Maximizing Charitable Impact Through RSUs and DAFs
If you’ve been working for your company for a while, then your RSUs could have risen to become an important component of the balance sheet. This growth is a good thing however, it also means that a larger portion of your wealth is tied to a single stock. If giving is something you want woven into your financial life and wishes to integrate into your financial plan it can be a great opening. RSUs and DAFs may help you aid causes that are important to you, while also reducing risks and providing an improved tax result, and all without the use of cash for it. A donor-advised fund, commonly known as a DAF is among the easiest ways to do this. Why RSUs Create A Unique Charitable Opportunity In the course of time, those employees who get regular RSU awards may build up a substantial quantity of stock owned by the company. Typically, they’re with a higher value than when they vested the shares. This means that you’re holding shares that have embedded capital gains. If you were to sell the shares, you’d be liable for tax on the gains. Donating appreciated shares could help you reduce capital gains tax on the amount that is appreciated as long as you follow IRS regulations. You can also claim the benefit of a charitable deduction (subject to IRS limitations) determined by what the share’s fair value was at the point you make the gift. In addition, because new RSUs can continue to vest each year, the shares you donate may be replenished in the course of time, which could help fund the ongoing charitable contributions. How Does A Donor-Advised Fund Works DAF is a charity account that you manage. You can contribute appreciated shares to the account, get an immediate charitable deduction and then make grants recommendations to non-profit organizations at your own timeline. How does it work: Your deduction and your gift aren’t required to be made the same year, this gives you flexibility in both the planning process and impact. What Is The Reason A DAF Works Well With RSU Compensation A donor-advised trust fund is a good option when you receive ongoing RSU compensation. If the company’s stocks have appreciated in value, giving shares could assist in reducing concentration, without giving rise to capital gains. It can help you save funds for other purposes while still helping the organizations you are passionate about. Many find that DAFs are a great option because DAF permits them to “pre-fund” several years of giving within a single year, for instance, when a significant bonus or vesting occurs, you get the deduction upfront, and then you make grants available at your own speed. It makes charitable giving part of your overall financial routine, not an event that you can only revisit periodically or when a charity extends its hand. If you are a person whose compensation includes regular RSU vesting or reinvestment, a DAF could be a straightforward and repeatable method to ensure that generosity and long-term planning are on the same page. How can you use RSUs to give charitable donations Simple sequence This could help you convert the accumulation of employer stock into the long-term future, usually with tax benefits and without the need for cash (depending on your individual circumstances). Questions To Ask Prior To You Make Your Contribution (and why they are important) These questions can help you decide whether a donation of appreciated RSUs is in line with your objectives: 1. Do You Own More Of Your Employer’s Stocks Than Comfortable? A concentrated position can increase your risk of being impacted by the fortunes of a specific company. By donating many shares, you can limit the risk of exposure, without creating capital gains. 2. Have Your RSUs Increased In Value Since The Time They Were Issued? The more shares you have grown, the less tax you’ll pay by giving them away instead of selling them. 3. Do You Plan To Make A Donation Next Year, Or Perhaps In The Near Time? If giving is a regular part of your routine, then appreciated shares can allow you to contribute to the same causes, while also giving tax benefits, based on the specific circumstances. 4. Are You Experiencing A Year Of High-Income? A larger deduction can be able to offset the income of big vesting occasions, bonuses, or liquidity occasions. 5. Would You Prefer To Give Shares Rather Than Cash? Donating stocks can enable you to contribute to charitable causes while also allowing you to save cash to fund other financial goals dependent on your individual situation. 6. Are You Receiving New RSUs Each Year? The ongoing vesting process can help replenish donations you make over time. This can help you continue giving to charities based on your individual situation. 7. Do You Wish To Have More Flexibility With The Timing Of Your Gift? A DAF separates tax deductions from the grant itself, therefore you can contribute whenever it is economically efficient, and you can recommend grants to charities if you feel that the time is right. Integrating Your Values And Financial Life A DAF can separate tax deduction from grants, which means you can contribute whenever it feels economically efficient, and also recommend grants to charities at the time that feels appropriate. If you’re looking for help making a decision about whether this strategy will work for your overall plan we’re here to help you through the process. Contact us today!
