes:

Taxpayer has an AFS. A calendar-year accrual method S corporation provides tennis facilities and lessons. On November 15, 2025, it received payment for a one-year contract for 48 one-hour tennis lessons beginning on that date. Eight lessons were given in 2025. On its AFSs, the business recognizes one-sixth (8/48) of the advance payment as revenue for 2025 and five-sixths (40/48) as revenue for 2026. Making the advance payment deferral method election, the business includes only one-sixth of the advance payment in taxable income for 2025. The remaining five-sixths must be included in taxable income for 2026.

Taxpayer doesn’t have an AFS. A calendar-year accrual method LLC provides online security protection services for computers, tablets and cell phones. On September 1, 2025, it received payment for two years of protection services beginning on that date. The business determines that four months of its services should be treated as earned in 2025. Making the advance payment deferral election, the business includes only one-sixth (4/24) of the advance payment in taxable income for 2025. The remaining five-sixths (20/24) must be included in taxable income for 2026.

Can you benefit?

We’ve only scratched the surface of complicated tax rules and regulations that apply to the treatment of advance payments. Contact us for help determining if your business is eligible to defer 2025 advance payments. We can also calculate the possible current tax savings.

Claiming the standard deduction vs. itemizing

Taxpayers can choose to itemize certain deductions on Schedule A or take the standard deduction based on their filing status instead. Itemizing deductions when the total will be larger than the standard deduction saves tax, but it makes filing more complicated.

The OBBBA made permanent and, for 2025, slightly increased the Tax Cuts and Jobs Act’s (TCJA’s) nearly doubled standard deduction for each filing status: $15,750 for single and separate filers, $23,625 for heads of household, and $31,500 for married couples filing jointly. (The new amounts have been adjusted for inflation for 2026 and will continue to be adjusted annually going forward.)

Because of the higher standard deduction and the TCJA’s reduction or elimination of many itemized deductions (mostly made permanent by the OBBBA), many taxpayers who once benefited from itemizing have been better off taking the standard deduction for the last several years. If you’re among those taxpayers and you have significant SALT expenses, OBBBA changes could increase your SALT itemized deduction for 2025 enough that your total itemized deductions may exceed your standard deduction, causing itemizing to make sense once again for you.

Increased limit on the SALT deduction

Deductible SALT expenses include property taxes (for homes, vehicles and boats) and either income tax or sales tax, but not both. Historically, eligible SALT expenses were generally 100% deductible on federal income tax returns if an individual itemized deductions. This provided substantial tax savings to many taxpayers in locations with higher income or property tax rates (or higher home values), as well as those who owned both a primary residence and one or more vacation homes.

For 2018 through 2025, the TCJA limited the deduction to $10,000 ($5,000 for married couples filing separately). This SALT cap was scheduled to expire after 2025.

Rather than letting the $10,000 cap expire or immediately making it permanent, the OBBBA temporarily quadrupled the limit. Beginning in 2025, taxpayers can deduct up to $40,000 ($20,000 for married couples filing separately), with 1% increases each subsequent year. The $10,000 cap is scheduled to return in 2030.

The increased SALT cap could lead to major tax savings compared with the $10,000 cap. For example, a married couple filing jointly in the 32% tax bracket with $40,000 in SALT expenses and MAGI below the threshold for the income-based reduction (see below) could save an additional $9,600 in taxes [32% × ($40,000 − $10,000)].

Reduced limit for higher-income taxpayers

While the higher SALT limit is in place, the allowable deduction drops by 30% of the amount by which modified adjusted gross income (MAGI) exceeds a threshold amount. For 2025, the threshold is $500,000; when MAGI reaches $600,000, the previous $10,000 cap applies. (These amounts are halved for separate filers.) The MAGI threshold will also increase 1% each year through 2029.

Here’s how the earlier example would be different if the taxpayer’s MAGI exceeded the threshold by $20,000: The cap would be reduced by $6,000 (30% × $20,000), leaving a maximum SALT deduction of $34,000 ($40,000 − $6,000). Even reduced, that’s more than three times what would be permitted under the $10,000 cap. The reduced deduction would still save an additional $7,680 in taxes compared to when the $10,000 cap applied [32% × ($34,000 − $10,000)].

Factoring in other itemized deductions

Depending on your 2025 SALT expenses, MAGI and filing status, your SALT deduction alone might be enough for your itemized deductions to exceed your standard deduction. If it isn’t, you’ll need to review your other potential itemized deductions and see if all of them, in aggregate, will exceed your standard deduction. Other possible itemized deductions include:

Medical expenses. This deduction is limited to the amount of eligible medical expenses that, in aggregate, exceeds 7.5% of adjusted gross income (AGI).

Home mortgage interest. This deduction is available for acquisition debt of up to $750,000. (A $1 million limit still applies to indebtedness incurred on or before December 15, 2017.)

Charitable donations. For 2025, cash donations to qualified charities are generally deductible up to 60% of AGI. (Beginning in 2026, the deduction will also be limited to the amount of eligible donations that, in aggregate, exceeds 0.5% of AGI.) Noncash donations may also be deductible, but additional requirements and limits apply.

Casualty and theft losses. For 2025, these losses are generally deductible only if they’re due to a disaster declared by the President. (Beginning in 2026, losses due to certain state-declared disasters also will be deductible.) The deduction is limited to the amount of eligible losses that, in aggregate, exceeds 10% of AGI.

Keep in mind that additional rules and limits apply to these deductions.

A return to itemizing?

If you have high SALT expenses but have been claiming the standard deduction in recent years, it’s time to revisit itemizing. A return to itemizing on your 2025 return might save you tax. If you’ve already been itemizing, a larger SALT deduction could also increase your tax savings, perhaps significantly, depending on your SALT expenses, MAGI, filing status and tax bracket.

We can assess the impact of the SALT limit increase — and other OBBBA changes — on your tax situation and help ensure you claim all the tax breaks you’re entitled to on your 2025 return. Contact us to set up an appointment.

Substantiating cash donations

If you made a cash gift of under $250, documentation such as a canceled check, bank statement or credit card statement is adequate. However, if you received something in return for the donation, you generally must reduce your deduction by its value — and you must have received a “contemporaneous written acknowledgment” from the charity.

Likewise, for a donation of $250 or more, you must obtain such an acknowledgment. In it, the charitable organization must state the amount of the donation, whether you received any goods or services in consideration for the donation and, if you did, the value of those goods or services.

The “contemporaneous” requirement can sometimes trip up taxpayers. It means the earlier of:

1. The date you file your tax return, or
2. The due date of your return, including extensions.

Therefore, if you made a donation last year that requires a contemporaneous written acknowledgment but you haven’t yet received it from the charity, it’s not too late — as long as you haven’t filed your 2025 return. Contact the charity now and request a written acknowledgment.

Substantiating property donations

Gifts of property worth $250 or more also generally require a contemporaneous written acknowledgement from the charity. Rather than listing a dollar value for the donation, it must simply include a description of the property. But as with cash donations of $250 or more, it must state whether you received any goods or services in consideration for the donation and, if you did, the value of those goods or services.

Some types of donations require additional substantiation. For example, if you donate property valued at more than $500, you must attach a completed Form 8283, “Noncash Charitable Contributions,” to your return. And for donated property with a value of more than $5,000, you generally must obtain a qualified appraisal and attach an appraisal summary to your tax return. But donations of publicly traded securities don’t require an appraisal.

Tax-smart charitable giving

Many other rules and limits can affect your charitable deductions. We can help you determine what you can claim on your 2025 return and plan a tax-smart charitable giving strategy for 2026. Contact us to get started.