Year-End Tax Planning for Individuals

As the year draws to a close, add value to your services with last-minute opportunities to lower your client’s tax liability or boost refunds. With expertise in the latest tax laws, you’ll guide clients in areas such as deductions, capital loss utilization, retirement account contributions and HSA contributions.

Below, you’ll find a few of the top questions from a recent webinar on year-end tax planning for individuals and their accompanying answers. If you choose to attend the on-demand version of this webinar, you can access the full recording and the entire list of Q&As.   

Q: How many years can the client claim the residential clean energy credit?

A: Limits on the credit are not a number of years. Rather, you can claim it for different components of a solar energy system on the same property in different years. So, if you install one element like solar panels, and then install different equipment that qualifies, you can take it multiple times.

Q: Can a taxpayer contribute to an HSA through their employer and have one on their own (assuming they don’t over-contribute)?

A: Yes, the major requirements of an HSA are that the individual is covered by a high-deductible health plan (HDHP) and that the annual contribution limit is not exceeded over all HSAs.

Q: Can a QCD be made from an employer pension system?

A: No, the contribution must be from an IRA. However, a pension that otherwise does not qualify can usually be rolled over tax-free into an IRA that can then complete the distribution.

Q: If you sell a business in the year you retire, can you protest the IRMMA due to a life-changing event?

A: Yes, it can be appealed; the instructor attested that he successfully appealed and won when his client sold their business.

Year-End Tax Planning for Businesses

Meeting with clients before the end of the year allows you to increase your per-client revenue by providing value-added services, such as tax planning. This also provides the opportunity to let clients know what steps they should be taking before the end of the year to both reduce their tax bills and make the 2025 filing season less stressful.

Below, you’ll find a few of the top questions from a recent webinar on year-end tax planning for businesses and their accompanying answers. If you choose to attend the on-demand version of this webinar, you can access the full recording and the entire list of Q&As.   

Q: How does an S corporation shareholder account for a home office deduction on their Form 1040?

A: There is no direct way to expense a home office deduction per se on an S-corp return that would flow through to the individual shareholder. That is why the accountable plan is valuable for S-corp shareholders, where a reimbursement plan can be set up for many expenses used for a home office.

Q: Is the accountable plan income included in Form W-2, Wage and Tax Statement?

A: No, it is not. The S-corp can deduct the payments, and the reimbursement is not included in the shareholder’s W-2.

Q: Can a SEP-IRA be an employee contribution-only plan?

A: No, only the employer can contribute to a SEP-IRA plan by statutory design.

Q: Can a single-member LLC taxed as an S-corp contribute to a SEP-IRA?

A: Yes. This IRS guidance has many links for setting up and contributing to a SEP-IRA plan: https://www.irs.gov/retirement-plans/retirement-plans-for-small-entities-and-self-employed.

To learn more about year-end tax planning for individuals and businesses, you can watch our on-demand webinars. NATP members can attend for free, depending on membership level! If you’re not an NATP member and want to learn more, join our completely free 30-day trial.