A Clear Guide to Medical Expense Tax Deductions
If you had a significant amount of medical expenses in the last year, you’re probably contemplating what deductions you can claim in your 2025 tax return. The income-based thresholds as well as other rules could make it difficult to claim medical expense deduction. In addition there are more kinds of expenses that could be qualified than you think. Limits On Deductions Medical expenses are tax-deductible only if they were not reimbursed by insurance or paid through the tax advantaged account (such as Flexible Spending Accounts and Health Savings Accounts). Furthermore, they’re deductible only to the extent that, in aggregate, they exceed 7.5% of your adjusted gross income (AGI). For instance, the 2025 AGI was $100,000, your medical expenses for the year must total at least $7,500 to be eligible for the deduction but only the amount above that is deductible. If you have $10,000 of eligible expenses, your possible deduction could be $2,500. Additionally, medical expenses can be deducted only when you make itemized deductions. In order to make itemizing a benefit, your itemized deductions should be greater than the standard deduction. In light of the changes in the Tax Cuts and Jobs Act that were made permanent through the last season’s One Big Beautiful Bill Act (OBBBA), the majority of taxpayers no longer itemize. But, some taxpayers who haven’t itemized in recent years may be able to benefit from itemizing in 2025 due to the quadrupling by the OBBBA of the local and state tax deduction limits. If you’re in this category, it is advisable to reconsider whether you are eligible to take advantage of the deduction for medical expenses for your 2025 income tax return. What Are The Eligible Expenses? If you plan to claim deductions for itemization in your 2025 tax return, it is a good time to look over your medical expenses for the year to determine whether you could exceed the 7.5% of AGI floor. The eligible expenses can include a variety of costs apart from doctor and hospital bills. Below are other kinds of expenses you might have experienced in 2025 which could be tax-deductible: Transportation: Costs of transport to and from medical facilities is a deductible expense. This can include taxi fares and public transportation as well as your personal vehicle. The cost of your vehicle can be estimated as 21 cents/mile for medical mileage to be driven by 2025, plus parking and tolls. Alternatively, you may take deductions for certain costs associated with your vehicle such as oil and gas however, not general expenses like maintenance, insurance or depreciation. Insurance Premiums: Health insurance is an expense in medical treatment that could amount to thousands of dollars each year. Even if your employer offers you with insurance you can claim the portion of premiums you have paid provided that it was not taken out as pretax paycheques. Long-term care insurance premiums may also be considered with dollar limits that are based on the age. The limits for 2025 are as follows: Nurses And Therapists: Services offered by people who aren’t doctors can be considered in the event that they relate to a medical condition, and aren’t used for general health reasons. For instance, the cost of physical therapy following knee surgery is eligible, however an individual trainer’s fee who will assist you in getting fit does not. Additionally, there are certain amounts that qualify to acupuncture practitioners and to a psychologist for medical treatment. Furthermore, certain long-term care services needed by chronically sick people are also admissible. Hearing Aids, Eyeglasses As Well As Prescriptions For Dental Work: Deductible expenses are the costs of contacts, glasses, dentures, hearing aids and the majority of dental procedures. The expenses that are strictly cosmetic (such as teeth bleaching) aren’t eligible, however certain cosmetic procedures that are medically required are tax-deductible. Prescription medications are eligible, however non-prescription medications like aspirin aren’t, even when the doctor recommends them. Smoking-Cessation Programs: Costs paid to take part in a program for smoking cessation and prescription drugs that are intended to help ease withdrawal symptoms from nicotine are tax-deductible expenses. But, nonprescription chewing gum and nicotine patches in particular aren’t. Weight-Loss Programs: A weight-loss plan is an expense that is tax-deductible if it is undertaken in the treatment of a disease identified by a physician. It could be due to an illness, such as obesity, or another like hypertension. In this case, the doctor recommends that you reduce weight. It’s best to have a doctor’s note on the diagnosis. In these instances, tax-deductible expenses can include the cost for joining a weight-loss program and to attend meetings. But, meals associated with a weight loss program typically aren’t tax-deductible. Dependents And Others: You can deduct medical expenses you incur to dependents like your children. In addition, you might be eligible to claim medical expenses you are responsible for with regard to an individual like grandparents or parents that would be considered a dependent, except if he or she is earning too much gross income, or has a joint filing. Most of the time, medical expenses incurred by children of divorced parents could be deductible by the parent that pays the expenses. Finding Out If You Could Gain After looking over the list of eligible expenses, do you think you have enough money in 2025 to surpass the 7.5% of AGI floor? Do you have any questions regarding whether certain expenses are eligible? Contact Parr & Ibarra CPA in Fort Worth, Texas. We can determine whether you are eligible for deducting medical expenses as well as other tax breaks in your 2025 income tax return.
