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To ensure compliance with IRS requirements, we inform you that any U.S. federal tax advice contained in this website (including any attachments or directed links) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

Please be assured that this notice does not reflect any decrease in the quality of services or the amount of thought we put into our client interactions.

Any advice in this communication is limited to the conclusions specifically set forth herein and is based on the completeness and accuracy of the stated facts, assumptions and/or representations included. In rendering our advice, we may consider tax authorities that are subject to change, retroactively and/or prospectively, and any such changes could affect the validity of our advice. We will not update our advice for subsequent changes or modifications to the law and regulations, or to the judicial and administrative interpretations thereof.

For more information on Circular 230, please click here

No Rendering of Advice

The information contained within this website is provided for informational purposes only and is not intended to substitute for obtaining accounting, tax, or financial advice from a professional accountant. Presentation of the information via the Internet is not intended to create, and receipt does not constitute, an accountant-client relationship. Internet subscribers, users and online readers are advised not to act upon this information without seeking the service of a professional accountant. Any U.S. federal tax advice contained in this website is not intended to be used for the purpose of avoiding penalties under U.S. federal tax law. 

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While we use reasonable efforts to furnish accurate and up-to-date information, we do not warrant that any information contained in or made available through this website is accurate, complete, reliable, current or error-free. We assume no liability or responsibility for any errors or omissions in the content of this website or such other materials or communications. If you wish to contact the webmaster of this website, please call CPA Websites Solutions at 802-655-1519. 

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2024 Standard Mileage Rates

Purpose Rates per Mile
   Business 67 cents
   Medical/Moving 21 cents
   Charitable 14 cents

 

2023 Standard Mileage Rates

Purpose Rates per Mile
   Business 65.5 cents
   Medical/Moving 22 cents
   Charitable 14 cents

 

Check It Out!

Check out the article in PICPA CPA Now by Greg Kashella, published November 2021, Enhanced Financial Statement Disclosures for Small Businesses.

https://www.picpa.org/articles/cpa-now-blog/cpa-now/2021/11/19/financial-statement-disclosure-enhancements-for-small-businesses 

Check out the article in the Central Penn Business Journal, Women Who Lead, March 2019 article featuring our partner Jori Culp

http://www.cpbj.com/article/20190306/CPBJ01/303069999/women-who-lead-jori-m-culp-cpa?fbclid=IwAR1QS3LqoY_P5jEkST4y0QOhRYFYvqzr3UunTpTTFF5PKLUqEfT3JSxd-Tw

Tax-Related Identity Theft

The IRS combats tax-related identity theft with aggressive strategies of prevention, detection and victim assistance. To find out more about tax-related identity theft call our office or visit https://www.irs.gov/identity-theft-fraud-scams/identity-protection for information and guidance.

Remember that the IRS will never contact you by electronic means. This includes emails, phone calls, text messages, or social media channels. If you are ever in doubt whether contact by someone claiming to be from the IRS is legitimate, call our office first for verification.

 

 

If you have a tax-favored retirement account, including a traditional IRA, you’ll become exposed to the federal income tax required minimum distribution (RMD) rules after reaching a certain age. If you inherit a tax-favored retirement account, including a traditional or Roth IRA, you’ll also have to deal with these rules.

Specifically, you’ll have to: 1) take annual withdrawals from the accounts and pay the resulting income tax and/or 2) reduce the balance in your inherited Roth IRA sooner than you might like.

Let’s take a look at the current rules after some recent tax-law changes.

RMD basics

The RMD rules require affected individuals to take annual withdrawals from tax-favored accounts. Except for RMDs that meet the definition of tax-free Roth IRA distributions, RMDs will generally trigger a federal income tax bill (and maybe a state tax bill).

Under a favorable exception, when you’re the original account owner of a Roth IRA, you’re exempt from the RMD rules during your lifetime. But if you inherit a Roth IRA, the RMD rules for inherited IRAs come into play.

A later starting age

The SECURE 2.0 law was enacted in 2022. Previously, you generally had to start taking RMDs for the calendar year during which you turned age 72. However, you could decide to take your initial RMD until April 1 of the year after the year you turned 72.

SECURE 2.0 raised the starting age for RMDs to 73 for account owners who turn age 72 in 2023 to 2032. So, if you attained age 72 in 2023, you’ll reach age 73 in 2024, and your initial RMD will be for calendar 2024. You must take that initial RMD by April 1, 2025, or face a penalty for failure to follow the RMD rules. The tax-smart strategy is to take your initial RMD, which will be for calendar year 2024, before the end of 2024 instead of in 2025 (by the April 1, 2025, absolute deadline). Then, take your second RMD, which will be for calendar year 2025, by Dec. 31, 2025. That way, you avoid having to take two RMDs in 2025 with the resulting double tax hit in that year.

A reduced penalty

If you don’t withdraw at least the RMD amount for the year, the IRS can assess an expensive penalty on the shortfall. Before SECURE 2.0, if you failed to take your RMD for the calendar year in question, the IRS could impose a 50% penalty on the shortfall. SECURE 2.0 reduced the penalty from 50% to 25%, or 10% if you withdraw the shortfall within a “correction window.”

Controversial 10-year liquidation rule

A change included in the original SECURE Act (which became law in 2019) requires most non-spouse IRA and retirement plan account beneficiaries to empty inherited accounts within 10 years after the account owner’s death. If they don’t, they face the penalty for failure to comply with the RMD rules.

According to IRS proposed regulations issued in 2022, beneficiaries who are subject to the original SECURE Act’s 10-year account liquidation rule must take annual RMDs, calculated in the usual fashion — with the resulting income tax. Then, the inherited account must be emptied at the end of the 10-year period. According to this interpretation, you can’t simply wait 10 years and then drain the inherited account.

The IRS position on having to take annual RMDs during the 10-year period is debatable. Therefore, in Notice 2023-54, the IRS stated that the penalty for failure to follow the RMD rules wouldn’t be assessed against beneficiaries who are subject to the 10-year rule who didn’t take RMDs in 2023. It also stated that IRS intends to issue new final RMD regulations that won’t take effect until sometime in 2024 at the earliest.

Contact us about your situation

SECURE 2.0 includes some good RMD news. The original SECURE Act contained some bad RMD news for certain account beneficiaries in the form of the 10-year account liquidation rule. However, exactly how that rule is supposed to work is still TBD. Stay tuned for developments.

© 2024

 

 

 

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