Because of the results of the presidential election, there’s a sense that tax changes could be coming in 2025. While that’s not expected to impact 2024 filing, says Kristen Batke, Tax Manager at Corrigan Krause, it should encourage businesses to file earlier so planning for the following year can get underway.
“2024, when it comes to taxes, is essentially set,” Batke says. “But for 2025, we expect to spend more time on planning opportunities, making sure that returns are filed sooner rather than later, giving us a greater opportunity to gauge the impact of any tax changes.”
Smart Business spoke with Batke about what businesses should consider for this tax year and beyond.
What are some of the more notable considerations for this filing year?
Fixed assets for businesses, over the past couple years, have had sunset provisions on them for depreciation, which have made those less beneficial. There had been a time when a business could put any asset into service and immediately get an expense for it. Many businesses had the strategy of spending a lot to buy assets to get that benefit, but that’s not really a benefit anymore because it’s not giving as much as it used to. And with prices increasing as that benefit diminishes, it’s become better to hold on to some cash and put that money to work in areas that are more beneficial. For example, rather than buying furniture or equipment, the better investment now is in employees and payroll, which are considered expenses and provide greater benefits going forward. Ultimately, fixed asset depreciation has become something that accountants typically no longer suggest for planning purposes.
Something else businesses must address is the reporting requirements under The Financial Crimes Enforcement Network’s (FinCEN) Corporate Transparency Act (CTA), which mandates the collection of beneficial ownership information (BOI) from many business owners. That was due at the end of 2024. Recently, a court in Texas issued an injunction banning the enforcement of this requirement. The impacts of this are still being calculated since the due date for this compliance was fast approaching. For now, this item is something all practitioners and business owners should be aware of to ensure compliance.
Should businesses wait to file so they can capture potentially beneficial tax changes?
Even though there’s a new administration at the federal level that is expected to make changes to the tax system, it’s still a benefit to file on time. If, for instance, a business has filed their taxes and a new credit becomes available, the business will still be able to apply for it. It’s not prudent, however, for a business to request a filing extension and hope for a credit to become available. That’s not reliable. The accounting industry is always going to be busy during tax time, regardless of whether changes are coming or not. That’s why is best to get in early so there is time to discuss concerns before getting to the filing point because time is limited.
There are always changes in the tax world — brackets are changing, some of the standard deduction items are changing. That’s why it’s important to work with an accountant early in the tax cycle to make sure that the business is in the best tax position and that the company is prepared going forward. Surprises at tax filing time are rarely good for a business. So, businesses should call their accountant and discuss their individual situation.
If there’s a specific question or concern, reach out to the people who can help. Asking those questions in March or April, at the height of tax time, isn’t necessarily the best time, which is why preparing early — in January and February — is a great time to file.
INSIGHTS Accounting is brought to you by Corrigan Krause.