Tax Guide for Landlords and Real Estate Investors
Real estate is among the most reliable ways to earn wealth over the long run, since it produces passive income and property values tend to increase as time passes. However there are some risks with real estate investments because landlords are required to be tax-paying for any income that they earn from their properties. In reality, the IRS treats rentals, short-term stays, commercial units, as well as development projects in different ways and each has distinct tax obligations. To assist you in understanding these tax regulations, this article outlines the rules for taxation on real estate and the ways you can legally lower the tax burden. Understanding Real Estate Tax Basics The tax on real estate within the U.S. is ad valorem, it is based upon the worth of the property in the year of its valuation. These are levied by each state and paid annually. The proceeds are used to fund local schools, roads, emergency services, roads and other utilities that are public. What counts as taxable income for Landlords Nearly all revenue made through a rental property is considered to be tax deductible income. This includes: Important IRS Forms All Real Estate Investor Must Know Topic 414 provides forms to be used to report income from properties. Here are some of the most important ones that you must know: When you fill out these forms, ensure that you have included all the supporting documents. The Difference Between Passive and Active Real Estate Income The main difference between a passive and active income lies in the involvement of the landlord. The income is active when the landlord invests time, money, and effort. Examples of active involvement include: All of this income earned is considered regular income and subject to self-employment tax. However the passive income occurs when the landlord is not in the picture in any way. It is comprised of: There is no tax on self-employment on these earnings. However, the losses are offset only against other sources of passive income. Knowing the difference is crucial in assessing tax obligations. Essential Real Estate Tax Planning Strategies Real estate taxes can quickly add up. This is why it is essential to be aware of the tax deductions you are eligible for and devise a plan using a variety of methods to lower your taxes. How to Maximize the Rental Property Deductions All expenses that are necessary and ordinary can be deducted. The key is to keep track of these expenses, identify what falls into this category, and keep the documentation required. Depreciation Benefits for Real Estate Investors Depreciation is an important deduction that allows you to recover the value of your home over its lifespan. Residential properties are subject to depreciation, it’s for a period of 27.5 years and 39 years for commercial properties. Furniture and appliances in rental properties can be depreciated over 5 to 7 years. Utilizing Cost Segregation to Help Accelerate Tax Savings Cost segregation is an expense strategy that is authorised from the IRS and is available to owners of residential and commercial rental properties. With this option you are able to boost immediate cash flow as well as accelerate deductions for depreciation. Instead of the traditional depreciation rate of 27.5 and 39 years in the case of properties, you can determine and reclassify specific components and depreciate their value by shorter time periods. Managing Repairs vs. Enhancements to Optimal Tax Treatment Repairs and upgrades are very complicated from a financial perspective. Repairs are deductible as operating costs in the year in which they occur when they are essential to keep the property in good condition. Improvements are, however, expenditures that are made to increase the value of the property and prolong the useful life or income potential of the property. This is why they are classified as a capital cost and are recouped through depreciation and cost aggregation. Advanced Real Estate Tax Strategies for Growth Many landlords prefer to employ advanced strategies in real estate for development and to build wealth over the long term. There are risks associated when you use these strategies, and it is recommended to seek advice from tax experts. 1031 Exchange: Deferring Capital Gains From the Sale of a Property 1031 Exchange, also called like-kind exchange, is a method which allows investors to defer capital gains as well as other tax liabilities related to the sale of a property, provided the proceeds go towards purchasing another property within the specified time frames. The process continues until the property is sold for cash. This option is only available for properties that are used for investment or business use. Utilizing LLCs and Entities to Improve Real Estate Tax Effectiveness A rental property that is held in an LLC allows for pass-through taxation. This means that the LLC doesn’t pay taxes to the federal government, but it passes them on to the owners who are required to pay the tax as part of their personal tax returns. In addition, it provides the protection of liability and legal separation of business and personal assets. It can also make it easier to record. How to Manage Capital Gains when Selling Investment Properties Dealing with capital gains is a complex procedure that requires several steps. Opportunity Zones and Long-Term Investment Tax Breaks The IRS offers an Opportunity Zone via the Qualified Opportunity Fund (QOF). When you invest the proceeds of capital gains into this fund, you will be able to defer tax-paying, decrease the tax-deductible gain, and get tax-free growth if you hold it for longer than ten years. Common Tax Pitfalls for Real Estate to Avoid Real estate taxes are complex. Small mistakes can result in an increase in tax liabilities, and that’s the reason you should stay clear from potential pitfalls. If you’re not sure about your tax situation, consult skilled CPAs who can assist in the process. The IRS has set a limit on the amount of money that can be claimed as a loss arising from passive income rental properties.
