Arrow Exchange Tax Solutions

  Office supply fraud is sneaky, but preventable Office supply scams are a tricky type of vendor fraud that generally use behavioral psychology and often depend on poor intraoffice communications for their “success.” Although they may not result in huge financial losses for defrauded companies, falsified invoices can add up to many thousands of dollars. Fortunately, you can help prevent them. How scams are perpetrated Office supply schemes typically begin as telemarketing fraud, with someone calling your business to obtain your street address and the name of an employee. Callers may: Ask for the “person in charge,” Claim to need information to complete an order, or Pretend to verify an office machine’s serial number. The goal is to get a name that will lend legitimacy to bogus shipments and invoices. For example, a supplier might ship boxes of poor quality gel pens and then, a week or two later, send you a pricey invoice. The delay is intentional: The fraudster hopes you won’t noti...

  Understanding taxes on real estate gains Let’s say you own real estate that has been held for more than one year and is sold for a taxable gain. Perhaps this gain comes from indirect ownership of real estate via a pass-through entity such as an LLC, partnership or S corporation. You may expect to pay Uncle Sam the standard 15% or 20% federal income tax rate that usually applies to long-term capital gains from assets held for more than one year. However, some real estate gains can be taxed at higher rates due to depreciation deductions. Here’s a rundown of the federal income tax issues that might be involved in real estate gains. Vacant land The current maximum federal long-term capital gain tax rate for a sale of vacant land is 20%. The 20% rate only hits those with high incomes. Specifically, if you’re a single filer in 2024, the 20% rate kicks in when your taxable income, including any land sale gain and any other long-term capital gains, exceeds $518,900. For a married jo...

  A power of appointment can provide estate planning flexibility A difficult aspect of planning your estate is taking into account your family members’ needs after your death. Indeed, after you’re gone, events may transpire that you hadn’t anticipated or couldn’t have reasonably foreseen. While there’s no way to predict the future, you can supplement your estate plan with a trust provision that provides a designated beneficiary a power of appointment over some or all of the trust’s property. This trusted person will have the discretion to change distributions from the trust or even add or subtract beneficiaries. Adding flexibility  Assuming the holder of your power of appointment fulfills the duties properly, he or she can make informed decisions when all the facts are known. This can create more flexibility within your estate plan. Typically, the trust will designate a surviving spouse or an adult child as the holder of the power of appointment. After you die, the holder has ...

  The possible tax landscape for businesses in the future Get ready: The upcoming presidential and congressional elections may significantly alter the tax landscape for businesses in the United States. The reason has to do with a tax law that’s scheduled to expire in about 17 months and how politicians in Washington would like to handle it. How we got here The Tax Cuts and Jobs Act (TCJA), which generally took effect in 2018, made extensive changes to small business taxes. Many of its provisions are set to expire on December 31, 2025. As we get closer to the law sunsetting, you may be concerned about the future federal tax bill of your business. The impact isn’t clear because the Democrats and Republicans have different views about how to approach the various provisions in the TCJA. Corporate and pass-through business rates The TCJA cut the maximum corporate tax rate from 35% to 21%. It also lowered rates for individual taxpayers involved in noncorporate pass-through entities,...

A QDRO can ease the transfer of retirement plan assets in a divorce Getting divorced and dividing up assets is no easy matter. At least you can sell a house, a car or certain other possessions and distribute the proceeds to the two ex-spouses according to ownership rights under the law. But liquidating other types of property, such as assets in a qualified retirement plan, can be more complicated. Using a qualified domestic relations order (QDRO) may provide for the transfer of assets in a qualified retirement plan to a nonparticipant spouse without incurring dire tax consequences. This can help you preserve more of your retirement account savings for your estate. How a QDRO works A QDRO provides a relatively straightforward means of accommodating a transfer of qualified retirement plan assets. A court with jurisdiction or another appropriate authority issues the QDRO. Essentially, the QDRO establishes that one spouse has a claim to some of the other spouse’s retirement plan accounts. ...

Filing a joint tax return for the year of a spouse’s death can be beneficial Surviving spouses are faced with many financial and tax-related decisions. One critical issue to consider is whether to file a joint or separate tax return for the year of the spouse’s death. Timing of the final tax return When a person dies, his or her personal representative (called an executor in some states) is responsible for filing an income tax return for the year of death (as well as any unfiled returns for previous years). For purposes of the final return, the tax year generally begins on January 1 and ends on the date of death. The return is due by April 15 of the following calendar year. Income that’s included on the final return is determined according to the deceased’s usual tax accounting method. So, for example, if he or she used the cash method, the income tax return will only report income actually or constructively received before death and only deduct expenses paid before death. Income and e...