Tech Startup Exit Strategies for the Later Stage
As tech companies continue to expand and increase market share, selecting the right investors and partners to ensure consistent expansion is increasingly crucial and can assist in overcoming common hurdles during the final stages. When a technology startup is at its final stage, it has demonstrated the viability of its product, has a solid market presence, and reliable funding, usually a private equity (PE) investment. In this stage, many founders begin preparing for an exit strategy. This is a crucial point during the startup’s life cycle which requires a lot of planning and the expansion of infrastructure. Mergers and acquisitions (M&A) are commonplace in this phase of a company’s development, and the deals with venture-backed companies surpassed $100 billion during the first half of 2025, which is a 155% increase over the previous year as per Arion Research. This article provides methods to get through the final stage of your business and prepare your company to make a smooth exit. Strategies to Prepare for an Exit Maintain Scalability and Growth Investors will be attracted by firms that have an obvious competitive advantage and opportunities for market expansion, and it’s crucial to demonstrate your potential for growth. This could mean expanding into new regions or extending existing product lines in order to strengthen your standing within the market. As businesses expand their activities, having an appropriate management system in place is crucial. Develop Talent As a founder in the latter stages, it is possible that you have stepped back yourself from controlling all aspects of a business’s operations or appointed a chief executive officer (CEO) to oversee the day-to-day tasks. Establishing a structure for management is a crucial element in establishing and expanding a profitable business. However, what worked with 10- 20 employees could be unsuitable for larger teams. In addition, having a strong leadership team can assist your business in managing the changes and help drive post-exit growth. PE investments can cause radical changes in leadership talent and strategies, however the correct core team will be in a position to guide the business through these transitions. Continuously hiring and developing highly skilled employees will benefit the business as it expands and demonstrate to investors that the company has the infrastructure for management that will ensure the future success. Prepare for Due Diligence The process of preparing for due diligence includes the preparation of financial statements and contracts, legal agreements, and documents that prove your company is of high-quality and has growth potential for the future. Sell-side preparation can be lengthy and difficult. Working with a deal advisory team will help you manage the selling process and navigate with numerous M&A concerns that always arise. Tax structuring of transactions, accurate valuation, precise projections of financial and accounting, as well as the post-deal integration elements are essential to the success of the M&A transaction. Tasks during due diligence prep may involve: With careful planning, you can present your financials in confidence and prevent any unexpected surprises during the transaction. Make Improvements to Your Infrastructure The acquisition of a business may expose pitfalls in the company’s systems and processes and it’s crucial to improve your system prior to an exit. While your company has probably spent a lot of money on studies and research, as well as marketing and other go-to market activities, the infrastructure of your financial and operational life might be put on the back of the queue during times that saw rapid growth. Strategies to improve infrastructure include: Engaging with a professional third-party consultant can help your company navigate the challenges of exiting the business including preparation for due diligence, from preparing for due diligence to driving efficiencies within your operations to withstand the changes that follow an exit. Common Mistakes To Avoid The landscape for exits presents many opportunities and issues to be aware of. The most common exit mistakes include: Your Direction to the Future Whatever your tech company’s current status is, Parr & Ibarra CPA in Addison, TX can provide a full solution to your accounting and tax needs. Our experts have years of experience in helping companies throughout their life-cycle, from the beginning of funding to the planning of exit. We’re equipped to assist your company develop financial statements and the processes needed to make your successful exit and integration. The fast-paced world of technology isn’t easy and our team is ready to assist.
U.S. GAAP Accounting for Adaptive Reuse Real Estate Projects
Cities across the U.S. grapple with excess office inventory and changing community requirements, adaptive reuse has emerged as an effective solution. Renovating commercial buildings that are not being used like warehouses, offices, or retail centers into multifamily hotels, housing or mixed-use areas can rejuvenate communities and generate long-term investment value. From a financial perspective, however, these projects tend to blur the lines between redevelopment, acquisition and new construction, posing new challenges under U.S. GAAP. Knowing the correct treatment for componentization, impairment, capitalization and leasing is crucial to the accuracy of financial reporting and compliance. Determining the nature of the Transaction The most common adaptive reuse projects begin by purchasing an existing property. It could qualify as a business combination as per ASC 805 or as an acquisition of assets if the majority worth is accumulated in one asset (often the real estate). Important factors (ASC 805) Business Combination: The acquired property incorporates inputs (e.g. in-place leases) as well as processes (e.g. the property management workforce) the deal may be categorized as being a business. Costs of transactions are expensed. This is especially true when multiple properties are bought together alongside an established property management team, leases for tenants exist, or current systems are being acquired. Asset acquisition: The most common reason for this is for adaptive reuse if one asset is purchased without a workforce established and existing systems. The property is valued at a cost (including the transaction cost) and then allocated between tangible and intangible components (land, building, lease intangibles, etc.) Based on relatively fair rules. Costs of Capitalization for Redevelopment Costs After the property has been acquired, the subsequent costs are analyzed according to ASC 970-360 (real estate, general) and ASC 360 (property plant and equipment) to determine the capitalization eligibility. Capitalizable costs: The price of the purchase and the directly related acquisition expenses (legal title, escrow, broker fees, transfer taxes) along with demolition costs that form included in the price of the new structure or redevelopment plan. If the property was bought with the intention of demolishing it completely, the purchase price as well as associated demolition costs are usually capitalized on land. Noncapitalizable costs: Builders must keep a clear cutoff point to define “development period.” When the property is fully completed and ready for usage, capitalization is stopped regardless of whether leasing or tenant improvements are ongoing. Post-development items such as lease commissions, tenant improvements and FF&E are counted like any existing nondevelopment property. Accountability for Demolition as well as Partial Retention The most common adaptive reuse projects include partial demolition but retaining some central structural components (e.g. frames, facades, foundations). As per ASC 360-10-35 as well as ASC 970-360-25, the purpose of the property acquired determines the way to allocate the purchase price and how to treat demolition costs. If demolition is planned at the time of acquisition, the current structure is not a separate long-lived asset. It’s essentially an expense of acquiring the property and preparing it to be redeveloped. For example, if a developer holds 30% of the structure’s shell, the undepreciated cost of demolished portions is written off. Costs for modifying the remainder of the shell are capitalized as improvements with a new useful life. Componentization and Depreciation Because of the hybrid characteristics of reuse projects, components-based accounting becomes crucial to make sure that useful lives are aligned with the economic realities: This ensures that depreciation accurately reflects the different age groups and the remaining service capacity of the new and retained elements. Impairment Factors Since adaptive reuse is often seen in markets that are experiencing declines in value or occupancy, companies must assess long-lived assets in accordance with ASC 360-10-35 to determine if they are at risk of impairment. The indicators include unfavorable changes to zoning and unexpected cost overruns, loss of financing or decrease in anticipated cash flow. The recoverability test compares the value carried by an asset with its undiscounted future cash flows. Successful adaptive reuse projects generate significant value if projected cash flows match the value of the property being redeveloped. This can help avoid impairments and also shows strong future income potential. This type of analysis requires a higher degree of judgment than required for stabilized or predevelopment properties, where there are less uncertainties. If the property is not recoupable, write down to fair value (typically supported by an appraisal from a third party). Financial Statement and Disclosure Presentation Investors and lenders are increasingly looking for the same level of transparency when it comes to redevelopment projects. Important disclosures include: These disclosures offer insight into the economics of projects and management’s decisions which allows for better comparison across companies and markets. An Accounting Frontier More than just an architectural trend, adaptive use poses challenges at the edges of accounting. For funds, developers and REITs, the complex instructions in the U.S. GAAP takes technical precision and practical knowledge to ensure that they are executing properly. Companies that have explicit capitalization guidelines, adhere to strict component tracking and proactively examine impairment risks are best placed to present accurate financial reports and present an inspiring story to investors regarding the sustainability of the business and its value creation. Parr & Ibarra‘s fixed asset advice and cost segregation team can assist in understanding the accounting process for adaptive reuse of real estate. Contact us for more information and help.
Federal Tax Law Updates: Individual Tax Provisions
The One Big Beautiful Bill Act (OBBBA) introduces significant changes to the tax planning of individuals. It makes several Tax Cuts and Jobs Act (TCJA) provisions permanent, and increases the standard deduction as well as the taxes on state and local tax (SALT) deduction limits and creates new deductions aimed at seniors and workers. These changes have led to both opportunities and challenges to compliance in the 2025 year and beyond. Rates, Standard Deduction, and SALT Cap Credits and Exemptions Planning point: In the event of an increase in the estate tax exemption, certain taxpayers could choose to return assets to their estates for a step-up in basis. New Deductions for Seniors and Workers Other Dispositions Planning For Taxpayers The most important takeaways The numerous tax law modifications implemented by OBBBA can cause some confusion among taxpayers. Our tax specialists at Parr & Ibarra CPA in Hurst, Texas can assist families and individuals optimize deductions, develop plans for estates and make the plans of temporary tax provisions prior to their expiration. Contact us today to get started.
An Overview of the Earned Income Tax Credit
The concept of the earned income tax credit (EITC) isn’t easy particularly with the numerous guidelines for eligibility as well as income limits that go with it. In this article the EITC is explained into simple phrases. We’ll go over what credit is as well as the reasons why millions of people have the right to it and how it could bring more money into the pockets of low-to-moderate income earners. By the end, you’ll know who is eligible, how to navigate through the tests for eligibility, what paperwork will be required and the best way to ensure that you receive the maximum amount of credit you’re entitled to. What is the Earned Income Tax Credit (EITC)? EITC is a tax credit for federal taxpayers that is refundable and created to aid people with low and moderate-incomes. If you’re eligible, the credit will reduce your tax liability you must pay to the IRS on your tax returns. If the credit you receive is greater than the amount you owe in taxes, then the IRS will reimburse you for the difference, which means it will increase your earnings even if you do not owe anything. To be eligible for the credit, taxpayers need to submit a federal tax return, even if they’re not required to make a tax return otherwise. EITC 2026 In the fiscal year of 2026 (taxes which are due in 2027) the highest earned tax credits are $664, $4,427, $7,316 and $8,231 depending on what status you file and how many children are eligible to claim the credit. EITC Requirements To determine who is eligible to receive the EITC, the IRS examines a variety of factors. This is a list of the most important conditions you’ll have to meet. To be eligible for the EITC with no children who qualify, you must be between the ages of 25 and 65. In the event that you’re filing jointly but don’t have an eligible child, only one spouse needs to meet the age requirement. Workers who have children that are considered to be eligible aren’t bound by these age limits. Your income from investments must be lower than a specific threshold to be eligible for the EITC. This includes earnings from dividends, interest as well as capital gains and other sources of investment. Separated couples are still eligible for the EITC however, there are specific rules. In general, married couples have to be jointly filing to claim the credit. However, people that are legally separated, or who were not living with their spouse during the final one-half of the year could be eligible for the credit as “married filing separately.” Your child also needs to be living with you for at least half the time of the year. Taxpayers who earn income from abroad generally are not qualified for EITC in the event that they claim Foreign Earned Income Exclusion, or file Form 2555. The EITC assists those who earn income taxed by the United States, so excluded income typically does not qualify. As well as the requirements mentioned above, employees must satisfy a couple of general eligibility requirements. The minimum requirement is $1 in earned income throughout the calendar year, and you can’t count as a dependent child on the return of another taxpayer. If you’re seeking the EITC without having a qualified child, you must have been within the United States for more than half the year. Who are considered to be Qualifying Children? For those who claim the credit with children who qualify, the IRS utilizes 4 tests for determining whether children meet the requirements. EITC FAQs When will I receive my EITC refund? In the tax year 2026, taxpayers that file their tax returns electronically and select direct deposit will typically receive their refunds around mid-February, provided that the tax return is free of errors. The timing is determined by the law. Paper-filed returns can take much longer. What do I do to get the EITC in my tax refund? For the purpose of claiming EITC, you must submit the tax returns (Form 1040, or 1040-SR). Tax software will guide you through the steps for no cost. If you have children that qualify for the program, you will also have to fill out Schedule EIC, which includes information such as the children’s Social Security number and birth year. Can I be eligible for an EITC in the absence of children? Yes, those who do not have children, who are eligible can get a lesser EITC amount. However, they will need to satisfy certain requirements, such as the income level, their age as well as any other requirements for filing. What can I do to avoid making errors when applying for this tax deduction? The most effective way to avoid mistakes is to ensure the accuracy of income, filing status, as well as the eligibility of children. Most mistakes involve residency requirements, rules for relationships or reporting inaccurate income. Utilizing tax softwares or tax professionals will assist you in avoiding any errors. Conclusion In this article, we explored the EITC, who qualifies for it, and the reasons why it is a valuable financial tool for people with low-to-moderate income employees as well as their family members. Through reducing tax burdens and thereby generating refunds, EITC assists millions of households achieve financial stability every year. Contact Parr & Ibarra CPA in Keller, Texas for more details and assistance.
Understanding IRS Standard Mileage Rates
If you offer reimbursement to employees for their driving and business mileage, or track the use of vehicles in any way, then it is likely that the IRS mileage rate will likely pop in your mind every year. Each year, the rate changes. HR and business owners have already been juggling payroll deadlines, as well as compliance regulations and increasing costs. Keeping up with mileage rate adjustments may feel like a burden to keep track of. The problem is that the mileage adds up quickly. Fuel prices fluctuate. Maintenance of vehicles isn’t going to get cheaper. If mileage isn’t managed correctly, it could cause tax problems for employers as well as employees. This article will look at how to use the latest IRS Standard Mileage Rate, how it compares with previous years as well as what’s included and exempted, and who is eligible to use it and the impact it has on taxes. By the end, you’ll feel comfortable that you’re using the new IRS mileage rate properly and be aware of how it will affect your tax plan. What’s the IRS Standard Mileage Rate? The IRS mileage rate was designed to ease the process of accounting for vehicle-related expenses. Instead of filing receipts for each gallon of gasoline and oil change, or repair bill, it is possible to determine a per-mile deduction or reimbursement using the mileage standard rate. It’s a good method to record the expenses you incur when traveling for medical, business, charitable and moving reasons. In the case of many companies, this method is simpler to control and more reliable than keeping track of actual expenses for vehicles. It also establishes a uniform baseline, that is, IRS-approved benchmark for deductions and reimbursements. What is the IRS Standard Mileage Rate for 2026? For 2026, the Internal Revenue Service adjusted the standard mileage rates in order to reflect current cost data and inflation. Starting January 1, 2026 the average mileage rates will be: These rates are applicable to diesel, gasoline, hybrids, as well as fully electric vehicles. The rise in the business mileage rates reflects the rising fixed and variable vehicle costs, like depreciation, insurance, fuel and maintenance. Moving and medical rates, however, are based on the cost of variable items, which is the reason they vary from the business mileage. It’s important to remember that the use of the standard mile rate is an option. Taxpayers may choose to calculate the actual expense of their vehicle; however, once you have decided on one method, there are guidelines on when and how you can switch. What’s included In the Mileage Rate of 2026? This IRS Standard Mileage Rate has been created to make it easier to account for vehicle expenses to be used for medical, business, charitable, or moving purposes. This is what it covers: What is not included within the mileage rate? Although the standard mileage rate is comprehensive, but there are some costs that are not covered: Who is eligible to use the standard mileage rate? The standard mileage rate can be utilized by: What Does This Mean for My Taxes? For HR professionals and business owners, knowing the tax implications of these changes are crucial. Conclusion The IRS standard mileage rate is a reflection of the constant reality that operating a vehicle isn’t going to be cheaper, particularly for companies that depend on employee travel. Knowing the current mileage rate as well as what it covers and how it impacts taxes will help you remain on track and avoid a tax time surprise. If the mileage reimbursement and deduction rules seem confusing, that’s not unusual. They affect payroll, tax and policy-related decisions all at once. Reviewing your mileage policies now will help you avoid headaches and time later. Also, ensure that you’re using the IRS mileage rate in the correct way going forward. Contact Parr & Ibarra CPA in Keller, Texas for more details.
How Taxes Can Impact Your Merger or Acquisition
If you’re selling your business or purchasing another business, tax implications could have a huge impact on the success or failure of your transaction. If you’re contemplating the possibility of a merger or acquisition, you should be aware of the tax implications. Stock Sale or Asset Sale? From a tax perspective, a transaction could be classified as an asset sale or stock sale. When it is an asset sale, the buyer is buying only those assets belonging to a company. This could happen if the buyer wants only certain products or assets. It’s the only option for a business that can be a sole-proprietorship, or an individual-member limited liability corporation (LLC) which is considered as a sole proprietorship for tax reasons. If the targeted business is a corporation, partnership or LLC which is considered a partnership for tax purposes, the buyer may directly purchase the shares of the seller or another form or ownership stake. Whether the business that is being bought is a C corporation or a pass-through entity (that is, an S corporation, a partnership or, more generally an LLC) can make a huge difference in the taxation. The 21% flat federal corporate income tax under the Tax Cuts and Jobs Act (TCJA), which the One Big Beautiful Bill Act (OBBBA) did not change, makes the purchase of shares of a C corporation somewhat more appealing. Why? The company will pay less tax and generate more after-tax income. Furthermore, any gains built-in from the appreciation of corporate assets are taxed at a lower rate when they’re transferred to a buyer. The TCJA’s reduced individual federal tax rates, permanently imposed by the OBBBA can be a factor in making ownership interests in S corporations, partnerships, and LLCs more appealing than they used to be. This is due to the fact that the income that is passed-through generated by these organizations will be taxable according to the lower rates imposed by TCJA on the buyer’s personal tax returns. The buyer could also be eligible for qualified business income deduction under the TCJA and was permanently enacted through the OBBBA. In certain situations, the purchase of stock by a corporation may be regarded as an asset purchase when you make a Section 338 election. Buyer or Seller? Sellers typically prefer stock sales due to tax reasons and also for nontax reasons. One of their primary goals is to reduce the tax cost of selling. This is usually done by selling ownership rights in the company (corporate stock or interest in an LLC or partnership) in contrast to selling the company’s assets. If you sell your stock or any other ownership interest, that carries liabilities generally to the buyer. Any gains from selling are usually taxed as long-term capital gains (assuming that the ownership interest was kept for more than a year). However, buyers typically prefer to buy assets. The primary goal is to generate sufficient cash flow from the acquired company to pay for any debts incurred in the acquisition and to earn an appropriate return from investment. So, buyers need to reduce exposure to unidentified and undisclosed liabilities and reduce taxes once the deal is closed. A buyer may increase (step-up) their tax base of the assets purchased in order to reflect the cost of purchase. A step-up basis decreases the tax liability in the event that certain items, including inventory and receivables are sold or converted to cash. It also boosts depreciation and amortization deductions on qualifying assets. Remember that other elements like employee benefits, could create tax problems that are not expected when merging or buying an enterprise. How Parr & Ibarra can help Selling the company you’ve spent years creating or becoming a new business owner through the purchase of an existing business could be the most expensive financial decision you’ll ever take. We’ll help you assess the likely tax consequences prior to discussions to prevent unpleasant tax surprises once a contract is signed. Contact us today to begin.
How to Check the Status of Your IRS Refund: A Step-by-Step Guide
Waiting for your IRS tax refund can feel stressful, especially when you’re counting on that money for expenses, savings, or investments. The positive side is the IRS offers reliable tools to monitor your refund status in real-time. In this comprehensive guide,we go through and explain precisely how to check your IRS refund status step-by-step and what each status signifies and what you should do if the refund has been delayed. How Much Time Does It Take to Receive the IRS Refund? Before you check your refund status, it’s crucial to know the IRS timeframes: Delays could be due to issues with identification verification, documents that are not in the system or IRS process of review. What You Need to Know Before Verifying Your Refund Status To check the IRS tax refund status, keep these items in your possession: If you make a mistake, it could stop the system from finding your refund. Step-by-Step Instructions on how to Check the Status on your IRS tax refund’s status Online Step 1: Visit the IRS “Where’s My Tax Refund?” Tool Visit the official IRS refund tracker, which is known as “Where’s my refund?” This is the most efficient and accurate method to verify your refund. Step 2: Fill in Your Tax Information Give you your SSN and ITIN number, the filing status and the exact amount of your refund as it was filed. Select the tax year when you filed your return (for instance, Tax Year 2025 filed in 2026 or Tax Year 2024 filed in 2025). The proper tax year is crucial. Selecting the wrong tax year will stop the system from finding your tax refund Step 3: View Your Refund Status After submission, the system will show the following three options: For a detailed explanation and visual walkthrough, please click to watch the video, it provides additional insights and clarifies each step discussed. How to check your IRS Refund Status using the IRS2Go App The IRS also offers a mobile option: Steps: This tool provides exactly the same information as the tool online and makes it convenient for mobile users. Understanding IRS Refund Status Messages Return received: Your tax return is being processed. There is no action to take until your IRS calls you. Refund Approved: The refund is confirmed. Direct deposits usually show up within five days. Refund Sent: The IRS has issued your refund. Allow extra time for the delivery in case of a mailed check. Why is my refund from the IRS Delay? The most frequent reasons for delay in refunds can be attributed to: If the refund you received is delayed past the normal timeframe, it is suggested to have a professional review. When to contact an IRS or a CPA? It is recommended to seek assistance for: How Parr & Ibarra CPA Can Assist? At Parr & Ibarra CPA in Keller, Texas, we provide support for families, individuals and business owners in: Our aim is to ensure that the refund process is completed accurately and quickly, with no unnecessary stress. Final Thoughts Verifying the status of your IRS return status is easy as long as you follow the proper steps and know what each update signifies. While a lot of refunds are processed promptly but delays and difficulties are not unheard of. If they do happen it is important to have a trustworthy CPA on your side that can make an enormous difference.
